Private rentals in Cornwall out of reach for many on housing benefits
New data shows that local housing allowance rates fall short for most two-bed rental properties in the region
Image: Alice Colvin-Cousley
Renting a home in Cornwall is impossible for many people in receipt of housing benefits or universal credit, according to a new analysis from the Bureau of Investigative Journalism.
The research, which looked at property listings across the country in July this year, shows that 97% of two-bed properties across Cornwall’s three Broad Market Rental Areas would be unaffordable based on local housing allowance rates (LHA).
As the cost of living crisis bites and rental prices skyrocket, there are concerns some will use crucial sources of cash, such as disability benefits, to top up their rent.
Chris Wallis, food bank coordinator for St Ives Foodbank, has seen just how inadequate the current LHA rates can be for private renters.
“One of the worst cases was in the summer where two people had recently been in hospital with heart attacks and cancer. They’d got evicted from their rented accommodation, because their housing benefit wasn’t enough and they couldn’t keep on top of their bills,” he told The Cornish Echo.
“The council put them in a static caravan site. It wasn’t suitable, there was no transport for them and they couldn't afford the heating. So it made them more physically unwell. It was a ridiculous situation. Eventually they got kicked off the caravan site. I don’t know where they are now. Probably homeless somewhere.”
Wallis also told of a couple who have had to move into a tent out of bricks and mortar accommodation and another man who is now sleeping in his car in a local lay-by.
“There’s so much hidden homelessness in Cornwall. And it’s getting worse with the cost of living and the housing market as it is,” he added.
The Bureau’s analysis was carried out on behalf of Channel 4 Dispatches, and looked at the details from more than 40,000 rental adverts for two-bed properties across the country, comparing them to the regionalised rates of LHA.
These properties are the most common kind rented by those on universal credit or housing benefit.
Cornwall is covered by three Broad Rental Market Areas including Kernow West, North Cornwall & Devon Borders and Plymouth.
The data shows that in Kernow West there were 116 properties listed in July. Just two of these were affordable for those on the LHA rate of £143.84 - meaning 1.72% of two-bed properties were affordable.
For North Cornwall & Devon Borders, 27 two-bed properties were listed. One of these properties was affordable for those on housing benefits, which are set at £123.12 (3.7% affordable).
And in the Plymouth BRMA, where the LHA rate is £134.63 a week, there were 119 two-bed properties listed. Five of these were affordable (an affordability rate of 4.2%).
In total, for these three BRMAs, there were 262 two-bed properties that were listed and eight that were affordable.
This meant that 97% of these properties were out of reach of people on housing benefits, without additional payments.
“The Bureau’s data is not remotely surprising and a depressing read,” a spokesperson from homelessness charity Harbour Housing told The Cornish Echo.
“Privately rented housing is becoming increasingly unaffordable for more people whether single individuals, couples or whole families, let alone those relying on LHA.”
Back in April 2020, former chancellor Rishi Sunak raised LHA rates so they would cover the bottom 30th percentile of all rental properties.
Since then the rates have remained frozen, despite rental costs rising and the impact of the cost of living crisis.
However, the Bureau’s data shows that the rates don’t come close to covering the bottom 30% of properties.
On average, LHA would need to be increased by £51.78 a week to meet the 30% target in Kernow West.
Rates for the North Cornwall & Devon Borders and Plymouth BRMAs would have to have a weekly increase of £43.73 and £37.97 respectively.
“The Local Housing Allowance bears no relation to the rental prices demanded and haven’t for a number of years. This was further exacerbated last year when the government decided to once again freeze the LHA rates for this year,” said Harbour Housing.
“The LHA effectively penalises people who have to live in private accommodation – social housing tenants get their rent paid in full, which is correct – but with limited social housing availability, many individuals have no choice but to go for private lettings which while also in short availability, have such a demand they are able to charge significantly inflated rents to their tenants.”
People using money they need for food and electricity
The Cornish Echo spoke with a number of people on housing benefits about their experiences of trying to rent in Cornwall - they wished to remain anonymous, worrying that speaking publicly would affect their claims.
They described experiences of moving home multiple times to try and find cheaper rent and living in constant fear of being made homeless.
Deputy leader of the Liberal Democrat Group on Cornwall Council Colin Martin, warned that people are being pushed into making difficult choices to try and keep up with payments.
“If your rent is above the local housing allowance, that means you've got to top it up with the money you were using to put food on the table and keep the lights on. That'll become even more difficult during a cost of living crisis,” he said.
“And so a lot of people who get disability benefits that are meant to be for helping them cope with their disability end up being used as a top up for the rent.
“Other people who don't have disability benefits, what options do they have? It's not like universal credit pays a generous amount in the first place. Either people have got to eat into their UC to pay the rent or move to the poorest parts of Cornwall.”
The movement of people to areas where rent is cheaper can end up with the poorest people concentrated in one place - and with that comes the social problems associated with poverty, according to Martin.
“If someone from a more affluent town like Lostwithiel needs to find a home to rent and they can only afford the LHA, then that probably means they are going to have to leave town and move to somewhere cheaper like Bodmin or St Austell,” he said.
“The people with the wealth and knowledge to help their neighbours are the least likely to have neighbours in need; whilst those living next door to families in need are the least likely to have the resources to offer any assistance," he added.
Discrimination is also an issue for those on UC and housing benefits. Property listings stating ‘no DHSS/Benefits’ are no longer allowed after a September 2020 court hearing deemed it discrimination under Equality Act 2010.
