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18 August 2016

Want a quick fix to homelessness? Reform private renting

Low-paid, working families are the hidden victims of homelessness. 

By Julia Rampen

The Hudson family lived in the same house on the outskirts of London for 13 years, which they rented privately from the supermarket Tesco. The rent increased, but only gradually. Then, one day, they received the letter that would change their lives drastically. Tesco was selling off its assets, including their home. 

The family – a single, working mother and two daughters – tried to find a new home. But rents in the neighbourhood had risen dramatically. Suddenly, they no longer had a roof over their heads.

This is the story of homelessness in the 21st century. A report from the Communities and Government select committee found a that a major cause of the increase in homelessness is simply a rental contract coming to the end. As it noted: “Once an Assured Shorthold Tenancy  has ended, tenants are often unable to find anywhere that they can afford.”

Not so long ago, low-paid families aspired to one day buy their own home and put down roots. Now they are haunted by homelessness. In 2005, about the time the Hudson family moved into their home, just 13 per cent of households accepted by local authorities as homeless had become so due to a contract ending. In 2015, that figure had risen to 30 per cent. “In many areas of the country, rents are increasing far faster than tenants’ ability to pay,” the report found. 

The problem is exacerbated by welfare reforms. Payments may be cut, but the rent still rises. While the Government used to pay housing benefit direct to private landlords, it is trying to leave this responsibility up to the tenant. But fears of unpaid rent mean landlords are now shunning such would-be renters.

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If we are not panicking about this homelessness epidemic, it is probably because it is still mainly invisible. Those tenants unable to afford another rented property don’t hunker down on the street with a sleeping bag. They sleep on sofas, travel from one night shelter to another, or ride the night bus until dawn breaks.

And in the morning, the kids go to school. Shelter spoke to teachers in London schools, who said that while only five or 10 years ago, they knew which children were experiencing homelessness, it was now impossible to predict.

As Kate Webb told the committee: “It is people with stable but low-paid jobs, and they are now in the situation where they cannot assume that the children they are teaching have a bed to sleep in. That has become commonplace.”

When it comes to the housing crisis, the Government has kept its focus relentlessly on the sunny uplands of buying your own affordable “starter” home, where affordable means up to £250,000, or £450,000 in London. As this report underlines, this approach is deeply out of touch. Home ownership rates have been falling – in London, where the Hudsons live, just one in three own their own home. While there is room to help first-time buyers, the reality is that Generation Rent is going to keep its name for many years to come. 

More social housing needs to be built, but given the sluggish rate at which private homes are built, this could take years. In the meantime, the Government could reform the private renting sector, and borrow some proposals from a long-forgotten Labour leader. 

Ed Miliband’s was widely reported as demanding “rent controls”. In fact, he proposed a fairly modest arrangement where families could agree a cap on rent hikes in the duration of a three-year tenancy (most rental contracts today are only six months or a year). 

He also proposed banning letting agent fees, which are often arbitrary and can erode tenants’ deposits by hundreds of thousands of pounds. In Scotland, these fees are already banned. 

Finally, the Government could allow more working tenants to request that housing benefit is paid directly to landlords. Fine words about “responsibility” mean little to a family turned away from every landlord they approach.

Reforming the private rental sector alone won’t eliminate homelessness. But it could mean more kids coming to school after a night in their own bed, not a stranger’s sofa. And that would be a start.