Poorest households face ‘catastrophe’ as number of affordable rental homes for those on housing benefit drops by a third in five months

Published

2 years ago

October 27, 2022

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The gap between housing benefit and the actual cost of private rent has risen by 40% in just five months, Sky News has learned.

Figures from the homeless charity Crisis and Zoopla show that affordable homes in England, for those on housing allowance, have declined by more than a third.

It means only 8% of private rental properties, on average, are now affordable to those on housing benefit.

Around 1.7 million households in England currently rely on Local Housing Allowance (LHA) to pay their private rent.

The statistics, which were given exclusively to Sky News, show that for a one-bedroom property households now face gaps, or shortfalls, of over £950 a year on average.

People living in two and three bedroom homes are having to find more than £1,500 and £2,300 (respectively) a year extra on top of their housing benefit.

Crisis chief executive Matt Downie said: “This isn’t a sort of prediction of things getting worse, it already is worse.

“We know that rough sleeping is going up. We know the councils have nowhere to put people.

“And unless, in the November financial statement, the government increases housing benefit in line with inflation, just like they’re talking about for other benefits, this is this is going to be catastrophic.”

Housing benefit levels have been frozen since early 2020 and are based on rents from 2018-2019.

Since then private rental rates have been rising at the fastest rate on record.

Mr Downie describes it as a “false economy”.

He added: “Once somebody becomes homeless, they cost far more to the state and they have to be put in temporary accommodation or helped in other ways.”

The new figures show the poorest households in England are being almost completely priced out of the rental market.

Nicole Hamilton, 27, is living with her two-year-old son Logan in emergency accommodation in London after fleeing domestic violence. She has been staying in a one room flat for months because she’s been unable to find an affordable rental.

The single mother works full time as a project manager but still needs housing allowance to pay rent.

That allowance, however, does not cover the local rents for a two bedroom property in the area where her son attends a childcare setting, and where her family live.

On the morning Sky News visited Nicole she had called the police out at 4.30am because somebody who looked like they were “on drugs” had been hammering on her front door trying to gain access while her son slept.

“I think it’s a bit unsafe,” she said, “I don’t really like it… the thing that is stressful at the moment is they don’t know how long I’m going to be here.”

“(Estate agents) also hear that I’m a single mum I’m on benefits, even though I work full time …and my income is good, but because I use benefits as part of the system to help pay my rent nobody is interested.”

The private rental market has become saturated due to an increasing supply and demand issue.

Rising mortgage rates, changes in tax and legislation have pushed more landlords out.

Renters are also signing up for longer lets which means less stock available.

Inflation and the cost of living have meant that the widening gap between private rent and housing allowance is predicted to get worse.

Cllr David Renard, housing spokesperson for the Local Government Association, also called for the freeze on housing allowance to be lifted, as well as greater support for authorities.

“Councils need more resources in terms of being able to fund homelessness services and to recruit the necessary housing officers to provide that support.

“So local authorities are very short of resources these days because of the increased demand.”

The Department for Levelling Up, Housing and Communities released a statement saying: “Our Renters Reform Bill will deliver a fairer deal for renters, empowering them to challenge unjustified rent increases.

“During the pandemic we increased Local Housing Allowance significantly, benefiting over one million households by an average of over £600 a year. This is alongside our Energy Price Guarantee which will save households on average £700 this winter with an extra £1,200 of cost-of-living support for the most vulnerable.”

London saw the most drastic fall in affordable properties, almost halving since April.

The North East, which Zoopla says is the region with the highest proportion of one-bed properties available, has just a quarter of affordable one-beds.

London is second worst with 13%.

According to Crisis, five of the nine regions (the East, East Midlands, South West, West Midlands, and Yorkshire and the Humber), had fewer than one in 10 affordable one-bed properties.

