Kicking the habit: how can councils reduce their reliance on temporary accommodation?
Chair: Modester Anucha, Corporate Director for Housing Strategy & Options, Waltham Forest Council
Claire Harding, Research Director, Centre for London
Abigail Davies, Director, Housing Consultancy, Savills
Deven Ghelani, Director, Policy in Practice
Temporary accommodation is bad for families and cost the taxpayer £1bn in London alone last year. Yet thousands of families remain stuck in TA for months or even years. Claire Harding shares the findings of her research on temporary accommodation, while Deven Ghelani shows the impact of benefit capping on families. Abigail Davis explains that rising rents are making it hard for councils trying to find homes in the private rented sector.
Claire Harding on why temporary accommodation is a peculiarly London problem
There is no question that homelessness in temporary accommodation is indeed one of London’s biggest challenges.
We know that homelessness is a national problem. People become homeless everywhere in England and to a greater or lesser extent everywhere in the world.
And poverty exists everywhere in the world. But the number of households in temporary accommodation is a London problem – 62% of all households in temporary accommodation in England are in London, which is vastly out of proportion to London’s population.
The rates of people in statutory homelessness tend to be higher in cities and urban areas than in rural areas. There is more pressure on accommodation in these places. We know also that vulnerable people often end up in cities for a range of complex reasons.
We have a nasty problem where taxpayers are getting a bad deal because most of the homelessness budget is being spent on temporary accommodation, and a lot is in London.
It’s not very good for families either. So nobody is benefiting except for private landlords, which is interesting in policy terms and challenging to solve.
Temporary accommodation is not inevitable
The high number of households in temporary accommodation is not inevitable. Over the last 20 years or so, the number of households in temporary accommodation went up and then it went down and then it went up again. That’s partly because of concerted policy efforts to make them go down.
They were targets to move households out of temporary accommodation. It was also a time when net social housing completions added more social homes than the right to buy took away.
The situation in London is changing quite quickly. The number of children in temporary accommodation in London is approximately equivalent to the number of children in Brent, which I find a terrifying statistic.
The cost of living crisis is likely to show in the next round of data. That is beginning to put more pressure on the system and drive temporary accommodation up again. Longer term, I think what will happen next is much less certain.
Abigail Davies shows why availability and affordability are such a problem for low-income families
I am going to talk about supply and demand for homes; benefit cuts to households, and then look at future policy directions.
RICS data over the last two years shows the gap between the supply of rental accommodation and demand. In the first part of the pandemic, there was more supply than demand. But that changed very quickly.
The flight from London was short-lived. People returned and expressed their demand to live in the capital very strongly. However, a lot of landlords decided to withdraw from the sector.
The house purchase market was pretty hot, so some landlords got out. So supply is not what it was, but demand is greater. If you break that down to the borough level, all areas have seen a decline in the number of rental properties available. But the difference between the boroughs is also quite stark.
Clearly, there are real pressures around the family size provision. We’ve modelled some hypothetical households by looking at the number of bedrooms and whether they are affected by the two-child cap.
Massive decline in supply
We’ve assumed that they keep the allowances within universal credit for their living costs, and therefore their rental spend is depressed. If we compare the first quarter of 2021 to a year later, there has been a massive decline in the number of properties available to those households.
The price point availability shows that massive change in a market that was already difficult.
As we see the size of households getting bigger and the available budget becoming more restricted, there is a negligible proportion of listings available.
That’s not news to anyone dealing with benefit cuts to households but it got worse in the last year. Households relying on the local housing allowance to pay their rent find it very difficult in most of London. The number of properties is very, very small.
Looking at the Rental Reform Act, the minister was quite clear this morning that he isn’t expecting to see any change in the local housing allowance. I think we will see there will be a lot of policy pressure exerted on the government in the coming months around that. There’s a lot of work going on around rental reform.
Landlords in the lower end of the market
Will landlords leave the market because of the changes in the policy environment? If we look back to 2004, when another big raft of changes came in with licensing and the health and safety rating system there was a lot of churn in the sector. A change in policy often makes people either stop completely or change how they participate in a sector.
That does not necessarily mean that the number of landlords went down. We’ve seen the private rented sector grow over that time. But we need to think about how landlords will behave and how local authorities and others encourage their participation in this lower and more affordable end of the sector.
Why would landlords agree to participate in a market where local housing allowance is frozen, and the rent people can afford to pay is not increasing?
Not everybody is necessarily looking to benefit from rental growth. Savills is predicting quite chunky rental growth over the next five years in London. Landlords might be more interested in capital growth, which could be about 5% over the next couple of years.
Let’s see if engagement with the people affected and the provision of information secures some opportunities or at least some control over how we can work together.
Deven Ghelani shows that if you are benefit capped, there may be no rented properties available in London
Policy in Practice works with council administrative data to identify households that are struggling so support can be targeted.
Temporary accommodation damages the educational and health outcomes of young children having to move multiple times. Our research looked at benefit-capped households and private rents. So what does the benefit cap do to the affordability of housing and is that driving the growth in temporary accommodation?
Finding accommodation within the local housing allowance is a significant challenge at the best of times. If you are benefit capped, the local housing allowance rates may be unaffordable. The number of affordable homes for families with two children in London is zero, and the proportion of Britain that is affordable for lone parents with more than two children is also zero.
If you keep the cap fixed, then temporary accommodation continues to grow with increased costs for local authorities and worse outcomes for children and families. We did the modelling if the benefit cap levels attracted median earnings and much more of Britain becomes affordable, although some parts of London are still unaffordable.
But you can see how much more of the UK and London becomes more affordable if the benefit gap levels had tracked median earnings much better.
Uprate the cap
So the policy ask is to uprate the benefit cap levels if you don’t want to drive growth in temporary accommodation.
If you move into work, you escape the cap and you are also better off than you are now. So try and create the incentive or motivation, then support people to take action to avoid the cap.
Another practical step you can take is to identify additional support people might be eligible for. So applying letting people know that they might be eligible for discretionary housing payments, letting people know about low cost.
If you apply for a DHP, you are quite likely to get it. We did some analysis with local authorities on using their benefit administration data to find those most in need. So if you’re in arrears; if you are facing a monthly cash shortfall, or if there’s a gap between your housing support and your rent, you may be eligible. But how many people apply?
We asked the audience to vote on the most important take aways from the session via Slido. Here are the results.