Sunday, 21 July 2019

Austerity Fuelling Housing and Homelessness Crisis

'Is there a link between shortage of housing, homelessness and the welfare reform in the UK?', asks Ripon Ray

'I made a claim for universal credit over 5 months ago. Nothing has come through yet. My landlord has just sent me a letter which shows I am in rent arrears.  Am I going to be homeless again?’

Joanna Smith, who is nine months pregnant, is living in temporary accommodation in Hackney, London. She was placed there by Westminster Council. The council could not afford to place her in accommodation within its own area.  The high cost of renting in the borough for a low income benefit claimant, such a Joanna, is beyond her means as a private tenant because housing benefit is not going to cover her rent once austerity measures are implemented in the UK. 

She was dismissed from her job by her employer due to pregnancy.  Given her pregnancy, it is unlikely anyone would give her another job. Her situation made me think about the current state of the housing crisis for individuals and families on low income in the UK who find it  impossible to get accommodation and whether many of them are forced into homelessness due to the government’s welfare reforms.

In 1976 there were over 5 million properties rented from local authorities on social rents. By 2017, council housing stock had shrunk to just over a million.

In 1980, the then Prime Minister, Margaret Thatcher, introduced the Right to Buy Scheme which offered tenants discounted prices on their council homes. In the process it removed a considerable number of homes from public ownership.  Hansard outlined that:

‘No single piece of legislation has enabled the transfer of so much capital wealth from the state to the people.’ 

The policy of the transfer of state assets to individuals marked a decisive moment in modern history. The shift paved the way from dependency on state support to the mercy of a deregulated market.  Many local authority properties were also transferred to private registered providers. These properties were acquired by housing associations and private landlords. In 1980, 1% of the total housing tenure was managed by housing associations. Since then it has increased to 6% whilst private tenure has risen from 7.5% in 1980 to 12% in 2018.  At the same time, over 52% of housing is privately owned; either owner occupied or bought to let.

Positive Money, a financial campaigning organisation, states,

‘House prices rise much faster than wages, which means that houses become less and less affordable.’

Inevitably for low income individuals and families who are on state benefits, just like Joanna, getting a private rental property is very difficult. The House of Commons Briefing Paper explained: 

‘The most commonly selected reason was a perceived greater risk of delays in payment or unpaid rent. This was selected by 68% of landlords and 78% of agents. Many landlords and agents also reported a perceived risk that the benefits would not cover all of the rent (reported by 62% of landlords and 70% of agents).' 

Since the financial crisis in 2019-10, a raft of reforms were implemented that left many low income individuals and families into destitution, pretty similar to what has happened to Joanna.  The Welfare Reform Act 2012 introduced the bedroom tax, benefit cap and universal credit and the freeze on the Local Housing Allowance.

According to Crisis, a national homeless charity,  in 2009/2010  and 2016-17 there has been a rise from 11% of homelessness acceptance to 31% by local authorities. It states that:

‘ …Local Housing Allowance reforms as a major driver of this association between loss of private tenancies and homelessness. These reforms have also demonstrably restricted lower income households’ access to the private rented sector. The number of Housing Benefit/Universal Credit claimants who are private tenants is now some 5 per cent lower than when the Local Housing Allowance reforms began in 2011, despite the continuing strong growth of the private rented sector overall.’ 

The Local Housing Allowance, a means tested social security benefit, was initially set up in 2003 to ensure private tenants can pay their rent if their income does not cover the cost by getting housing benefit. 

According to Shelter, a homeless charity:

 ‘Since 2010, housing benefit have not risen in line with rising private rents…this means that most private renters who need their income topped up by housing benefit will face a monthly shortfall between the actual cost of their rents and the support available.'  

Since 2013, universal credit has been rolled out throughout UK and every corner of the country has seen an increase in rent arrears.  Social landlords, defined as local authority and housing associations, say they are now feeling the stress of austerity measures. The Ministry of Justice’s record shows that in between January and March 2019, the majority of all landlords bringing a claim for possession were social landlords.  They make up 63% of all the claims. Many of these housing associations explained that austerity is fueling rent arrears:

‘the difficulty many tenants had with 'direct payment' (that is, being responsible for paying their rent); tenants encountering an unexpected expense; 'accidental' underpayment, which involved tenants underpaying inadvertently; and, the delay between tenants' initial UC claim and their first payment.’

Joanna’s situation clearly resembles what the landlords are stating.   I personally feel it has made her situation worse, just as it has done for many low income individuals and households in this era of austerity. 

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