Business

Labour lures BlackRock chief Fink to flagship investment summit

Published

6 hours ago

September 21, 2024

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Labour lures BlackRock chief Fink to flagship investment summit

The boss of BlackRock, the world’s largest asset manager, will attend the new government’s flagship investment summit next month amid suggestions it is struggling to attract large numbers of high-calibre international business figures.

Sky News has learnt that Larry Fink, BlackRock’s chairman and chief executive, will attend the 14 October gathering, which will be held at a prominent central London venue.

Mr Fink, who was also present at a similar event organised by the Conservatives in 2021, will be among the most influential global bosses to attend.

Among the others who have agreed to come are Margherita della Valle, the Vodafone chief executive, Hemant Taneja, CEO of technology investor General Catalyst, and John Graham, who runs the Canada Pension Plan Investment Board, one of the world’s largest pension plans, Sky News understands.

David Solomon, boss of the Wall Street bank Goldman Sachs, will also be there.

The emergence of some of those attending comes as Labour battles suggestions that it will struggle to draw the 300 industry leaders it pledged in early August.

Sources said fewer than 150 companies had confirmed their bosses’ attendance, with just over three weeks until the event takes place.

Roughly 100 ministers, metro mayors, officials and other government-connected figures are also expected to be present.

One insider insisted this weekend that “quality is more important than quality” and said the government remained on track to have 300 people at the summit.

That figure may ultimately be reached but comprising both the government and private sector delegations.

They questioned, however, why a formal numerical target had been set publicly when the summit was being staged at such short notice.

“It’s made us a hostage to fortune,” said one.

The event, which Labour vowed during the general election campaign to hold within 100 days of coming to power, is being seen as a key test of its economic credibility.

Whitehall officials are keen to announce investment deals worth tens of billions of pounds on 14 October, although whether they will hit this target is unclear.

Some corporate bosses, including the heads of Blackstone and JP Morgan, have declined the invitation, citing diary commitments.

Those two companies are expected to send alternates to the event, with Blackstone being represented by Lionel Assant, one of its most senior private equity executives.

Until recently, the government had insisted that only CEOs would be able to attend, with their invitations not transferable, according to insiders.

Aviva, Barclays, BT Group and HSBC Holdings will be among the FTSE-100 companies represented by their CEOs.

The business secretary, Jonathan Reynolds, told the Financial Times this weekend that details of the government’s industrial strategy would be set out before the investment summit.

That is expected to include the appointment of a chair for its Industrial Strategy Council, although it faces going into the event without an investment minister being appointed.

The summit will also be politically delicate given that it comes just a fortnight before Rachel Reeves, the chancellor, delivers her first Budget – with higher taxes affecting many of those attending on October 14 expected to feature prominently.

The Department for Business and Trade declined to comment, while none of the companies contacted by Sky News would comment.

Business

Trio of property giants oppose Cineworld rent cuts plan

Published

1 day ago

September 20, 2024

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Trio of property giants oppose Cineworld rent cuts plan

A trio of property giants has lodged a protest against a radical financial restructuring that will see Cineworld imposing steep rent cuts on its landlords.

Sky News has learnt that British Land, Landsec and Legal & General Investment Management all voted against the cinema operator’s restructuring plan this week.

Cineworld has confirmed plans to close six of its UK multiplexes, but documents circulated to creditors show almost 50 others are in categories requiring landlords to agree to revised rent deals in order to ensure their long-term viability.

Although they carry significant influence in the commercial property sector, the trio’s protest will have no impact on the outcome of the company’s proposals, since its owners are now also among its largest creditors, meaning they can effectively force the deal through.

According to documents sent to creditors during the summer, 33 sites – categorised as Class B – “require a reduction of rent to ERV [Estimated Rental Value] Rent in order to place the sites on a viable long-term footing”.

A further 38 of Cineworld’s cinemas would be unaffected, while another 16 Class C1 and C2 leases require reductions to either turnover rent or zero rent in order to render them financially viable.

The documents added that the company did not have sufficient funding to meet a quarterly rent bill on June 24 of £15.9m.

