A further 800,000 homes will be put out of reach of people on housing benefit because of government welfare cuts – leaving low income families the choice of cutting spending on food to pay the rent or moving out, according to a study by housing experts.
The Chartered Institute of Housing has found there will be thousands more claimants than properties that are affordable on benefits alone, raising the possibility that the poor will migrate to "benefit ghettoes" in seaside towns or the north of England.
From this month, the government has capped housing benefit payments to, for example, a maximum £250 a week on a two-bedroom home. The cut is compounded by the allowances being scaled back by pegging them to the bottom third of rents in any borough.
The result is that in many towns and cities there will not be enough affordable homes to rent for those claiming local housing allowance, the benefit paid to tenants of private landlords. The problem is most acute in central London, where in two of the country's richest boroughs – Westminster, and Kensington and Chelsea – more than 35,000 homes will at a stroke be put out of reach of people on housing benefit.
It is unlikely that the poor will be able migrate to cheaper parts of the capital: in Newham, east London, there will be twice as many claimants as there are low-cost homes. In Croydon, 17,000 people will be chasing 10,000 properties.
The effect will be felt not just in south-east England. Before today, Birmingham had more than 37,000 homes with rents affordable on welfare. Now 34,500 housing benefit claimants will be chasing 23,000 low-cost houses, according to the analysis, carried out for the Guardian. On the Mersey, 21,000 people collecting local housing allowance will only be able to afford 12,000 homes in Liverpool.
Because welfare is set at Westminster, the cuts will also be felt in Scotland. In Glasgow there will be a thousand more benefit recipients than there are properties which can be rented with the government's reduced housing subsidy.
Grainia Long, the interim chief executive of the institute, said the welfare changes will "see for the first time more people chasing homes than the market currently provides".
"The only option to stay might be to borrow more or simply stop buying essential items such as food," she said. "This will mean that more than 1.3 million private tenants face the new year with dread – facing an uncomfortable prospect of homelessness or debt."
While the government says the average loss in benefits is £12 a week, the analysts say that is equivalent to 18% of unemployment benefits. This average also masks regional variations: the rent subsidy for a three-bedroom property in Bath drops by £26 a week; in Derby, the cut is half that.
Long said the poor, especially in south-east England, could end up in "benefit ghettoes", sinks of social unrest in the most affluent part of the country. "The whole of the south-east is a sea of high rents punctuated only by a few small isolated low-cost islands … mainly old seaside towns such as Margate and Hastings where the once buoyant tourist trade has long since declined. But if claimants migrate to areas like these then this will create benefit ghettoes … the result is likely to be increased social problems and a breakdown in community cohesion."
Even where there are enough low-rent properties for the poor, benefit claimants face competition from others looking to live cheaply. This problem is acute in university towns and cities. Nottingham, Newcastle and Leeds all appear to have equal numbers of cheap rental properties and welfare recipients, but the poor compete with large numbers of students.
The changes will also see people forced to move from where jobs are to where there are far fewer, the institute warns. "The analysis shows that big cities where we expect to find most of the jobs and the most varied employment are the worst hit by the government changes. If this (is supposed) to help people in terms of getting them into work then it looks as if it will not succeed."
Charities said the analysis vindicated their warnings that the government's plan will cause homelessness. Leslie Morphy of the charity Crisis said: "The figures make clear that there will just not be enough properties anywhere that are affordable on these reduced benefit levels. With unemployment rising and more people relying on housing benefit, yet soaring demand for properties, the government's plans just don't add up – we urge them to stop and reconsider."
Labour says it supports the principle of the benefit cap but added: "The government has got to get the detail right otherwise it will simply clobber the poorest and put families on the street".
Liam Bryne, the shadow welfare and pensions secretary, said there was evidence the benefits cap had been "so badly thought through it could actually end up costing more by pushing up the costs of homelessness … it's time to go back to the drawing board."
