The effect of local housing allowance reductions on overcrowding in the private rented sector in England

Amy Clair

doi:10.1080/19491247.2021.1964253

Abstract

Ensuring housing affordability while controlling government expenditure is a concern in many countries. In the UK support for private renters is delivered via an income-related housing benefit calculated using the Local Housing Allowance. As part of a programme to reduce government spending the support provided by the Local Housing Allowance was significantly reduced in 2011, and ongoing changes to its uprating have further reduced its value. These changes have raised concerns about the suitability of homes people receiving the allowance can afford. Using a natural experiment approach by applying matching and difference-in-difference methods to housing stock data from the English Housing Survey, this research finds a statistically significant 5% increase in overcrowding for housing benefit recipients following the changes to the Local Housing Allowance, equivalent to approximately 75,000 additional households living in overcrowded conditions. Longer-term results show that overcrowding continued to increase as changes to the uprating system further reduced the value of housing benefit. The decision to reduce the Local Housing Allowance and sever its relationship with actual rents has therefore reduced the ability of recipients to access suitable housing which will have had important implications for health and well-being, particularly during the COVID-19 pandemic.

Highlights

The Private Rented Sector (PRS) in England has expanded significantly in recent decades
Using a natural experiment approach by applying matching and difference-in-difference methods to housing stock data from the English Housing Survey, this research finds a statistically significant 5% increase in overcrowding for housing benefit recipients following the changes to the Local Housing Allowance, equivalent to approximately 75,000 additional households living in overcrowded conditions
When explored in terms of housing benefit (HB) receipt, those receiving HB saw a sharp increase in overcrowding in the survey year after the Local Housing Allowance (LHA) change, a trend which continued into 2016 (Table 2), while overcrowding decreased for those not in receipt of HB

Summary

Introduction

The Private Rented Sector (PRS) in England has expanded significantly in recent decades. Rather than reflecting increased popularity of private renting, the expansion of the PRS is due to the growing difficulty in accessing owneroccupation or social housing, affecting young people from lower income backgrounds (Bailey, 2020; McKee et al, 2017). There are concerns about the suitability of the PRS to this expanded role, and the consequences for ‘Generation Rent’: young people who are having to spend long periods of their lives in the PRS or parental/family home with consequences for transitions to adulthood, their ability to ‘settle-down’ and make a home (Hoolachan et al, 2017). Concerns about the increase in the PRS and Generation Rent are by no means unique to England or the UK, they can be found in many ‘homeowner societies’ with highly financialised housing systems (Byrne, 2020)

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Conclusion