Universal Credit fails to cover rent in all but one London local authority, new Centrepoint analysis finds


New analysis from youth homelessness charity Centrepoint has found that in all but 1 local authority in London, the amount of Universal Credit under 25s receive fails to cover the cost of renting. The analysis also found that, in almost 75% of local authorities in London, the shortfall between the amount claimants receive and the cost of rent is greater than £100 a month.

The analysis – the first since the Chancellor announced an increase in Universal Credit to cover at least 30% of the cheapest local rental costs in response to the coronavirus pandemic – compares local rental market data with the new post-pandemic Local Housing Allowance rate.

Local Housing Allowance (LHA) is the rate used to calculate the amount of Universal Credit claimants receive to help with renting costs in the private rental sector. It is split into different rates, depending on the claimant’s housing type. Some vulnerable claimants are able to access the higher One Bedroom Rate – but most under 35s will receive the lowest Shared Accommodation Rate because the rules assume they are able to return home or receive financial help from parents.

The government already recognises this would not be possible for some vulnerable groups – such as care leavers aged 18 to 21 and homelessness hostel leavers older than 25 – and allows them to claim the higher one bed rate. Over the last year, Centrepoint has successfully campaigned for this exemption to include care leavers and hostel leavers under 25, with the Chancellor announcing in his pre-lockdown Budget that they would be able to claim the one bed rate – but not until 2023.

Now, with growing evidence that young people will be amongst the hardest hit by the economic impact of the pandemic and lockdown, Centrepoint is calling on the government to bring those plans forward.

Balbir Chatrik, Director of Policy and Communications of the youth homelessness charity Centrepoint, said:

“Universal Credit is forcing too many young people to choose between paying rent and food. These are impossible choices to make at the best of times but, in the middle of an unprecedented health and economic emergency, it’s clear the rules need urgent change.

“The fact is that ministers already know this. That is why the Chancellor announced vulnerable young people would eventually receive more support with rental costs in his Budget and why, at the beginning of lockdown, he uprated local housing allowance to bring it closer to be in line with the true cost of renting.

“These were important first steps but coronavirus and its fallout means we can’t stop there. It was never rational to wait three years before allowing vulnerable young people the chance to live independently and it makes even less sense now. The government won plaudits for its early work with rough sleepers and help with renters – that will count for nothing if it now fails to follow through and leaves some of our most vulnerable young people facing destitution and homelessness.”