The Department for Work and Pensions said housing benefit was unfair because some families on benefits had been able to live in homes that most working families not on benefits could not afford.
The department said: "Early indications are that people are not moving out of cities in their droves to cheaper rural areas. For the vast majority of areas except the most expensive parts of inner and central London, at least 30% of all private rental properties will be affordable. Our measures will place a lid on spiralling rents and local authorities will continue to work with tenants and landlords to negotiate down rents, which will in turn help to keep properties within reach."
Comments
1 January 2012 7:39PM
Watch out, a recipe for civil unrest on an unprecedented scale.
So far no one has rioted for food or shelter here, but this year that could change.
I hope the police realise whose side they are on and refrain from using those baton rounds.... and live rounds... that the Bullingdon Buffoons want them to use to keep the oils down.
Its dangerously close to a nightmare.
1 January 2012 7:41PM
The simple fact is people should not be living in houses they couldn't afford to buy at the expense of the taxpayer,they should move to cheaper accommodation and not expect the rest of us to pay through the nose in taxes to subsidise them.
1 January 2012 7:42PM
The market is the dogma of class war. The rich don't want to look out the window on the people they are slowly allowing to starve.
Welcome to your ghettos, like in the 80s Liverpool and most of the North East will be allowed to go all Blade Runner (managed decline).
Maybe the music will be good; certainly the riots will be spectacular.
1 January 2012 7:44PM
The tories, and Labour to an extent, seem to believe that landlords will lower the rents if they slash housing benefits.
Walk down any high street and see the empty shops that have been vacant for years now and see that landlords never lower the rental costs.
The only way out of this is to band houses and flats in a similar way to council tax. Then the government sets the amount of rent for each band.
If the landlords don't like it, let them sell the properties off.
1 January 2012 7:45PM
Madness and stupidity
1 January 2012 7:45PM
Cap excessive rents.
And before the "It's the work shy, lazy benefit scroungers to blame" brigade migrate over from looking down blouses and up skirts at the DM, I will point out that you can get HB as a low paid hard working person too.
It's terrifying, it really is.
1 January 2012 7:46PM
Thousands of flats will become more affordable to ordinary people as rents that have been pushed up by government subsidies become cheaper to rent to the great chagrin of the guardian reading champagne socialists with their buy to let properties.
Many people who don't receive housing benefit have to move because the area they would really like to live in is too expensive I don't see why housing benefit claimants should be a special case.
1 January 2012 7:46PM
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1 January 2012 7:47PM
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1 January 2012 7:47PM
And the only way that will happen is if we increase social housing,
and, judging by most of your blinkered comments on this site, that
is something you will disagree with.
1 January 2012 7:47PM
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1 January 2012 7:48PM
There should be rent controls brought in.
1 January 2012 7:49PM
So you don`t mind paying ten times as much to a B&B owner?
1 January 2012 7:50PM
Put a cap on the amount a landlord can charge for renting property ,reintroduce registered rents ,it`s the landlords that are pushig up housing benefit rates .
Selling off public housing and the buy to rent racket is the root cause .If a government canot look after ALL its citizens just what is it for ?
1 January 2012 7:50PM
God....where to start.
1 January 2012 7:50PM
99.9 % of people of housing benefit aren't living in nice areas.
Private landlords charge through the roof for sub standard housing. The only cheap way of renting is through councils or housing associations.
These landlords usually vote tory and are in no way socialist.
Engage brain next time.
1 January 2012 7:51PM
@patcarter
Even the conservatives understand they're following policies that will inevitable cause riots, thats why they're preparing laws and policing to deal with it. They're willing to accept civil disorder to push through their ideology.
1 January 2012 7:51PM
Is there such pent up demand for rental properties that any properties unaffordable even with the support of housing benefit of £12000 per annum will be filled without dropping thir rent? Unlikely.
Still the headline 'if all else remains equal, housing benefit cuts will put 800,000 homes out of reach, according to study' isn't quite as exciting, huh...
