LHA in 2013/14 – the final straw for the benefit claimant and homelessness through the roof!

The coalition released the official LHA rates to be paid from April 2013 last week and I didn’t pay any attention to them like it seems everyone else.  What they show below has not been released anywhere else or at least has gone uncommented.  Yet the actual figures present a massive and inevitable increase to homelessness and a massive additional cost to every local authority.  Is this Localism in action?

LHA is going up by 2.2% we were told and after 2012/13 when it has been frozen it attracted little if any attention.  Yet the official figures show the actual increase is 0.59% and not 2.2% and in some areas it is being cut by over 7%!!

The tables show 2012/13 LHA, the 30th percentile, a further table showing what a 2.2% increase would be (why if this is not being implemented?) and then the final table showing the actual rates to be paid in 2013/14.  The table appended here shows the actual percentage changes

Now imagine private landlord’s inevitable reaction to a 7% reduction in LHA in fact to any reduction in LHA payable and especially on top of a freeze last year. It means only one thing….that PRS landlords will flee the benefit claimant in their droves and huge demands placed upon local authority homeless departments.

In short the new LHA rates will DIRECTLY create a huge increase in homelessness.

Further to this given the figures in the table and you can predict with some degree of accuracy where it will impact.  Mid and West Dorset for example will have a major homeless increase given the 7.3% cut to the shared accommodation rate.  Is this area well provisioned with single homeless hostels or will it lead to a huge surge in rough sleeping there?

How about Central Norfolk and Norwich with a 6.47% cut to the 4 bed rate?  Has Norwich got a surfeit of larger sized social housing and a surfeit of homeless families units or should I be buying shared in the local B&Bs there?  How much extra will this cost Norwich City and neighbouring councils in added homelessness costs?

What about Liverpool my home city?

SAR           1 bed          2 bed        3 bed          4 bed

Greater   Liverpool

-0.90%

-1.26%

0.00%

0.00%

-2.64%

As you can see it’s at best another year’s freeze for 2 and 3 bed properties and the shared accommodation rate, 1 bed rate and the 4 bed rate all reduce.  Liverpool is far from unique in how it is being treated and many areas will have no increase and/or cuts such as those high rent areas such as Bradford and Bolton and Stoke and Hull (eh?)

How about North Nottingham with a 7.69% decrease in the 1 bed rate? 

I don’t happen to know if this area has a higher than average bedroom tax problem, you know the one that nationally sees 180,000 single people occupying 2 bed properties yet only 64,000 1 bed properties being let each year and why tenants cant downsize and will accept the bedroom tax!  They can’t even move to 1 bed private renting given this dramatic cut in LHA can they?  Would that be the same Nottingham that has massively reduced its single hostel provision?  Oh yes it is so that’s a huge increase in cost in Nottingham to the councils there isn’t it? Maybe I should be buying up B&B’s there…then again I’m spoilt for choice in that regard as B&B hotels used for homelessness will rapidly become THE growth industry in England next year!

I could make comment on the 7.14% reduction to the shared accommodation rate in Swindon and comment on London both Inner and Outer is largely unaffected and will largely have 2.2% increases.

Overall and across all rental sizes LHA will increase by 0.59% in 2013/14 and private landlords will flee the benefit claimant market in their droves…and let’s be honest who could blame them?  Not only will benefit claimants welfare benefits only increase by 1% their LHA income with fall in real terms too meaning a huge double whammy for anyone on welfare benefits and renting in the private sector…yes that’s the same sector that has seen a 59% increase in LHA claimants in the last 4 years!!

In summary, it is clear the coalition has no comprehension of the impacts this cut will have.  And it is a cut, a real term cut with 0.59% increase in benefit set against a CPI of 2.2% – Yes the same CPI figure this coalition have lied about in their spin on these figures.

Time to restate some official data.

That last point and research unfortunately was published during the Christmas week and shouldn’t be overlooked.  In fact that figure of just 1.5% being available will seem like nostalgic whimsy this time next year!

