The Homelessness Monitor England 2015
Sheila Camp LGiU associate | 21 May 2015
The Homelessness Monitor is a five year study funded by Crisis and the Joseph Rowntree Foundation; it was commissioned to provide an independent analysis of the homelessness implications of recent economic and policy developments in England, focussing on the effects of the recession and subsequent housing market downturn, together with recent social policy changes.
The Year 4 report monitors the impact on homelessness of the economic downturn and the effects of welfare and housing reform, analysing key trends since 2011. It identifies key emerging trends, such as the implications of the benefits cap and the increasing use by local councils of informal methods of assisting homeless households, meaning many homeless households do not show up on the statutory returns.
This briefing will be of particular interest to members and officers with responsibility for housing, welfare benefits and finance and of general interest to other elected members who are concerned about homelessness and the local authority’s ability to alleviate it.
Briefing in full
The Homelessness Monitor is a five year study providing an independent analysis of the impact on homelessness of recent economic and policy developments in England and the rest of the UK. The current report is the fourth annual report for England and indicates how homelessness stands in 2015, or as close to 2015 as data allows. In addition to examining the consequences of the post-2007 economic and housing market recession and subsequent recovery, it looks at the impact of the government’s social policy changes currently being implemented. Published in February 2015, it was not in a position to speculate on the implications of the recent general election result for households dependent on welfare benefits.
The researchers have adopted a wide definition of homelessness to include rough sleepers; single homeless people in hostels and shelters; statutory homeless households; and hidden homeless households such as people severely overcrowded, “sofa surfers” and squatters.
To inform the report, the researchers have reviewed relevant literature; carried out (annual) interviews with key informants from the statutory and voluntary sectors; undertaken statistical analysis of social, economic and homelessness trends; and, new for this year, undertaken an online survey of all English local authorities.
Theoretical, historical and international perspectives indicate there is no single trigger which leads to homelessness; rather, it is a combination of individual vulnerabilities combined with structural factors, such as labour market change. However, the key informants have consistently argued that policy changes – particularly housing and welfare reform – have a greater impact than the overall economic context.
Economic factors that may impact on homelessness in England
The overall context
The post-2007 recession produced the longest economic downturn in the past 10 years; GDP has now recovered to pre-recession levels but, when population growth is taken into account, GDP per capita remains below 2007 levels. Although unemployment continues to fall, earnings in real terms remain below 2008 levels.
Although the housing market has started to recover from its post-recession slump, UK house prices outside London remained well below 2007 levels in mid 2014. This is despite the record low interest rates since 2007 and the (limited) government assistance for first time buyers. Thus, the housing bubble which some feared has not materialised outside the capital. And lending institutions continue to exercise extreme caution in mortgage advances, which obviously affects new entrants to home ownership.
Of more fundamental concern is the shortfall in new housing supply in both the social and private sectors relative to real or potential levels of household formation; this increases the numbers of overcrowded or “sharing” households, particularly in London, where overcrowding is more severe.
One major growth area is the private rented sector (PRS), which is now larger than its social sector counterpart. Very little of the increase is attributable to new stock, the majority being previously owner occupied homes; Buy to Let mortgages typically only require the mortgagee to cover interest payments, whilst owner occupier mortgages require capital repayment too. The growing PRS numbers mean welfare reforms affecting tenants take on extra significance; this is considered in a later section.
Homelessness implications of the economic and housing market context
In contrast to the last major recession of 1990, which reduced statutory homelessness through easier access to owner occupation, thus freeing up social and private lettings, no such benign influence has been detected post-2007. In fact, social lettings to new tenants are well below levels in the 1990s.
On the positive side, evictions for mortgage and rent arrears so far remain a very small proportion (2%) of reasons for statutory homelessness. This may change when and if interest rates rise and mortgage lenders adopt a more aggressive stance on arrears, particularly in places where the sales market is recovering.
Research evidence suggested that, even if possessions for mortgage arrears do increase, the effect on homeless numbers will be marginal as most households from this sector find their own solutions, usually in the PRS.
In the rented sector, rent arrears and evictions fell during the recent recession, so implications for homelessness do not appear to be tied to the overall economic context; of far greater concern is the long term implications of welfare reform discussed below.