1 January 2012 7:51PM
Plenty of cheap housing up North in such salubrious places as Scunthorpe,Rotherham,Doncaster,Hull,etc,etc.
1 January 2012 7:52PM
Actually, people shouldn't be buying up houses and renting them out at astronomical prices, then expecting the government to pay their Buy To Let mortgage for them.
£250 a week rent for a two bedroom house? The landlord must be laughing all the way to the bank.
Bring back rent controls.
1 January 2012 7:52PM
Reading Boy: Who is going to clean your streets? Who will look after the old..? Not the people who can't afford to live in your RICH Ghetto...simple right..?
1 January 2012 7:53PM
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1 January 2012 7:53PM
The cost of accommodation has to come down in this country. Benefits have to be managed down as they create an artificial base to rental prices. Minimising the human cost is important but the bigger picture here is about removing the Government-backed crutches that keep housing unaffordable for everyone.
1 January 2012 7:54PM
Which they would probably do, the amount of property available for let will drop and you will be back whingeing that the greedy Tories are making people homeless
1 January 2012 7:54PM
This isn't really news and if the site were working I could link to the impact assessment highlights I posted before.
Housing benefits are NOT an out of work benefit and the majority who receive it are low paid workers and pensioners.
Housing is devolved and in Scotland a much higher proportion of the population live in social housing than elsewhere in the UK which is why Holyrood is in dispute with Westminster over this, and many other, Tory attacks on the welfare state.
Historic day as MSPs unite to reject Con-Dem benefit reforms in Scotland
Not a surprsie from the party that brought ATOS into the benefits system.
1 January 2012 7:54PM
It is absolutely outrageous to cut housing benefit. I had heard this was happening and I felt physically ill for the people who depend on this. I am raging about the housing problems in the UK. It is the first day of a new year and I find this matter so sad.
Regards comment above by Readingboy: how very sad you make me.
What on earth do we do to stop this??? Please let us all reflect.
1 January 2012 7:55PM
This is the wealthy declaring war on the poor - there can be no other way of viewing it. Those who were just hanging on to the edge are having an unelected rich insurance backed mafia stomping all over their fingers and seeing them over ..
There are people out here going to have no choice but to get the gloves on - simple as that. Mad Max is about to move into urban ghettoes. Every box that can be ticked ...going up in the crime department is going to go exponential.
They used to say you may as well be hung for a sheep as a lamb - but while the poor sods at the bottom are going to be left to rot - where are the trials for the gangsters who are the authors of all this misery? Why are they not being extradited out of Grand Cayman and the Bahamas etc? Why are they not being made to repay their 'bonuses'?
1 January 2012 7:55PM
The problem with the UK housing is it is at least about 40% OVERPRICED. It is no wonder a study by Manchester Uni and an article in the Guardian was conclussive on where between 2000 - 2008 where 60% of the loans Banks gave out went - into mortgages (artificial price hike). It is the stocks in the hands of mortgage lenders that still help keep the inflated prices up.
My opinion is 2012 could bring some rationality into it as those with spare cash, who see property as a milking Cow will get to some senses and let the property market come to rational pricing. It just does not make sense a match box one bedroom in London on offer for an arm and a leg.
1 January 2012 7:55PM
The only cheap rents are available in crap sink towns where there are no jobs. Vicious circle or what?
1 January 2012 7:55PM
Employers will have to pay a wage that will enable their workers to live in the area. I suppose you think that it is bad thing that your domestic servants accommodation won't be as heavily subsidised by the state.
1 January 2012 7:56PM
Your ignorance shows no limits, it matters not if its the cheapest area in the country
claimants will still only get 30% of the market rent in that area.
1 January 2012 7:56PM
Not beyond the wit of Readingboy to make a limited number of rented homes available for those doing those jobs. Servant's quarters in the attic used to be standard .......
