Homelessness and the Private Rented Sector

by Nov 21, 2018Occasional reports, Reports, Welfare Reform & Homelessness

Homelessness has a devastating effect on those who experience it and is costly to the public purse. Homelessness acceptances have been increasing since 2009, with the most significant growth being from the private rented sector. The number of such households has grown in absolute terms – from 4580 acceptances in 2009 to 16,320 acceptances in 2017, and as a proportion of all acceptances, from eleven percent to twenty eight percent (MHCLG, 2018).  Yet, while there has been some excellent research published recently about particular aspects of this growth, there remain a number of gaps in our understanding. Knowing what is driving recent increases in homelessness from the private rented sector is key to understanding what policy and other changes are necessary to address this problem.

The research reported here was commissioned by the Residential Landlords’ Association, and undertaken by Dr Chris O’Leary, Dr Susan O’Shea, and Professor Kevin Albertson from the Policy Evaluation and Research Unit at Manchester Metropolitan University. The research was conducted between June 2017 and July 2018, and involved a rapid review of the existing literature, research and data; interviews with sixteen key stakeholders representing landlords, policy makers, and homeless charities; a survey of around 1850 landlords; and, a Delphi survey of key stakeholders.

The research found that security of tenure is not a cause of increasing homelessness from the private rented sector. Most tenancies are ended by tenants rather than landlords. Where landlords ended tenancies under ‘no fault’ routes, rent arrears was the most common reason cited by landlords for terminations. This suggests that ‘no fault’ terminations is a misleading name and changes to the minimum length of tenancies or to s21 terminations are unlikely to reduce homelessness.

Rather, it is the introduction in 2008 of the Local Housing Allowance (LHA) as a means of calculating Housing Benefit payments, and subsequent changes to LHA rates, that is driving the increase in homelessness from the private rented sector. The LHA is a ‘double whammy’ for some households – increasing the likelihood that their tenancy will be ended by their landlord, and making it difficult for them to find alternative, affordable accommodation. The gap between Local Housing Allowance rates and market rents is significant, and is growing. Landlords who currently rent to Housing Benefit tenants are concerned about the effects of planned tax and benefit changes, and are looking to move out of this sector. Of particular concerns is the roll out of Universal Credit, both because of payment frequency and direct payment arrangements, but also because of the delays being experienced in dealing with claims.

These benefit changes do not account for all of the increase in homelessness from the private rented sector seen in the last decade; affordability, competition for accommodation, changes in and lack of access to social housing, and wider policy changes are disproportionately affecting the lower end of the market in some parts of the country.

Finally, this research found that much policy and wider debate about the private rented sector is London-centric. There is no single private rented sector, nor will a one-size-fits-all policy response work. In particular, some local authorities could do more to work actively and positively with their local private rented sector, and more support is needed to households who are placed in the private rented sector by local authorities discharging their homelessness duties.

The authors recommend:

  • the Local Housing Allowance is driving homelessness from the private rented sector. Government should undertake a fundamental review of the design and operation of the Local Housing Allowance;
  • local authorities should consider the role played by the private rented sector in their areas, particularly in terms of low-income households. They should develop strategies for actively and positively engaging with private landlords, using their enforcement and grant making powers to encourage supply at LHA rates;
  • local authorities should review their ‘help to rent’ services, assessing whether these need to be targeted and personalized to the needs of individual tenants. Local authorities without ‘help to rent’ services should consider whether and how they might implement such help;
  • there needs to be more research on the potential impact of the proposed three-year tenancies, taking account of regional and tenant sub-market differences within the private rented sector. Local authorities (particularly in Housing Benefit dominated areas) should consider undertaking such research in their local housing markets; and
  • more research is undertaken on how and why landlords use s21 notices, and on the implications of restricting ‘no fault’ terminations.