How many NIMBYesque single homeless hostels will close and have been closing over the last few years with the SP cuts.  Anyone see the need for Derby City Council to revise their proposed 83% cut there given the huge increased demand this LHA change will have and how much more it will cost them?

Is the coalition’s estimate of an additional £400m per year HB cost to local authorities that is not paid back by central government enough? (Missed by any in the Autumn Statement but here is the detail.)  Clearly not and this will increase massively.  Yet again we see the Coalition claims over welfare reforms costing more and not saving a penny…and still Joe Public naively believing they will save money!!!!  (If ever a line of argument for the opposition was presented to it on a golden platter….!)

What about all those private leasing schemes that LAs and some SP providers have with private landlords?  Are such contracts to be affected?  Undoubtedly they will be and PRS landlords will become even more reluctant to develop or continue with such schemes.

Don’t be fooled by two year real terms reductions in LHA as being regulation for the PRS however.  It is only the benefit that is being regulated not the rent and last year average PRS rents rose 3% – that’s 36% above inflation of 2.2% and 114% higher than wage inflation of 1.4% despite a freeze in LHA payment.  All this does is widen the £76pw average make-up a private tenant pays to meet the rent over what they get in LHA.  Something has got to give and it will give…the increased use of the S21 Notice to benefit claimants and homelessness will rocket.

Just to hammer home that point imagine you are a PRS landlord with 3 bed properties in Rotherham.  Rotherham is a low PRS rent area and LHA and gross market rents are broadly aligned and means PRS landlords can still trade in the market and know that LHA payments are closer to 100% of the rent and not the 60% national average (£106 of £182pw is 58.24%).  Yet you will see that the LHA your benefit claiming family will reduce, a figure that has been frozen for the last 12 months anyhow, will fall a further 3.34% in 2013/14.  That family’s risk to arrears has just increased significantly and given the overall benefit cap, given the council tax cut and other ‘welfare reforms’ due in this year means that family is not going to be able to afford the rent as it is let alone if it increases, which of course the landlord wants and can do.  The PRS landlord will have to spend so much more time keeping a careful eye on that rent account – another cost – of he or she will simply evict and get a non benefit-claiming tenant.  That is a no brainer.

That’s another family made homeless and the most secure PRS renting family too yet it still will happen.  It may be slightly slower than the 1 bed PRS family in Nottingham but it will happen and happen this year.  We will see a fall in S21 Notices between now and April 2013 as LHA payments will in many areas be higher in real and actual terms, but come April we are going to see a hell of a lot of homeless officers in local authorities going off with stress due to the massive increase in their workload!  Maybe I should get a few shares in recruitment agencies too as their profits will also increase massively as local authorities pay out more too.

Full table below with percentage changes in LHA for 2013/14.                       

