Less than 3 per cent of private rental properties in Hackney are affordable to those reliant on housing benefit, according to the council – compared with 50pc six years ago.
“Increasingly unsustainable shortfalls” between market prices and benefits is the leading cause of homelessness – now 72pc of all applications – and is likely to rise with the rollout of universal credit in June.
While housing benefit currently pays a maximum of £1310.09 per month for a two-bed property, median market rents in Hackney come in at £117 a week more: £1,820 per calendar month (PCM).
Housing benefit for singles under 35 is restricted to the rate for a room in a shared house, and they are allowed £442.39pcm. But the median market rent for a room with shared facilities is £70 a week more at £750pcm.
Before 2011, 50pc of private rented properties in Hackney were affordable to households relying on housing benefit.
But by April 2016, following reductions and freezes in local housing allowance rates, that figure had fallen to 3pc – and the situation is now even worse after further welfare reforms like the benefit cap.
“The scale of the shortfalls severely affects the council’s ability to prevent evictions, as landlords can receive significantly more by renting on the open market,” writes Tom Thorn in a briefing for the town hall’s “living in Hackney” scrutiny commission, which met on October 16.
“For an unemployed single individual with a total income of £72.10 a week from jobseeker’s allowance, these shortfalls are increasingly unsustainable.”
Benefits have failed to keep pace with bills, Mr Thorn says, meaning more households on lower incomes losing private accommodation to rent hikes as landlords can ask, and get, more cash from young professionals.
“Terminations of assured shorthold tenancies are now the greatest cause of new homelessness cases in Hackney and England.”
It is feared the rollout of universal credit could make matters worse. The policy combines living and housing costs into a single payment paid directly to claimants. Recipients currently face a built-in wait of six weeks for their first payment, which has caused up to 85pc of tenants in pilot areas to fall into rent arrears.
“Universal Credit additionally reduces the ability of local authorities to further prevent homelessness by guaranteeing rent payments to landlords,” added Mr Thorn, “as it not administered by council but by the DWP.”
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