At least 89 per cent of rented homes in the capital are now unaffordable to those on Universal Credit because of a “persistent” gap between the amount it pays out, and the true cost of renting.
That’s according to a new report from homeless charity Crisis as part of their Cover the Cost campaign.
They say the shortfall between rents and the credit is leaving people facing the choice between paying for essentials like food and bills or paying their rent – and in the most severe cases, facing losing their home.
Local Housing Allowance
The study focused on people unable to work, who would be entitled to full Local Housing Allowance (LHA) – which is administered under Universal Credit.
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LHA is a subsidy to allow people on low incomes to pay their rent.
However, since 2011, there have been cuts to LHA – meaning it has stopped keeping up with rising rents – and in 2016 it was frozen altogether.
The report compared the maximum possible LHA rates with actual rent costs in each area to find out how many homes were affordable.
Just 11 per cent of rooms in shared houses in Edinburgh were affordable for young single people under 35 receiving Universal Credit in 2018/19.
Only seven per cent of two-bed accommodation for small families was affordable.
There were 5,521 people in Edinburgh on UC as of March this year – one in every 93 people in the city. Two thirds are not in employment.
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For those already sleeping rough or in temporary accommodation, such as hostels and B&Bs, the shortfall means finding a safe and stable home to build their future in is near impossible.
That’s particularly the case as the number of social homes continues to decline.
Previously, LHA rates were set to ensure that recipients could afford at least 30 per cent of properties in their area, giving households more opportunity to find safe and stable homes.
But with the LHA freeze coming as rents rise year on year, affordable rented accommodation has become harder and harder to come by.
'The widening gulf between Universal Credit and private rents'
Councils are being left to pick up the pieces for those who do become homeless, spending tens of millions of pounds on housing people in temporary accommodation.
Until there are enough social homes to house people on low incomes, Crisis is calling on Government to commit to restoring LHA rates in the next spending review so that it once again covers the cost of renting at least 30 per cent of properties in any given area, and that it keeps up with rises in rents each year.
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Grant Campbell, Director of Crisis in Scotland, said: “We all deserve the dignity and stability that a safe and decent home provides.
“Yet the widening gulf between Universal Credit and private rents is leaving many in the West Midlands living on a knife-edge.
“More and more people are forced to make impossible choices between keeping up with the rent and paying for essentials like food and bills, all the while knowing that falling behind with payments could cost them their homes.
“Universal Credit can be a tool to prevent homelessness, but only with the right investment – and that’s why we are launching this campaign today.
“We need to see Government bring Universal Credit back in step with the true cost of renting.
“This will drastically reduce council spending and will provide greater reassurance to private landlords that people on Universal Credit can afford to pay their rent each month.
“Most importantly, it will stop people becoming homeless in the first place while giving those on the lowest incomes the safe and stable homes they need to build their futures.”
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