Room

1 bed

2 bed

3 bed

4 bed

Ashford

2.21%

2.20%

0.00%

2.20%

0.00%

Aylesbury

0.00%

0.00%

0.00%

0.00%

0.00%

Barnsley

1.33%

0.00%

0.00%

-1.98%

-0.83%

Barrow-in-Furness

0.06%

0.00%

1.56%

0.28%

0.84%

Basingstoke

2.20%

2.20%

0.72%

2.20%

0.00%

Bath

2.20%

1.82%

2.20%

-0.63%

-1.59%

Bedford

0.00%

-1.16%

0.00%

2.20%

-3.63%

Birmingham

2.20%

0.00%

2.20%

0.00%

2.20%

Black   Country

0.00%

0.00%

2.20%

2.20%

0.00%

Blackwater   Valley

1.92%

0.84%

0.00%

0.00%

0.00%

Bolton   and Bury

-2.49%

0.00%

0.00%

0.00%

-3.70%

Bournemouth

-1.22%

0.00%

0.00%

1.25%

0.00%

Bradford   & South Dales

-0.07%

0.00%

0.00%

0.00%

-4.55%

Brighton   and Hove

2.19%

0.00%

2.20%

0.00%

0.00%

Bristol

2.20%

0.20%

0.00%

0.00%

2.20%

Bury   St Edmunds

-1.13%

2.20%

2.20%

2.20%

0.00%

Cambridge

2.20%

0.00%

2.20%

2.20%

0.56%

Canterbury

2.19%

2.20%

2.20%

2.20%

2.20%

Central   Greater Manchester

0.59%

2.20%

1.02%

0.00%

2.20%

Central   Lancs

2.20%

1.33%

-1.04%

0.00%

0.00%

Central   London

2.20%

2.20%

2.20%

2.20%

2.20%

Central   Norfolk & Norwich

0.00%

-1.26%

-1.00%

0.00%

-6.47%

Chelmsford

2.21%

0.00%

1.56%

2.20%

0.00%

Cheltenham

0.00%

0.00%

2.20%

2.20%

2.20%

Cherwell   Valley

0.00%

2.20%

0.00%

0.65%

0.00%

Chesterfield

0.00%

0.00%

0.00%

2.20%

0.00%

Chichester

2.20%

-0.87%

0.00%

0.00%

-4.17%

Chilterns

2.21%

0.00%

0.00%

-1.51%

0.00%

Colchester

0.00%

2.20%

2.20%

0.72%

2.20%

Coventry

2.21%

0.00%

2.20%

0.00%

0.00%

Crawley   & Reigate

0.00%

0.00%

2.20%

2.20%

2.20%

Darlington

2.20%

1.53%

0.00%

0.00%

0.00%

Derby

1.82%

-1.37%

0.00%

0.00%

0.00%

Doncaster

0.00%

0.00%

0.00%

0.00%

2.20%

Dover-Shepway

1.33%

0.00%

0.00%

2.20%

2.20%

Durham

0.00%

0.00%

-1.31%

0.00%

0.84%

East   Cheshire

0.28%

1.13%

2.20%

2.20%

0.00%

East   Lancs

0.00%

1.49%

0.00%

0.00%

0.00%

East   Thames Valley

2.20%

0.00%

0.00%

2.20%

2.20%

Eastbourne

-1.49%

0.00%

0.00%

-1.27%

2.20%

Eastern   Staffordshire

1.33%

1.42%

0.00%

0.00%

2.20%

Exeter

-3.61%

0.00%

0.00%

0.00%

0.00%

Fylde   Coast

2.21%

-1.61%

0.00%

-0.12%

-2.64%

Gloucester

2.20%

0.00%

0.00%

0.00%

0.00%

Grantham   & Newark

2.20%

2.20%

1.20%

0.00%

0.00%

Greater   Liverpool

-0.90%

-1.26%

0.00%

0.00%

-2.64%

Grimsby

0.00%

0.00%

2.20%

2.20%

-2.37%

Guildford

0.10%

1.40%

2.20%

2.17%

0.00%

Halifax

1.95%

0.00%

0.00%

0.00%

0.00%

Harlow   & Stortford

0.00%

0.00%

0.72%

0.00%

0.42%

Harrogate

0.00%

0.00%

1.71%

2.20%

2.20%

Herefordshire

-0.90%

1.27%

2.00%

