For those who need it most, the private rented sector is increasingly out of reach

Dr Kesia Reeve, Principal Research Fellow

19.07.2016

Mark became homeless a year ago when his landlord required his flat back. As a single person without ‘priority need’ his local council had no duty to house him so advised him to look to the private rented sector and provided him with a list of letting agents. However, not one single agent on that list was willing to rent to people claiming Housing Benefit (HB). Mark has a job – he is a nighttime cleaner – but his wage is low and so he still qualifies for some HB.

He eventually found one agent ‘specialising’ in letting to tenants supported by benefits but the few properties they had on offer were unfit for habitation, including flats with no heating or hot water.

Sharon and Michael, meanwhile, did find landlords willing to rent to them but only if they could find significant ‘upfront’ fees of thousands of pounds. Michael could find nowhere at all to rent within the ‘shared accommodation rate’ that applied to him as a single person under the age of 35 on Local Housing Allowance – Housing Benefit for people in the private rented sector (LHA)

Mark, Sharon and Michael were all interviewed for Crisis research study we have been conducting for Crisis exploring homeless people’s experiences of private renting. Their stories expose the way in which the combined effect of policy changes in the social and private housing markets – alongside wider tenure restructuring and market change – have left many homeless people unable to resolve their housing problems.

With owner occupation out of reach, long waiting lists for social housing, and many single homeless people not qualifying for assistance, the private rented sector has long been the most viable option for many. This has intensified in the past 15 years, with the erosion of the twin pillars of owner-occupation and social housing.

The introduction of ‘affordable rents’, greater powers for local authorities to discharge their homelessness duty into the private rented sector, the extension of the Right to Buy policy, and the raft of welfare measures have all had an impact on the  private rented sector. As a result homeless people have been hit homeless people with a double whammy: Increasingly restricted access to other tenures at the same time as policy changes make it more difficult to find affordable accessible private rented housing.

We also surveyed over 900 private landlords across England and Scotland. The results were concerning, showing that although the private rented sector has expanded significantly in recent years, access to the sector remains severely restricted for homeless people.

80 per cent of landlords said they were unwilling to rent to homeless people (and 61 per cent were unwilling to let to benefit claimants). A proportion of these would only do so through a private sector leasing arrangement, leaving just
14 per cent with property available to homeless people on the open market.

It was also clear that recent Government policy has compounded the situation:

• Around half of the landlords surveyed reported that changes in LHA rates and the four year freeze on HB had made them less willing to rent to homeless people and/or benefit claimants
• Nearly half of those unwilling to rent to HB claimants said 
the reduction in LHA rates was deterring them from doing so
• Around two thirds of landlords reported that direct payment of HB to the tenant was making them less willing to rent to benefit claimants and/or to homeless people and recent taxation changes and increased regulation (such as immigration checks) also affected landlord willingness to rent to HB claimants and to homeless people.

These changes have increased the risk landlords associate with renting to benefit claimants and homeless people. They acknowledged putting in place ‘additional safeguards’ when renting to benefit claimants and to homeless people, effectively imposing a premium on these prospective tenants – a premium that only succeeds in putting a private rented tenancy even further from reach. For example, when renting to homeless people:

• 16 per cent of landlords reported increasing the deposit
• 12 per cent said they increased the advance rent
• 15 per cent increased the contractual rent
• A sizeable proportion also said they made more extensive use of guarantors (32 per cent) and references (31 per cent).

The interaction of these factors means that people in housing need increasingly dependent on the PRS may face a housing future marked by persistent homelessness.