Londoners face homelessness crisis due to housing benefit freeze

Up to 60,000 Londoners who rent privately are at risk of becoming homeless in the next six years unless the government increases the housing benefit they receive, a new report warns.

The report, commissioned by London Councils, a cross-party group representing the 32 boroughs and the City of London, estimates that between 16,500 and 22,000 households in the capital will lose their homes by 2030 if the government maintains the freeze on Local Housing Allowance (LHA).

LHA was frozen in 2016 and has not kept up with rising rents in London, where one in seven private renters rely on it.

The report, by Alma Economics, also found that raising LHA to cover at least 30% of local market rents would save the public sector more than £100m a year in the capital, mainly by reducing the demand for homelessness services provided by the boroughs.

‘Raising Local Housing Allowance is vital’

London Councils’ executive member for regeneration, housing and planning, Cllr Darren Rodwell, said: “Raising Local Housing Allowance is vital for getting a grip on the homelessness crisis.

“London’s homelessness pressures are already enormous and unsustainable. On current trends, almost 60,000 more London renters are set to become homeless in the coming years.

“London is the epicentre of the national homelessness crisis.”

He added: “The situation is increasingly unmanageable and requires urgent government action. We cannot continue in this disastrous direction.

“Just as the government boosted LHA during the Covid-19 pandemic to prevent a wave of mass homelessness, we need a similar emergency response to the situation today.

“An increase in LHA will help low-income households pay their rents and avoid homelessness, which can be so devastating to families and bring massive costs to local services.”

Urging the government to end the freeze on LHA

London Councils is urging the government to end the freeze on LHA and restore its link to local rents in its upcoming Autumn Statement, which will set out future spending plans.

The group says that homelessness is already a major challenge in London, which accounts for more than half of England’s total number of homeless households in temporary accommodation.

According to the latest figures from London Councils, nearly 170,000 Londoners are currently homeless and living in temporary accommodation arranged by their local authority. This includes around 28,000 children.

The group warns that the situation is becoming increasingly unmanageable and that the boroughs are set to overspend their homelessness budgets by £90m this year.

The report also highlights the turbulence in the capital’s private rented sector (PRS), which is a key factor behind the growing numbers of homeless Londoners.

Separate research commissioned by London Councils and published in July, showed a 41% drop in private rental listings in London since 2020, with a corresponding 20% increase in listed rents.

As a result, only 2.3% of London listings on Rightmove in 2022-23 were affordable to those using LHA to pay their rent, compared to 18.9% in 2020-21.

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