1 January 2012 7:57PM
Those properties that landlords have would dramatically drop in price, so people who want to buy but are having to rent at the moment, will be able to afford a house.
They then free up rental properties for other people to rent.
You would have to be an idiot to not be able to follow the logic.
Are you?
1 January 2012 7:59PM
These rants are really getting beyond parody.
1 January 2012 7:59PM
Readingboy - speak for yourself. I have paid tax for about 45 years sometimes at the higher rate. In my adult life I have never had to draw on a benefit but I am perfectly happy that my taxes go towards subsidising housing for people who are not so lucky. You may not want to pay 'through the nose' or even from your pocket but I and many like me are happy for taxes to go towards housing in this way. Rather spend on housing children than on weapons.
1 January 2012 7:59PM
Sigh..more Daily Hate reading bilious nonsense, are you in the Tories social cleansing mobile unit? Plenty of folk rent property they couldn't afford to buy..Duke and Duchess of Cambridge? But unlike those scroungers the folk who clean offices in the City, sweep the streets, drive the buses/trains are unlikely to inherit millions or be able to afford the 350k average price of a London home. So where would you have them commute in from on a daily basis to do the work you probably think you're above due to an accident of birth, Wales?
1 January 2012 8:00PM
Until landlords and rents are justifiably regulated then this spiral will continue. I cannot believe that anyone defends this - seeing families turfed out onto the street because of greedy landlords.
1 January 2012 8:00PM
About time there were cuts to housing benefits. I am by no means poor and our family of three lives in a 3 bed in London for 330 pounds a month. It is only fair that the state does not allow benfit seekers to live in more expensive properties than what working people can afford. You guardianistas should ignore your special interests as public sector workers and grow up!
1 January 2012 8:00PM
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1 January 2012 8:01PM
This is a the tories wet dream,cleansing wealthy areas of poor people,shoving the poor into ghettos, stick the low life where they deserve to be,yes its certainly a tory fantasy coming true.
1 January 2012 8:01PM
So what are these people doing to get themselves off welfare and begin contributing to society?
1 January 2012 8:01PM
That may happen. However it depends on how the figures pan out, and it depends on the sorts of properties.
1 January 2012 8:02PM
Simply, How much is your rent ? I bet it's not £ 250.
1 January 2012 8:02PM
'guardian reading champagne socialists'
Brilliant, its been years since I saw anybody use that particular Bloody Stupid Cliche
1 January 2012 8:02PM
Yes, outs a good start although your typing leaves a bit to be desired.
It is grossly unfair to subsidies the non-working to a greater extent than those who are working.
So lets move someone working who is in a smaller house into the house occupied by the non-wrking, in the form of a house swap.
That would be fair wouldn't it ?
1 January 2012 8:03PM
Oh god, another Tories will eat your babies rant.
OK, you want the poorest to live rent free in Mayfair - can you tell us how you are going to fund that?
1 January 2012 8:03PM
I am a charity worker for a well known organisation. I had a client recently who came to see me about a breakup of his marriage and the loss of his job (as a web designer). Part of the many changes this young man had to make was a move out of London back to his home town in the North of England. When I asked him where he was going to live he told me that this was not a problem as he had a Council house that he had been sub-letting for the past 18 months.
Not everything is as simple as the headline would suggest!
1 January 2012 8:04PM
Where have you been then, it seems to me to appear hourly
1 January 2012 8:04PM
Can you think of a better way?
Self regulation never works.
The landlords have to be forced into change.
1 January 2012 8:04PM
So why are you so anxious to see more tax payers money be siphoned to these people through housing benefit. Rental prices depend on supply and demand and it is the housing benefit that have pushed up both rents and house prices in many areas.
I would be more than happy if the government imposed a 1% tax on the value of a property which wasn't the primary residence of the owner who was a UK citizen domiciled in the UK for tax purposes payable by the owner of course. I have little sympathy for the effect this may have on buy to let landlords given how they have benefitted from low interest rates.