Industry News Sam Hunter 08/04/2022

North East Renters Face Squeeze as Benefits Frozen

Almost 70 per cent of private tenants in the North East relying on Universal Credit to pay their rent have a shortfall between the amount they receive and what they have to pay.

Official data shows that across the region, 68 per cent of renters receiving housing benefit have a gap. Government figures show that nationally the average shortfall between the support such tenants receive and the rent they pay is £100 a month.

The proportion of tenants affected ranges from over 74 per cent in Sunderland, Stockton-on-Tees, and Darlington to just under 55 per cent in South Tyneside and Gateshead.

The Local Housing Allowance is used to calculate the amount tenants can receive to support housing costs as part of a Universal Credit payment. In response to the pandemic the Government increased the Allowance in April 2020 so that it covered the bottom 30 per cent of private rents in any given area. In April last year the rate was frozen in cash terms and remains frozen for 2022/23.

As a result of the freeze, the link between local rent levels and the amount of housing benefit support received has been broken. This means the number of properties that private renters in receipt of Universal Credit can afford will steadily decline. This is despite rents across the North East have increased by far less than inflation.

In highlighting these figures, the National Residential Landlords Association (NRLA) calls on the Government to unfreeze the Local Housing Allowance and so restore the link with the cost of local rents.

John Forth, North East Spokesperson for the NRLA, said:

“The benefits system is failing to provide renters and landlords across the North East with the security they need.

“It cannot be right that housing benefit support fails to reflect the reality of current rent levels. The freeze merely exacerbates  the already serious cost of living crisis for tenants across the region.

“The Chancellor needs to listen and respond to the concerns of both renters and landlords by unfreezing housing benefits as a matter of urgency.”