Save, make, understand money

Household Bills

Half of families rely on benefits to pay rent

Paloma Kubiak
Written By:
Paloma Kubiak

Just over half of families in the private rented sector are relying on government support to pay their rent, analysis by a campaign group has revealed.

One in five families renting from a private landlord has a shortfall between their benefits and their rent, according to Generation Rent.

The analysis comes after benefits data up to August 2020 from the Department for Work and Pensions revealed that 910,000 families with children renting from a private landlord are receiving either housing benefit or Universal Credit which includes Local Housing Allowance (LHA).

This is an increase of 169,000 since February (23%).

Generation Rent said for many tenants, the benefits they receive are not enough to cover their rent.

LHA only covers the whole rent for the cheapest 30% of homes in a local area. On the basis that 21% of private renter families are receiving benefit but living in more expensive homes, Generation Rent estimates that 378,000 families, including 750,000 children, face a rent shortfall and have had to cut down on essentials, dip into savings or get into debt.

Further, many families will not get the full LHA because of the household benefit cap. Many new Universal Credit claimants have been exempt from the benefit cap, but this grace period only lasts for nine months, and people who applied for Universal Credit in March will be nearing the end of it around Christmas.

The campaign group said renters in this position may try to move to a cheaper home, but discrimination against benefit claimants remains widespread, shutting this option off to many.

As such, Generation Rent is calling on the government to commit greater support to private renters – by raising LHA, scrapping the benefit cap, and clearing rent arrears – so they are not forced to make devastating choices between putting food on the table and getting into debt.

‘Families forced to go without essentials’

Alicia Kennedy, director of Generation Rent, said: “Coronavirus has had a devastating impact on the finances of families living in private rented homes, with over half now reliant on benefits to pay the rent.

“After the country went into lockdown, 169,000 families claimed Universal Credit for the first time, and found it doesn’t cover the cost of average rents. With thousands more about to be hit by the benefit cap in the run up to Christmas, rent arrears will keep on growing. Savings have already been bled dry by the first wave, forcing many tenants to rely on credit. Without further support, families are being forced to go without essentials, take out a loan to pay the rent, or risk eviction.

“With so many private renters now reliant on it, the government must ensure the benefits system covers housing costs. Everyone deserves the security of a home they can afford while we recover from the economic impact of coronavirus.”