0.00%

2.20%

High   Weald

-0.95%

1.77%

0.67%

2.20%

2.20%

Hull   & East Riding

2.20%

0.00%

-1.34%

-1.10%

-2.56%

Huntingdon

0.00%

0.00%

0.91%

0.00%

2.20%

Inner   East London

2.20%

2.08%

2.20%

2.20%

2.20%

Inner   North London

2.20%

2.20%

2.20%

2.20%

2.20%

Inner   South East London

1.69%

2.20%

2.20%

1.92%

2.20%

Inner   South West London

2.20%

2.20%

2.20%

2.20%

2.20%

Inner   West London

2.20%

2.20%

1.72%

2.20%

2.20%

Ipswich

-1.27%

-1.20%

0.00%

0.00%

2.20%

Isle   of Wight

0.00%

1.27%

0.00%

0.00%

2.20%

Kendal

-1.57%

-3.14%

0.00%

0.00%

0.00%

Kernow   West

-0.35%

0.00%

2.20%

0.00%

0.00%

Kings   Lynn

2.20%

-1.28%

0.35%

0.00%

2.20%

Kirklees

0.00%

0.00%

0.00%

0.00%

2.20%

Lancaster

2.19%

0.00%

0.00%

2.20%

0.00%

Leeds

0.00%

-0.93%

-1.30%

0.00%

-0.08%

Leicester

0.85%

2.20%

0.00%

0.00%

0.00%

Lincoln

2.19%

0.00%

-1.15%

0.00%

-1.15%

Lincolnshire   Fens

2.20%

1.81%

2.20%

0.00%

0.00%

Lowestoft   & Great Yarmouth

0.74%

0.00%

0.00%

1.01%

2.20%

Luton

-1.32%

0.00%

2.20%

0.00%

2.20%

Maidstone

0.00%

0.00%

0.00%

2.20%

0.00%

Medway   & Swale

0.00%

2.20%

2.20%

0.00%

2.20%

Mendip

0.06%

0.00%

-3.67%

0.00%

2.20%

Mid   & East Devon

1.84%

0.00%

2.20%

0.00%

-1.20%

Mid   & West Dorset

-7.30%

-0.14%

-0.09%

0.00%

-1.74%

Mid   Staffs

0.00%

0.00%

0.00%

0.00%

0.00%

Milton   Keynes

0.00%

0.00%

0.00%

0.00%

0.00%

Newbury

-2.69%

0.00%

2.20%

0.63%

0.46%

North   Cheshire

0.00%

1.27%

2.20%

0.00%

0.00%

North   Cornwall & Devon Borders

1.91%

0.00%

2.00%

0.00%

2.20%

North   Cumbria

2.19%

0.00%

0.00%

1.04%

0.00%

North   Devon

0.00%

1.95%

1.01%

0.00%

-0.72%

North   Nottingham

2.21%

-7.69%

0.00%

0.00%

0.00%

North   West Kent

-4.06%

1.91%

0.00%

2.20%

0.50%

North   West London

0.00%

2.20%

2.20%

0.00%

0.00%

Northampton

2.20%

0.00%

2.20%

0.84%

0.00%

Northants   Central

0.00%

0.00%

0.00%

0.00%

0.00%

Northumberland

0.00%

-0.42%

-1.31%

0.00%

0.00%

Nottingham

0.00%

2.19%

2.20%

2.20%

2.20%

Oldham   & Rochdale

0.07%

0.00%

0.00%

0.00%

0.00%

Outer   East London

2.19%

1.81%

2.20%

2.20%

2.20%

Outer   North East London

2.20%

2.20%

2.20%

0.00%

2.20%

Outer   North London

2.20%

0.00%

2.20%

0.00%

0.21%

Outer   South East London

2.20%

2.20%

2.20%

0.00%

2.20%

Outer   South London

0.00%

2.20%

2.20%

1.67%

2.20%

Outer   South West London

-2.81%

2.20%

2.20%

0.00%

-1.96%

Outer   West London

1.44%

0.00%

2.20%

2.20%

2.20%

Oxford

2.20%

0.00%

2.20%

0.00%

1.56%

Peaks   & Dales

0.00%

