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An unfair share: Local Housing Allowance is failing young people

An unfair share: Local Housing Allowance is failing young people 11 MB

For many young people, the benefits system is based on a fiction. It is asking them to rent homes that literally do not exist.

In this report, we consider the design, operation and impact of the Shared Accommodation Rate (SAR), ie the rate of housing cost support available to benefit claimants under 35 years old, if they are single and do not have children.

The SAR funds people to rent a single room in a house or flat of multiple occupancy (HMO) in their local area, up to the 30th percentile of local rent costs for this type of accommodation. But there are far too few HMO rooms available: demand outstrips supply, almost everywhere, especially in terms of affordable properties priced at or around the SAR. People are being forced to live beyond their means.

And the SAR is itself an unreliable guide to the price of an affordable home. The government uses very few data points (ie surveyed rents in payment) to calculate the 30th percentile in each local area. One of the consequences is high volatility in rates, both over time and across different areas.

We see the consequences among the people we support. Our debt clients reliant on the SAR have much higher monthly shortfalls than people eligible for other rates of housing cost support. The SAR is contributing to homelessness among young people. It is a barrier to living independently, and to finding work.

The expectation that young people should live in shared housing creates other problems too. Young people with issues around mental health and neurodiversity are negatively affected. Young people who have been granted refugee status find it difficult to identify suitable accommodation. The SAR makes it difficult for separated parents, and single pregnant people, to establish suitable family homes.

We believe that the government should abolish the SAR. At the very least, the upper age eligibility limit should be reduced to 25 (in line with the original policy). Whether the upper age limit is 25 or 35, the government should consider introducing mechanisms to increase the SAR, such as setting payments at the halfway point between the SAR as calculated and the 1-bedroom rate of housing cost support. Additionally, the government should widen the range of exemptions to the application of the SAR, and ensure Discretionary Housing Payments are more available to people affected by the SAR.