Written evidence submitted by Commonweal Housing (TH0024)
Introduction
The evidence for this submission is based on the learnings from ‘No Access, No Way Out’[1], a new report by social justice charity Commonweal Housing, that reveals the shocking state and scarcity of private rented housing options for single homeless people.
About Commonweal Housing
Commonweal Housing is an independent social justice charity working to investigate, pilot and champion housing-based solutions to social injustice. By using our charitable resources, Commonweal provides experts and partner organisations the opportunity to trial and test new approaches designed to enhance housing equality and justice through property-based pilot projects. We also commission research into areas of injustice where housing is part of the problem, but where better quality, appropriate housing may also be the solution.
In 2024, we commissioned independent researcher Becky Rice to investigate how reduced availability and rising prices at the lower-cost end of the Private Rented Sector (PRS) are affecting people experiencing homelessness from moving-on from homelessness services.
The research was compiled through interviews with clients and staff of homelessness services or local authorities who highlight the struggles facing people experiencing homelessness in their attempts to move-on from homelessness services into the PRS.
The findings demonstrate a broken PRS and a benefit system that creates systemic barriers to employment. As a result, homeless but stable individuals are stuck in limbo as they cannot afford to leave their current, often high-cost transitional support services, hindering government efforts to tackle homelessness.
The low-cost end of the PRS current landscape and its impact on tackling homelessness
Across England, private rental prices have surged[2] while supply at the bottom end of the market has fallen. This has led to a rise in the number of people unable to exit homelessness accommodation, such as hostels and winter shelters.
As referenced in the No Access, No Way Out report, a 2022 survey undertaken by homelessness membership charity Homeless Link[3] showed that 40 percent of those living in services were ready but unable to move on from their current provision. The main barrier was a lack of PRS homes available at Local Housing Allowance rates, with 65 percent of respondents citing this issue. [4]
The number of homeless people stuck unable to transition out of homelessness services is likely higher now, as new tenancy prices have risen by nearly a fifth in the last two years[5], indicating a worsening situation.
Subsequently, this prevents in-need individuals from accessing the housing and support services they require due to capacity limits and, therefore, having to sleep rough. In 2022, more than two-thirds of services [6] had to reject clients for capacity reasons.
The lack of flow-through accommodation is not only creating a backlog of individuals who are ready to live independently, but also preventing homelessness services from assisting new clients and impacting government efforts to tackle homelessness.
The costs associated with issues in the PRS market
Below, we highlight issues with the low-cost end of the private rented sector and the implications for public spending based on findings from the No Access, No Way Out report.
Systemic worklessness traps:
The majority of those exiting homelessness services receive Local Housing Allowance (LHA) as part of their overall Universal Credit to pay for their housing costs.
As a result of the high cost of PRS accommodation – frequently in excess of LHA levels – people transitioning out of homelessness services are too often trapped in worklessness. This is because the sharp taper on the housing element of Universal Credit payments, or legacy housing benefit payments, even when working on a low and potentially variable income, makes covering shortfalls in rent unaffordable in many cases.
Additionally, the report highlights that while people are often very keen to move into employment, there are growing cases of landlords at the cheapest end of the market preferring to rent to non-employed tenants, as they receive a guaranteed income through the tenant's housing benefit payments.
This situation creates a cycle of poverty, making it difficult for individuals to afford rent while pursuing work. In addition to negatively stymieing efforts from across the government to get people back into employment and also significantly impacting upon wider ambitions on health and wellbeing metrics as people are trapped in more institutional homelessness services.
Cost of alternative housing options:
As identified in the report, factors behind the reduced availability of PRS accommodation for people experiencing homelessness include landlords increasingly moving away from providing homes at the lower-cost end of the PRS to providing or leasing to providers of supported 'exempt' accommodation.
Landlords have increasingly moved to this section of the market because providers of supported housing are exempt from the LHA rates and can, therefore, claim a higher rate of housing benefit in return for intensive housing management or other support.
This has led to a reduction in the number of HMOs that can be accessed by people reliant on LHA, resulting in less shared accommodation being available at the shared accommodation rate. In many cases, this has left supported accommodation as the only option for people who are under 35 and subject to the shared accommodation rate.
As such, the report finds that individuals who could potentially manage living independently end up in supported accommodation that is more expensive due to support costs.
Not only does this mean individuals are put into accommodation more suited to those with supported needs, but the public money is being spent incurring high costs to subsidise supported accommodation options for those who don't require supported housing.
Moreover, the report highlights how tenants in supported housing are often unable to work at all or only part-time to avoid going above the threshold of the benefit cap which would mean they have to pay a high rental charge for the accommodation and support. Therefore, contributing to worklessness traps and poverty cycles as individuals are unable to access employment to help secure future permanent accommodation.
Increased use of incentives:
Alongside falling supply of lower-cost PRS, soaring rent prices and lack of financial resources to cover deposits and advance rent payments leaves people leaving homelessness excluded from the rental market.
The report finds landlords operating in the low-cost end of the PRS market are increasingly being encouraged to accommodate people experiencing homelessness through cash incentives rather than rent deposits or rent in advance.
As more and more incentives are paid, local authorities face additional costs in securing PRS tenancies, at a time when budgets are already tightened. Homelessness services are also impacted by the increased use of landlord incentives as they often do not have the funds to pay cash incentives.
Recommendations to enable move-on from homelessness services into the PRS
This section includes the report's recommendations to improve access to the low-cost end of the PRS market to enable move-on from homelessness services to tackle homelessness, both in terms of preventing rough sleeping and facilitating move-on.
The government must deliver a bold approach to tackle injustice in the PRS by ensuring that a fairer, more equitable PRS is viewed as central to ending rough sleeping.
The government must also increase the delivery of new homes at scale as an urgent priority to prevent and relieve homelessness and ease market pressure.
To address the issues of landlord incentives, the government must establish new mechanisms that incentivise landlords to limit their rental prices to no more than the Local Housing Allowance levels for statutory homeless households and those transitioning from homelessness services. Such incentives should be delivered via the tax system to move the burden away from local authorities providing cash offers at the point of tenancy sign-up.
The Department for Work and Pensions should consider removing the shared accommodation rate to address the challenges facing renters or potential renters aged under 35. Doing so would help reduce the use of costly supported accommodation, often the only housing option for this group.
To ensure the PRS is an affordable option for those exiting homelessness services, there should be an evaluation of the impact of the Local Housing Allowance on people subject to the benefit cap, and consider linking future increases to changes in the cap.
Ultimately, enabling access to the PRS and eliminating barriers to employment for single homeless people must be included in plans to tackle homelessness.
November 2024
[1] Rice, B, No Access, No Way Out, Commonweal Housing, 2024: No-Access-No-Way-Out-WEB-FINAL.pdf
[2] Pacitti, C, Through the roof: Recent trends in rental-price growth, Resolution Foundation, 2024
[3] Homeless Link, Support for single homeless people in England: Annual survey 2022, 2023.
[4] Ibid.
[5] Pacitti, C, Through the roof: Recent trends in rental-price growth, Resolution Foundation, 2024
[6] Homeless Link, Support for single homeless people in England: Annual survey 2022, 2023.