Housing benefit caps to welfare payments that came into force this week will make 810,000 private rented homes unaffordable for tenants on housing benefit, it has been claimed.
Already, one local council in London has announced that it is planning how to help private tenants move out, if they can no longer afford to rent in the borough.
Research by the Chartered Institute of Housing for the Guardian newspaper has analysed the impact of caps to Local Housing Allowance, which is paid to housing benefit tenants in private rental accommodation.
It claims that 720,000 private rental homes in England will become unaffordable to housing benefit tenants, 60,000 in Scotland and 30,000 in Wales.
Tenants in London and the South-East will be hit hardest. A quarter of a million homes will become unaffordable in the region, says the CIH.
The new LHA caps restrict the maximum LHA payable to between £250 and £400 a week, depending on the number of bedrooms, with a top limit of four bedrooms.
The research also looked at the impact of setting LHA rates according to the lowest 30th percentile of local rents rather than the median 50%, which will be introduced from April. Effectively, this will mean that only one-third of private rental accommodation in any area will be available for LHA tenants.
Together, says the CIH research, the changes will mean there will be more families claiming benefit than available homes in some areas.
Private landlords have been under pressure to reduce their rents to the level of the new caps, in some cases in return for receiving LHA direct. For tenants whose landlords have decided against cutting rents, they have the choice – if they can afford it – of footing the difference themselves, or moving elsewhere to cheaper accommodation.
Grainia Long, interim chief executive of CIH, warned: “Welfare reforms will see for the first time more people chasing homes than the market currently provides.
“The only feasible option for many families who want to stay in their communities will be to borrow more or to spend less on essential items such as food.
“This could mean that more than 1.3 million private tenants face the New Year with dread, confronted with an uncomfortable prospect of homelessness or debt.
“Low income families could move to more affordable areas, creating benefit ghettoes and resulting in increased social disorder and a breakdown in community cohesion.”
Separately, Harrow Council is considering a housing report following months of consultation, including how to help residents move out of the area if they cannot afford local housing.
Portfolio holder for housing, Cllr Bob Currie, said: “We will be faced with residents who simply cannot afford to live in Harrow after all of the Government welfare benefit caps are enforced.
“We are planning now with our residents, tenants and leaseholders so that we are able to continue to protect and support our most vulnerable into the future.”