9 May 2011

I have explored in the post LHA recipients in Cornwall lose out the changes in the June 2010 Tory Libdem budget to the local housing allowance (LHA), the housing benefit for tenants in the private sector.

As part of those changes from October this year the percentile of local rents used to set LHA rates will be the 30th rather than the 50th as at present. Using local rents in the private sector to set rent support in the local housing benefit for private tenants means that the benefit received is linked to the rent to be paid. The Welfare Reform bill changes this by restricting the uprating of LHA rates from 2013/14 to increases in the Consumer Price Index (CPI). Over the last decade private rents have increased more than CPI inflation has. Thus from 2013/14 people will each year probably receive less of their housing costs and will eventually be unable to afford the rent.

Research for Shelter suggests that these changes will probably reduce the numbers of suitable affordable houses available for renting with local housing benefit.

Research also suggests that most of Cornwall will become unaffordable by 2019 to those seeking private rented accommodation with local housing benefit (download all data, the data for local authorities).

The areas where rents are increasing more slowly tend to be areas of more unemployment. Will people be forced from their homes in the unaffordable areas like Cornwall and migrate to more affordable areas where work is scarce?

Is this a sensible policy?

Is there any chance our Libdem Cornwall MPs will say it isn’t?

For informed and considered views about housing see the blog of Alex Marsh, professor of public policy at Bristol University. His post Taxpayers and ‘the right to the city’: alternative narratives on cuts to housing benefit of 25 April 2011 looks inter alia at the Tory Libdem government’s LHA policy.