The REAL crisis in housing is the affordability of renting from a council or housing association landlord for the benefit household created by the systemic flaw in the overall benefit cap policy when rent levels increase.
Table 1 – % benefit income on rent 2017 and 2024 (Regions)
| REGIONS |
2017 |
2024 |
| Single person social rent |
31% |
39% |
| Single person ‘affordable’ rent |
44% |
53% |
| Family social rent |
38% |
46% |
| Family ‘affordable’ rent |
54% |
67% |
Table 2 – % benefit income on rent 2017 and 2024 (London)
| LONDON |
2017 |
2024 |
| Single person social rent |
27% |
32% |
| Single person ‘affordable’ rent |
34% |
41% |
| Family social rent |
33% |
41% |
| Family ‘affordable’ rent |
48% |
59% |
The figures represent the average social housing rent levels expressed as a percentage of the maximum household income of the overall benefit cap of £13,400 for a single person and £20,000 for a family in the regions and £15,400 and £23,000 in London.
The average rent levels for 2017 are taken from official figures known today and inflated by the CPI+1% rent increase formula from 2020/21 to 2024/25 with CPI at today’s 3% figure.
Comment
It has long been said that 30% of net household income is the affordability threshold for rent and that figure is already met today and will rise to between 41% and 67% for families by 2024
The inflation-busting council and housing association rent increases together with an overall benefit cap limit that remains constant is the reason for this staggering increase in the unaffordability of social housing.
The only ways to prevent this catastrophe is either (a) the rent rises are abandoned or (b) the overall benefit cap limit is also increased by CPI+1%.
Catastrophe?
A recent report by the Chartered Institute of Housing (CIH) and the University of Sheffield revealed that council and housing association landlords are refusing to accommodate the benefit household because of welfare reforms leaving the benefit household with too little to afford rent.
That figure of a 60% refusal rate sees such persons and families become homeless as they have been refused the cheapest form of rented housing on grounds of affordability.
That 60% refusal rate for families is when the benefit household has to pay 38% of household income on rent in the regions which will rise to 46% of total income to pay the rent. So many more families in the regions will be refused the cheapest rented housing due to the 21% increase in the percentage of income they have to find to meet the rent.
The same will happen in London as the cheapest social rent will increase from 33% of total household benefit income to 41%.
The catastrophe is a homelessness epidemic that is created systemically when rents increase and the maximum overall benefit income remains constant. This is the systemic flaw in the overall benefit cap policy.
We know that council and housing associations in the UK have 400,000 new tenancies created each year and thus need 400,000 new tenant households to replace the old ones every year. Those ‘social’ landlords will increasingly not be able to fill their empty properties with the benefit tenant household for reasons of affordability.
The UK thus has no social housing safety net any longer due to the systemic flaw. This affects those households who go direct to social landlords and to those who have been refused privately rented housing and instead of being housed in the social rented sector such families can ONLY live in temporary homeless accommodation such as unsuitable and incredibly expensive B&B type provision paid for by the local council’s homeless department.
IF the CPI inflation rate remains at its current 3% then we can statistically project that up to 87% of benefit households applying for social housing each year will be refused on affordability.
To put that into context when the overall benefit cap policy began in late 2013 the refusal rate due to affordability was 0.46%. In 2013 just 46 of every new 10,000 benefit household applicants for social housing were refused on affordability – by 2024 it will be 8,700 out of 10,000!
With 400,000 new council and housing association tenancies each year this becomes 348,000 benefit tenant households each year that will be refused a council or housing association property and become homeless.
When the overall benefit cap policy began in 2013 social landlords were only refusing the benefit household of a couple with 4 or more children and mostly with 5 or more children on grounds of affordability. By 2024 the lone parent with one child will be refused social housing because they cannot afford the rent.
We have opposition politicians currently taking a post facto approach to welfare reform scrutiny on Universal Credit and the LHA Maxima Cap policy with debates in the House of Commons. Post facto scrutiny to make up for any original scrutiny of these horrendous policies – yet no scrutiny whatsoever and not even any murmurings over the overall benefit cap policy that limits household benefit income!
The Labour Party manifesto for the 2015 general election included a policy to reduce the overall cap level. The 2017 general election manifesto of Labour did not mention the OBC policy at all and neither did the 2016 or 2017 Labour Party conferences mention it – the ostrich syndrome of not taking ANY position against a policy that will at least triple homelessness. And we are told daily that Corbyn Labour is left-wing!!
We have the usual suspects of Shelter, Crisis, the JRF and others lobbying hard on the unaffordability of private renting and unfreezing the maximum housing benefit paid to private landlords … yet not a dickie bird from these homeless ‘experts’ over the catastrophic and systemic huge increase in homelessness that the overall benefit cap means for social housing. Shameful!
As I have said many times these adverse impacts are not speculative in any way, they are not ‘scaremongering’ at all; they are inevitable and could be predicted by a 7-year-old on the most basic spreadsheet. Yet we hear or read absolutely bugger all about the systemic homelessness that the overall benefit cap policy creates for social housing.
As you would expect the social landlords are euphoric over inflation-busting rent increases from April 2020 to March 2025 which the Tories announced a few weeks back – yet their incompetence and ignorance in being so euphoric is easily seen when they will struggle to find the 400,000 replacement social tenants they need each year and their costs increase significantly and they put themselves at severe risk of going bust. Social landlord euphoria is nothing less than turkeys celebrating Christmas!
The social landlord strategy ever since 2013 has been it’s not out fault this is government policy and they have been at pains to point this out to existing tenants one of either pay the rent or be evicted. Increasingly to the prospective social tenant it has been if we think you can’t afford the rent then you ain’t getting one of our properties and each year those affordability tests get tougher.
Unless the opposition, the usual ‘experts’ and social landlords start campaigning to get the overall benefit cap policy abandoned we will have a homeless epidemic and the UK will be a country that does not provide shelter for its most marginalised.
Yet the OBC policy has widespread support from the general public as evidenced in opinion polls and those who should lobby against it because it will inevitably create a massive increase in homelessness simply raise the white flag of surrender because they perceive the OBC policy a too difficult to challenge.
Far easier to ignore the massive adverse and inevitable impacts of the policy than to mount any challenge.
Far easier to worry more about the self-interest of the survival of homeless organisations rather than the interests of those they claim to represent.
Far easier to chase more research and other funding than to do your job.
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IF the CPI inflation rate remains at its current 3% then the average rent in the regions at a social rent level increases by £1,153 per year by 2024. The benefit tenant will have no increase in income by 2024 due to the overall benefit cap limit.
If the CPI inflation rate remains at its current 3% then the average rent in the regions at the ‘affordable’ (sic) rent level increases by £1,435 per year by 2024. The benefit tenant will have no increase in income by 2024 due to the overall benefit cap limit
Speye Joe 
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