London facing homelessness spike due to cost-of-living crisis

London could see a dramatic rise in homelessness, as inflation and a lack of affordable housing has left thousands of households in the capital struggling to cope.

Analysis by cross-party group London Councils has revealed how approximately 125,000 low-income households are at a higher risk of homelessness as their benefit payments are no longer enough to cover rent.

A shortage of affordable housing is also adding fuel to the fire, as average rents have risen by 15.8% since last year over to June 2022 and are now higher than pre-pandemic levels.

This partly due to a fall in housing supply across London, with the number of properties listed for rent falling by 35% in the first quarter of 2022 compared to pre-covid averages.

The organisation is calling for the government to increase Local Housing Allowance (LHA) to cover at least 30% of local market rents to help recipients of housing benefit and Universal Credit to cover costs.

Cllr Darren Rodwell, London Councils’ Executive Member for Regeneration, Housing & Planning, said: ‘The combination of rising rents and the worsening cost-of-living crisis means many tens of thousands of Londoners are at real risk of homelessness in the coming months.

‘Just as the government boosted LHA to help households avoid homelessness during the pandemic, it’s vital that LHA is restored once again to cover at least 30% of market rents. Increasing LHA would bring much-needed relief to Londoners struggling with housing costs.

‘Without urgent action, we’re worried we’ll see growing numbers of low-income households unable to afford their rent and becoming homeless. The consequence for those Londoners could be devastating. We’re keen to work with ministers on this important issue, as tackling homelessness is a priority for us all.’

According to London Councils, just over 423,000 Londoners receive LHA, but as of 2021/22 only 8.8% of properties in the city were affordable for benefit claimants, down from 12.9% in 2020/21.

The situation is even worse for households affected by the Benefit Cap, as just 0.8% of properties were within budget for a capped single parent household with two children under four.

Due to a chronic shortage of social housing, many benefit claimants in London rely on privately rented properties, but with a four-year freeze placed on LHA rates in 2016 this has severely restricted what’s available.

London has some of the highest rates of homelessness in the UK, accounting for two-thirds of England’s homelessness total and with 150,000 believed to be living in temporary accommodation.

Photo by Jon Tyson