The Homelessness Reduction Act 2017 (and LHA Rates)

I recently attended an evening talk at Doughty Street Chambers (https://www.doughtystreet.co.uk/) on the Homelessness Reduction Act 2017. It was a very useful talk given by some very experienced barristers.

The Doughty Street team began by explaining that the purpose of the Homelessness Reduction Act was, in part at least, to save the Government money. It increased early-intervention duties for local authorities so that people threatened with homelessness would be assisted in order that they do not actually become homeless, and so not need emergency temporary accommodation from the council. Temporary accommodation is the most expensive type of accommodation which the government funds. The idea is that earlier intervention equals lower demand for temporary accommodation equals a saving in the budget. Before people are made homeless, councils are under new duties to assess them and provide them with a Personalised Housing Plan alongside prevention and relief duties for 56 days each. The Government has provided £20 million over three years for these additional duties, but the savings envisioned in respect of the need for temporary accommodation are not materialising and homelessness funding is now facing a £110 million shortfall in London, and this is expected to increase to a £420 million shortfall over the next 5 years. Nationally, the figures I have gathered online suggest shortfalls of £1 billion and £8 billion respectively.

One problem with homelessness alleviation and the homelessness budget – which is not aided by the 2017 Act – is the lack of housing stock and the consequences of this. The lack of housing stock has logistical as well as financial consequences. Where a duty to house is made out, local authorities must sometimes turn to private landlords to take homeless applicants off their hands, for a fee. The amount that local authorities pay private landlords in Housing Benefit is set at Local Housing Allowance (LHA) rates which are decided by the Valuation Office Agency. LHA rates were frozen in April 2015 and will not rise until at least March 2020. Currently, LHA rates in Wandsworth – the borough in which I work – are set at up to £320.74 per week for a two bedroom property depending on the area of the borough and the size of your household. This is £1,282.96 for four weeks. A full break down of rates in that particular borough can be found here: https://www.wandsworth.gov.uk/info/10112/local_housing_allowance/976/local_housing_allowance.

This rate is not enough to incentivise landlords who are typically reluctant to accept Housing Benefit tenants. Local authorities are therefore being forced to pay private landlords a sweetener of as much as £8,700 to take homelessness applicants off their hands. Apparently, London authorities spend about £14 million on these sweeteners every year.

The Homelessness Reduction Act 2017 is a very positive step in attempts to alleviate homelessness. However, the black hole of funding, the housing shortage, and the amount of work that councils face means that they are only managing to fire-fight and must expend some parts of their budget incentivising landlords rather than targeting that money on their new early intervention duties.

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