Coalition government policies potentially impacting on homelessness in England
Housing, homelessness and “localism”
The report authors have argued in previous Monitors that the Localism Act 2011 has undermined the national context of housing support for disadvantaged households by enabling local authorities to move to fixed term “flexible” tenancies and to introduce restrictions on joining the housing waiting list. Those restrictions identified included not fulfilling minimum residence qualifications (ranging from 2 to 5 years), a history of anti social behaviour, rent or council tax arrears, and a failure to engage in “work related” activities. Though the Localism Act retained the requirement to give “reasonable preference” to certain priority groups including statutory homeless households, it took a recent Court of Appeal ruling to establish that they could not be excluded through lack of residency.
In the housing association sector, landlords are increasingly urged to charge “affordable” rents of up to 80% of market rents, which are not in fact affordable to many low income households in high rent areas. It has also brought associations into conflict with some local councils who seek to set rent limits below the 80% maximum for associations operating in their areas. These social landlords make the counter argument that, to compensate for grant reductions, they are forced to put up rents if they are to continue developing new homes. Allied to this, the researchers were told, is associations’ tightening of nomination criteria – some are reluctant to take anyone with previous debt and some will only take working tenants.
In short, the Localism Act has served to reduce access to social housing for many low income households, who may or may not be homeless. For statutory homeless households, it gave local councils the power to discharge their rehousing duties with a single offer of a fixed term tenancy in the PRS and over half of those councils surveyed had already adopted this power (88% in London). This has had the effect of homeless applicants choosing to take the informal “housing options” route to resolve their potential homelessness, rather than risk the “one PRS offer” under the statutory procedure. Once they know they are very unlikely to get a social housing tenancy, the “housing options” route enables them to have more choice in the PRS.
The authors postulate that these changes, taken together will effectively mean that the PRS is taking over from the social rented sector as the tenancy of last resort. However, the overall impact of the changes must be considered alongside changes to welfare policies.
The major elements of welfare reform – Local Housing Allowance changes, the benefit cap, and the spare room subsidy (“Bedroom Tax” ) – have, according to a recent LSE study, impacted disproportionately on lower income households, with those in the lowest three income deciles the biggest losers. This has a knock-on effect on how such households fare in the housing market, as indicated below..
Local Housing Allowance for the PRS is now set with reference to the 30th percentile of market rent rates (rather than the median) and is also capped and inflated by the lower of CPI or changes in market rents. This has effectively restricted access to the PRS for low income households, particularly in London, and forced London councils to look outside their local areas for suitable rented property for potentially homeless households. An additional problem is the extension to single under-35s of the Shared Accommodation Rate, which further restricts access to the PRS and causes problems in areas with no market for shared accommodation.
The Benefit Cap, set at £350 per week for single people and £500 for other households (with exemptions for people of pensionable age or with some disabilities) has impacted most severely on larger households in high rent areas. Although local authorities confirmed the numbers affected were relatively small, the impact on those households was considerable, with losses of over £100 per week in one third of cases.
The spare room subsidy introduced limits on eligible rent for social sector tenants deemed to have one or more “spare rooms”. The number of bedrooms the household are deemed to require is fixed by size criteria essentially derived from the social survey ‘bedroom standard’ measure established in the 1960s. Whilst it only applies to a small proportion of working age tenants in receipt of housing benefit, almost two thirds were either disabled or had a disabled partner. Most of those affected did not think they were “over-accommodated” and there have been numerous court challenges on, for example, the need for a separate bedroom for medical reasons or the small size of a room deemed to be able to be shared by two children (regardless of age). In many areas, particularly in the north, there is a dearth of smaller homes in the social sector, so the opportunity to downsize is very limited.
Affected tenants are being supported by Discretionary Housing Payments (DHP), private borrowing or cutting down on other essentials. About one fifth are not making any payment to cover the gap. The DHP budget is time-limited but at present, the researchers found that three fifths of it in England was being used to support bedroom tax shortfall.
Other welfare reform policies
There are a number of other welfare reform policies which either have not been fully implemented or have an indirect impact on homelessness.
- Universal credit combines a number of welfare benefits, including housing benefit, into a single monthly payment and is currently being piloted for certain new claimants in a few pathfinder areas. Its full implementation has been deferred, largely due to computer problems. There is concern over how vulnerable claimants will cope with a single monthly payment and a more general worry among social landlords that the inclusion of housing benefit will increase both rent collection costs and rent arrears.
