Welfare or Work? Low-Income Working Households' Housing Consumption in the Private Rented Sector in England

Abstract

This paper is concerned with issues of equity and efficiency in the Housing Benefit (HB) system in the private rented sector (PRS) in England. Using information from a survey of low- income working households (LIWH) and in-depth interviews with LIWH families, it addresses two policy-relevant questions. First, there are mixed findings on whether the current HB system enables HB recipients to consume more housing than is available to otherwise similar non-HB-recipient households in the PRS. HB rules on eligible property size appear not to unduly favour HB claimants compared with LIWH. LIWH, however, tend to pay a rent which is less than the maximum amount an HB recipient could receive. This is particularly true for LIWH families with children who are most likely to be living in properties smaller than allowed by HB regulations. Second, there is no evidence that the HB system incentivises LIWH to give up work or otherwise seek to become eligible for HB.