But there are still examples where agents or landlords claim it is a restriction on their mortgage or insurance, according to Harbour Housing.
“There are still instances where this happens and where it is not directly challenged there’s little in the way of recourse for the individual unless they decide to take it to court – legislation making it explicit that it is prohibited would be welcome in our view,” a spokesperson for the charity said.
Increase in demand for Discretionary Housing Payments
Cash can be awarded by Cornwall Council to top up any shortfall between a claimant’s benefits and their rent in the form of a discretionary housing payment (DHP).
And while funding for the DHP has dropped from £1,065,574 in 2021/22 to £755,235 for 2022/23, Cornwall Council told The Cornish Echo that the money is projected to meet demand.
However, this might change as the cost of living crisis keeps piling financial pressure on households.
A recent update from Cornwall Council’s insight dashboard said that the crisis is expected to see an increase in the number of people unable to afford housing costs, and evictions from the private rental sector.
It is expected this will lead to increasing levels of homelessness, and households in temporary accommodation with difficulties in finding move-on accommodation due to the restricted supply of alternative rental options in the market.
The council is bracing itself for an increase in demand from people requiring discretionary housing payment, council tax support and crisis and care hardship funding.
To date, the council has allocated 56.73% of its £755,235 DHP funding, which includes approximately 6% of the funding being allocated to awards that were rolled forward from 2021/22.
But it acknowledges that if the impact of rises in the cost of living worsens, that may have a negative effect on the remaining budget for DHP.
A spokesperson for the council said at that point they would have to adjust how the help is targeted to ensure it is used to “maximum effect”.
The root of the problem
The Bureau’s data found that of the 40,000 rental adverts analysed across the country, 98% were beyond the means of people in receipt of universal credit or housing benefit.
But the causes of high rents in Cornwall are specific to the region - which has been shaped by the tourism industry.
“The free market folks say, it's a simple issue of supply and demand. Just build more houses and that'll bring prices back into balance,” said Colin Martin.
“But that's only true if all the new houses you build are actually available to rent by local families.
“So the question is, how many houses are being sold to people moving in from outside Cornwall, and how many are not even being used as homes at all, because they're used as holiday accommodation?”
There is currently no planning permission required to change a residential property into holiday accommodation, making it an attractive option for owners.
The problem is that when these switches happen, there is less residential housing available, and rental prices go up.
“You can rent a house out for quite a lot of money to holidaymakers - for a two bedroom house, particularly in a nice scenic part of Cornwall, you could very easily get £1000 a week in the peak summer season,” Martin said.
“So if we're relying on the free market to provide more affordable housing, then you can build as many new houses as you like, but if it is always more profitable to rent those houses out to holidaymakers, then you're not actually going to fix the problem.”
And while there are plenty of rewards for switching over to holiday accommodation, running a residential property is getting increasingly difficult.
Ruth Clarke, chair of the Cornwall Residential Landlords Association, explained that some landlords are under pressure if they have mortgages, given rising interest rates - making the high returns of switching to a holiday more attractive.
“If you have any other types of business, such as holiday lets, you get tax advantages so you can set off some of your interest on the borrowing against the tax,” she said.
A residential landlord can't do that, so increases in interest rates are going to have a “serious effect” on the profitability for a lot of residential landlord businesses, according to Clarke.
“There are an increasing number of landlords who are selling off going over to holiday lets. The income from a holiday rental is roughly ten times what you'd get from a market rent of a tenanted property. And market rent is a lot higher than LHA rate,” she added.
Landlords also have to contend with increased legislative burdens, such as a proposed rule that would force them to make sure their properties had an energy performance certificate rating of at least C - a standard that many of Cornwall’s old buildings wouldn’t easily achieve.
“Quite rightly, the government has said some landlords don't provide good quality accommodation and so we want to try and tip the balance a bit more in favour of the tenant,” said Colin Martin.
But because the landlord always has the alternative of going into the holiday sector, that leverage doesn't really work, he said.
“If the only thing that that landlord could do was be a private landlord, then if you pile on more regulations, he'll have to go along with it. But if he's got other options (such as selling up or switching to Airbnb), then all you're doing is just driving people out of the sector.”
While the freezing of LHA is inevitably putting pressure on people, the root causes need to be addressed to find a long-term solution to high rents, according to Martin.
“Increasing the Local Housing Allowance to match what's actually available is important, but it's just a sticking plaster on a patient that needs major surgery,” he said.
“In the long-term, what you need to do is fix the supply of affordable, decent rented housing for local people by rigging the market so that you're excluding holiday makers from competing in that same pool and reducing the competition from people who are wanting to retire to Cornwall or relocate to do their remote job here.”
Harbour Housing echoed this point, calling for more affordable housing, as well as changes to LHA so it mirrors social housing rents.
Cornwall Council told The Cornish Echo it is taking a “multi-faceted” approach to address the housing crisis and there are lots of aspects to the plan - with each one making a “significant difference” to the overall crisis.
It is building more council homes for local people to rent such as the social rented scheme at The Market Garden in Veryan and is also making acquisitions including sites at Padstow, Launceston and the West Carclaze Garden Village where it has purchased 130 open market homes to convert them into affordable homes for local people in need.
There have also been proposals to significantly expand this programme throughout Cornwall.
“We sympathise with the position that some residents are finding themselves in as Cornwall continues to face extreme pressure on the availability of housing. Tackling current housing pressures is a top priority for Cornwall Council,” a spokesperson said.
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