2.20%

-2.06%

0.00%

2.20%

Peterborough

1.63%

0.00%

1.02%

2.20%

2.20%

Plymouth

0.72%

0.00%

0.00%

0.00%

0.00%

Portsmouth

2.20%

0.00%

2.20%

2.20%

2.20%

Reading

0.00%

0.77%

0.63%

1.67%

0.00%

Richmond   & Hambleton

0.00%

0.00%

2.20%

0.00%

-0.72%

Rotherham

0.00%

1.96%

0.00%

-3.34%

0.00%

Rugby   & East

-3.15%

0.00%

0.00%

1.77%

0.00%

Salisbury

-2.38%

2.20%

2.20%

0.00%

-0.50%

Scarborough

2.21%

0.63%

0.00%

-2.15%

0.00%

Scunthorpe

-2.73%

0.00%

1.27%

0.00%

2.20%

Sheffield

2.20%

0.00%

-1.08%

0.67%

0.00%

Shropshire

0.00%

0.00%

2.15%

0.00%

0.00%

Solihull

0.00%

0.51%

2.20%

2.20%

2.20%

South   Cheshire

1.92%

0.00%

2.20%

0.00%

0.00%

South   Devon

-2.31%

0.00%

0.00%

0.00%

2.08%

South   East Herts

2.19%

0.78%

2.20%

0.00%

-0.16%

South   West Essex

-2.93%

0.00%

1.48%

0.00%

0.00%

South   West Herts

0.00%

2.20%

2.20%

2.20%

2.20%

Southampton

0.00%

0.00%

2.20%

1.93%

-4.76%

Southend

1.69%

0.00%

2.20%

0.63%

0.00%

Southern   Greater Manchester

1.95%

2.20%

0.00%

2.20%

0.00%

Southport

0.00%

2.20%

0.00%

0.84%

0.00%

St   Helens

0.00%

0.00%

0.00%

2.06%

0.00%

Staffordshire   North

2.21%

1.48%

0.00%

0.00%

0.00%

Stevenage   & North Herts

0.00%

0.00%

1.54%

2.20%

0.00%

Sunderland

0.00%

1.33%

0.08%

0.00%

0.00%

Sussex   East

2.20%

1.27%

2.20%

-0.58%

0.00%

Swindon

-7.14%

2.20%

2.20%

-3.70%

0.00%

Tameside   & Glossop

0.00%

0.00%

0.00%

1.54%

2.20%

Taunton   & West Somerset

0.00%

2.20%

0.00%

0.00%

0.00%

Teesside

2.20%

0.00%

1.20%

0.00%

0.00%

Thanet

0.00%

0.00%

0.00%

2.20%

2.20%

Tyneside

0.00%

0.00%

-1.67%

0.50%

0.00%

Wakefield

-1.33%

-2.60%

0.00%

0.00%

-4.13%

Walton

0.00%

2.20%

2.20%

2.20%

2.20%

Warwickshire   South

2.20%

2.20%

2.20%

0.00%

2.20%

West   Cheshire

0.00%

-3.41%

0.00%

-0.67%

2.20%

West   Cumbria

0.06%

0.69%

0.00%

0.00%

2.20%

West   Pennine

2.19%

2.20%

0.00%

2.20%

0.67%

West   Wiltshire

2.20%

0.00%

1.91%

0.00%

2.20%

Weston-S-Mare

-2.25%

1.20%

0.00%

0.00%

0.63%

Wigan

2.20%

0.00%

2.20%

0.00%

0.00%

Winchester

0.29%

0.80%

-2.51%

0.00%

2.20%

Wirral

2.20%

0.00%

0.00%

-0.72%

2.20%

Wolds   and Coast

2.21%

0.00%

0.00%

2.20%

0.96%

Worcester   North

0.00%

0.00%

1.01%

0.00%

0.00%

Worcester   South

2.20%

0.00%

0.00%

0.00%

0.00%

Worthing

0.00%

2.00%

0.00%

0.00%

2.20%

Yeovil

0.00%

0.00%

0.00%

0.00%

1.82%

York

1.18%

2.20%

0.00%

0.84%

0.00%

Overall Increase Avg.

0.53%

0.54%

0.80%

0.60%

0.50%

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