Warning of homes crisis over private rent rates
Experts blame government failure to unfreeze key benefit
HOUSING experts have warned of an increase in homelessness in Scotland as a government failure to unfreeze a key benefit has made the majority of private sector rent unaffordable for the least well-off.
New research commissioned by professional standards body the Chartered Institute of Housing (CIH) has found just one in 12 of new private rental properties were at rents that would be covered by local housing allowance rates.
They say that means 92% of the private rented sector (PRS) in Scotland was unaffordable for people claiming benefits.
It comes as it has been revealed that Scots housing minister Paul Mclennan and the wellbeing spokesperson for the Convention of Scottish Local Authorities, Maureen Chalmers, have written jointly to the UK work and pensions secretary
Mel Stride, urging him to increase the Local Housing Allowance (LHA), saying a three-year freeze was increasing the risk of homelessness. They have told him that rates no longer provide “genuine support” to those who need it most.
Housing campaigners have called for a formal Scotland-wide declaration of a housing and homelessness emergency.
The CIH has said that the LHA is supposed to support private tenants by covering rent for the cheapest 30% of properties in an area, but the current rates fail to do this.
It says that while rents have soared in recent years, local housing allowance rates, which determine housing benefit levels, have been frozen since 2020, leaving a “huge gap” in support for private tenants.
It comes as private rents faced by Scots have hit new record levels, despite a bill freeze brought in by the Scottish Government to support people through the cost of living crisis.
Annual rent rises from private landlords have leapt by 5.7% in the year to July, according to official estimates. Two years ago, the rise was just 1.3%.
Data from lettings agency Citylets revealed that for those Scots seeking new lets, the market rent rise is even more significant at 11.4%.
Details of the rent hikes have come despite the then First Minister Nicola Sturgeon announcing a rent freeze in September last year to beat the cost of living crisis.
It was replaced by a 3% rent cap for private tenancies only in April, which was to remain in place until September 30 this year.
A further six-month extension was agreed by ministers, meaning landlords with properties within Scotland will continue to face restrictions to rent rises until March 2024.
The rent cap freeze and cap does not, however, apply to new tenancies.
The new study found that Aberdeen and Aberdeenshire had
the largest percentage of “affordable” properties at 19.7% but that was still significantly below the 30% level.
But at the other end of the spectrum was West Dunbartonshire, where there were no properties available at or below the LHA rate.
The study found that the average rent gap in the amount covered by LHA was £108.10 per month for a two-bedroomed house.
The smallest difference of £6.64 per month was found in Aberdeen and Aberdeenshire. In Greater Glasgow, the shortfall was £201.78 per month.
The Cih-fronted analysis highlights concerns that the gap between LHA rates and actual rents “increases the risk of homelessness as families struggle to juggle increasing costs”.
It concluded that the private rented sector “is now largely unaffordable to new entrants or those seeking to move within the sector who are in receipt of LHA”.
It estimates that to ensure that local housing allowance covers the cheapest 30% of properties would cost around £98m in Scotland.
They say that the cost could be covered by the UK Government or a “top up” by the Scottish Government.
The Scottish Tenants’ Organisation said the analysis was “devastating” and called for the Scottish Government to declare a housing and homelessness emergency as a priority.
A spokesman said: “We need to have a massive investment now to build tens of thousands of social rented homes and retrofitting some of the estimated 43,000 empty homes in Scotland through the Scottish Government re-calibrating the £3.5 billion already allocated for building affordable homes by 2032 by front loading much of this money now to deal with the housing and homeless emergency in Scotland.”
“Only by tackling this emergency now can we stop the unravelling housing disaster in Scotland.”
Meanwhile, the number of open homelessness applications in Scotland has soared by over 27% since before the pandemic.
In September 2019, there were 22,783 open applications with local authorities across Scotland. Three years later there were 28,944.
The analysis, carried out in association with the UK Collaborative Centre for Housing Evidence, also said consideration should be given to scrapping shared accommodation rate (SAR) which limits single people under the age of 35 to a room in a shared home, rather than a one bedroom home should be scrapped, saying it is “unfair and impractical, and consideration should be given to scrapping it.
Gavin Smith, CIH Scotland chairman said: “The PRS is a vital part of our housing system and can play a greater role in preventing and responding to homelessness in Scotland. We cannot ignore the link between affordable housing supply, the rising number of people in temporary accommodation and the emergence of Scottish councils having to declare housing emergencies.
“The PRS plays a vital role, but must be affordable and as this research shows freezing LHA rates has had a devastating impact on its affordability for those that need it the most. All UK governments must urgently unfreeze LHA rates.”
A DWP spokesman said: “We’re helping to ease the pressure of rising rents, investing over £30bn on housing support this year on top of record financial support worth around £3,300 per household.
“We’ve also maintained our £1billion boost to Local Housing Allowance and our Discretionary Housing payments provide a safety net for anyone struggling. We have given an extra £82 million to help people in Scotland.”
The spokesman added that discretionary housing payments have been “fully devolved to Scotland who are responsible for the allocation and payment to Scottish local authorities”.