The escalating homelessness crisis in the UK, exacerbated by a housing shortage and rising living costs, is forcing families into dire situations. The freezing of the Local Housing Allowance in 2016, intended to aid low-income households in the private rental sector, has further strained the situation. A recent study discovered that just 5 percent of private rents advertised in early 2023 could be covered by the LHA. Cities like Manchester have been hit hard, with soaring rents outpacing LHA rates, leading to a severe family homelessness crisis. Rent increases and landlord sales have triggered a 500 percent year-on-year rise in homelessness in the city.
The UK’s housing affordability issue clashes with increasing demand, rising living expenses, and the tighter financial situations faced by landlords. Rent prices in the country have reached their highest point since the Office for National Statistics began tracking them in 2016. This surge follows years of limited house construction and a rising demand for housing. Consequently, areas that previously had a less pronounced homelessness problem are now grappling with a significant increase in people without housing.
Historically, Oldham has been a reasonably affordable place to rent, but it now faces nearly twice the national average in homelessness rates. Between January and April, there was an 80 percent year-on-year increase in homelessness in Oldham, along with a similar rise in the number of children residing in emergency housing.
The latest government statistics on homelessness underscore the escalating crisis, highlighting the growing number of individuals directly impacted by this issue. The most recent government homelessness statistics reveal a notable increase in the severe aspects of the crisis. In the first three months of this year, there was a 10 percent year-on-year rise in the number of children living in temporary housing. Experts point to the fundamental issue of housing scarcity in the UK as the root cause of this crisis.
The shortage of available rental properties has worsened due to the difficulties faced by landlords, who have been grappling with rising interest rates and increased mortgage expenses over the past year. These factors have made investments in buy-to-let properties less appealing.
A report from real estate consultancy Savills earlier this year highlighted that investors in the private rental sector experienced their lowest net profits since 2007, primarily due to the combination of rising interest rates and changes in taxation. Beadle noted that an increasing number of landlords now find themselves in a challenging financial predicament.
According to experts, the decision to freeze the Local Housing Allowance in 2016, which is meant to supplement the rents of low-income households in the private rental sector, has worsened the problem. An analysis conducted by the Institute for Fiscal Studies think-tank, using data from the online estate agency Zoopla, revealed that in the first quarter of 2023, only 5 percent of privately advertised rents across the UK could be covered by the LHA.
In Manchester, the high demand for housing has led to rents surpassing the LHA rates, resulting in a significant and ongoing crisis of family homelessness. The median rent for a three-bedroom house in the city increased by 13 percent between 2022 and 2023, as reported by the ONS. Consequently, homelessness due to rent increases or landlord property sales saw a staggering 500 percent year-on-year rise in the first quarter of this year.
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