- Council Tax Benefit: Government support for council tax benefit was cut by 10% from 2013-4, leaving local councils to make up the difference (or not). Although reductions to council tax benefit are relatively modest in cash terms, they are significant for those affected who were already struggling financially.
- Sanctions: The imposition of sanctions on claimants of Job Seekers Allowance (JSA) and Employment and Support Allowance (ESA) has increased and has impacted disproportionately on people under 25, as shown by recent JRF research. This has caused problems for both claimants and organisations dealing with homeless young people. On the positive side, they have formed good working relationships with the local Jobcentre plus to identify problems at an early stage.
- Localised Welfare Assistance: The Social Fund, which provided emergency cash to claimants, was localised in 2013; this has resulted in fragmentation, with councils imposing conditions on eligibility for assistance, leading one service provider to comment “it’s been a nightmare in terms of people not being able to access cash”.
The cumulative effects of welfare reform on homelessness were already making some impact but the Monitor authors reported that only 10% of local authority respondents thought their impact had largely “run their course”. London respondents were more likely to forecast lessening impacts because the effects to date have been so dramatic, but generally the message is that the full impact is still to come. And that is without the £12b welfare cuts promised by the new government.
Homelessness trends in England
The Monitor found increases in all of the homelessness categories, except national figures for statutory homeless households, which fell by 2% in 2013-44. However, as discussed above, as more local authorities adopted the power to discharge their rehousing duty with one offer in the PRS, an increasing number of homeless households were opting for “informal” assistance, thus casting doubt on the statutory figures as offering an accurate picture.
Regional divergence is sharp, with London acceptances up by 80% since 2009-10, as opposed to a 14% fall in the north. Nationally, almost three quarters of the increase in acceptances was due to the loss of a PRS tenancy.
Official figures show a continuing growth, up 37% since 2010, though showing only a 5% increase in the last two years. It is possible benefit restrictions on nationals from more recent EU members may increase rough sleeping among these groups.
Conclusions and future monitoring
In its conclusion, the report identifies seven key areas which have major implications for future monitoring of homelessness.
First, and perhaps most important, is the ongoing trend by local councils to steer homeless households away from the statutory homeless route towards more informal assistance, particularly where councils are discharging their rehousing duty via one offer in the PRS.
Second and linked to this trend is the validity of using statutory homeless acceptances as a measure of homelessness. Whilst the statutory returns may accurately record trends, they underestimate the true level of homelessness and indicate the need to capture numbers offered informal assistance by local councils.
Third, although local authorities outside London reported improvements to the service offered to single homeless people and other non-priority groups, this does not tally with the growth in rough sleeping, cuts to Supporting People cash and a more general reduction in homeless activities aimed at this group.
Fourth, this year’s findings pointed to London differences growing to the point where the capital was almost “another country” in homelessness terms. “The continuing shortfall in the levels of new house building relative to levels of household formation, in a context where there are already substantial numbers of concealed and sharing households, and severe levels of overcrowding in London, is a prime structural contributor to homelessness”.
Fifth, London local councils are increasingly unable to secure PRS accommodation in their area, both because of high rents and the disproportionate impact of welfare reform in London, but the consequences of this demographic change has not been fully grasped or documented.
Sixth, the extension of the Shared Accommodation Rate to under 35s, the extension of JSA/ESA sanctions and the localisation of the Social Fund plus other welfare reforms have had the cumulative effect of making many poorer households dependent on charity, such as food banks. At the same time, many are being pushed out of London and other high rent areas because of these changes.
Finally, the increasing movement towards “localising” key elements of housing and welfare support, such as the Social Fund and Council Tax Benefit, together with an increasing emphasis on “local connection”, is seriously undermining any national system of support for homeless households.
The Year 4 Housing Monitor report for England contains some fairly disturbing figures on the homelessness implications of the welfare reforms already implemented and a warning that these are expected to get worse – except in London, where their drastic effects have already been felt.
The report’s authors intend that the Year 5 report will be able to take a measured look at all the changes since 2010 – but by then, we may be trying to estimate the consequences of the further £12b of welfare cuts proposed by the new government. It will probably be too soon to reflect other housing policies, such increasing the numbers of new homes built and to increase access to home ownership for first time buyers.
Rough Sleeping: House of Commons research paper (PDF document)