“The UK group did not have sufficient liquidity to make the June 2024 Rent Payment and required further funding from the US Group to meet this liquidity need.

“Absent this funding, the UK Group would have been insolvent on a cashflow basis.”

Cineworld is being advised by AlixPartners.

Other cinema operators are now poised to step in to take over some of Cineworld’s sites.

The company trades from more than 100 locations in Britain, including at the Picturehouse chain, and employs thousands of people.

Cineworld grew under the leadership of the Greidinger family into a global giant of the industry, acquiring chains including Regal in the US in 2018 and the British company of the same name four years earlier.

Its multibillion-dollar debt mountain led it into crisis, though, and forced the company into Chapter 11 bankruptcy protection in 2022.

It delisted from the London Stock Exchange last August, having seen its share price collapse amid fears for its survival.

Cineworld also operates in central and Eastern Europe, Israel and the US.

Business

Consumer confidence slumps following warnings of ‘tough choices’ in budget ahead

Published

1 day ago

September 20, 2024

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Consumer confidence slumps following warnings of 'tough choices' in budget ahead

A long-running measure of consumer confidence has slumped to levels last seen at the start of the year following warnings of “tough choices” ahead in the looming budget.

GfK’s Consumer Confidence Index fell seven points in September to minus 20, with significant drops in predictions for personal finances and the general economy over the coming year.

The report’s authors suggested it was “not encouraging news” for the new government, which has made growing the economy its top priority.

Money latest: Millions already buying mince pies ahead of Christmas

But within weeks of taking the post of chancellor, Rachel Reeves – followed by prime minister Sir Keir Starmer – moved to warn of a legacy £22bn “black hole” in the public finances and said it would result in a painful budget on 30 October.

Among measures already taken include cuts to winter fuel payments, leaving up to 10 million pensioners up to £300 worse off, and inflation-busting public sector pay settlements.

Tax rises and spending cuts are widely expected in next month’s statement to MPs though The Times reported on Friday that a decision by the Bank of England to slow a programme of loss-making bond sales would leave Ms Reeves £10bn better off than she had anticipated.

It added that she was still expected to push forward with her budget plans anyway as a signal of her commitment to fiscal discipline.

The latest snapshot on the public finances, released by the Office for National Statistics (ONS) on Friday showed net borrowing of £13.7bn during August.

Its chief economist, Grant Fitzner, said: “Borrowing was up by over £3bn last month on 2023’s figure, and was the third highest August borrowing on record.

“Central government tax receipts grew strongly, but this was outweighed by higher expenditure, largely driven by benefits uprating and higher spending on public services due to increased running costs and pay.”

Consumer spending accounts for around 60% of the UK economy.

Data released separately on Friday showed a 1% rise in retail sales volumes during August in the wake of weakness, mostly blamed on poor weather, over the previous couple of months.

The ONS said that the increase was driven by supermarket sales, as demand for BBQ food and drinks rose due to the arrival of some sunshine over the key holiday month.

It also credited discounting by clothing retailers.

The data chimes with the latest updates from big retailers, including Next and B&Q’s owner, which have spoken of weak demand for so-called big ticket items such as home furnishings and kitchens respectively.

GfK’s closely-watched survey showed expectations for the general economy over the next 12 months fell by 12 points to -27, while the forecast for personal finances was down nine points to -3.

Commenting on its key measures, including the headline figure, consumer insights director at GfK Neil Bellamy said: “These three measures are key forward-looking indicators so despite stable inflation and the prospect of further cuts in the base interest rate, this is not encouraging news for the UK’s new government.”

He added: “Strong consumer confidence matters because it underpins economic growth and is a significant driver of shoppers’ willingness to spend.

“Following the withdrawal of the winter fuel payments, and clear warnings of further difficult decisions to come on tax, spending and welfare, consumers are nervously awaiting the budget decisions on October 30.”