Almost 60,000 London renters could be pushed into homelessness by 2030 if the Government does not increase housing support, according to a new analysis.
The warning comes after figures last week showed that rough sleeping in the capital is the highest it’s been since records began, with more than 4,000 people recorded on the streets by outreach teams in three months.
London Councils, a cross-party group which advocates for the capital’s borough authorities, warned that one in seven of the city’s renters are currently reliant on local housing allowance (LHA) to meet their housing costs.
The organisation has commissioned independent research from Alma Economics, which estimates that an additional 16,500 to 22,000 London households will become homeless by 2030 unless LHA is raised. London Councils calculates that 22,000 households equates to 58,740 people – including 28,000 children.
LHA is paid out to people on low incomes, either in the form of housing benefit or as the housing element of universal credit - but rates have been frozen since 2020, with the value based on the 30th percentile of rents in September 2019.
The payments are not intended to cover all rents in all areas, but rather to provide help towards covering some housing costs. As housing costs have sharply risen over recent years however, the frozen level of support has become increasingly inadequate.
Darren Rodwell, London Councils’ executive member for housing, said: "Raising LHA is vital for getting a grip on the homelessness crisis.
“London’s homelessness pressures are already enormous and unsustainable… The situation is increasingly unmanageable and requires urgent Government action. We cannot continue in this disastrous direction.”
Mr Rodwell, who is also leader of Barking and Dagenham Council and Labour’s parliamentary candidate for Barking, added: “Just as the Government boosted LHA during the Covid-19 pandemic to prevent a wave of mass homelessness, we need a similar emergency response to the situation today.
“An increase in LHA will help low-income households pay their rents and avoid homelessness, which can be so devastating to families and bring massive costs to local services.”
A spokesman for the Government did not directly respond to London Councils’ request for LHA rates to be unfrozen, but did say: "We’re helping to ease the pressure of rising rents, investing over £30 billion on housing support this year on top of record financial support worth around £3,300 per household.
"We’ve also maintained our £1billion boost to Local Housing Allowance while our Discretionary Housing Payments (DHPs) provide a safety net for anyone struggling."
The “£1bn boost” mentioned by the spokesman refers to the last time LHA was increased, back in 2020.
DHPs are an additional form of support which people can apply for, but London Councils has warned that London’s allocation of DHP money “has historically not been sufficient to meet demand in the capital”.
Similar requests for LHA rates to be unfrozen have been made in recent weeks by London's deputy mayor for housing, Tom Copley, and by Sem Moema, a Labour member of the London Assembly.
Alma Economics’ research also suggests that restoring LHA to cover at least 30 per cent of local market rents would save the public finances in London more than £100m each year. Most of these savings would come from reduced pressure on London boroughs’ homelessness services, but also from lower costs to other parts of the public sector such as the NHS and social care.
According to City Hall’s latest data, outreach teams recorded 4,068 people sleeping rough in London between July and September - a 12 per cent increase on the same period last year. Of that number, more than half - 2,086 people - were sleeping rough for the first time.
The 4,068 people recorded is the highest quarterly rough sleeping count in London since records began.
London accounts for more than half (57 per cent) of England’s total number of homeless households in temporary accommodation. London Councils’ most recent figures show that almost 170,000 Londoners are currently homeless and living in temporary accommodation arranged by their local council – equivalent to around one in 50 Londoners overall and one in 23 children in the capital.
The capital's boroughs warn that they are set to overspend their homelessness budgets by £90m this year.
The short supply of properties in London's private rented sector has also contributed to the crisis. Separate research commissioned by London Councils and partners, published in July, revealed a 41 per cent drop in private rental listings in the capital since 2020, with a corresponding 20 pet cent increase in listed rental prices.
Only 2.3 per cent of London listings on Rightmove in 2022-23 were found to be affordable to those using the benefit to pay their rent – falling from 18.9 per cent in 2020-21.
