The Shared Accommodation Rate (SAR), the housing benefit rate available to childless, single people under 35, is creating a myriad of challenges for those seeking to move on from homelessness and for the authorities and providers trying to assist them.
Local Housing Allowance (LHA) rates are not universal. Entitlements vary depending on circumstance, and people under the age of 35 are (unless they qualify for an exemption) offered the SAR – which is calculated to cover the rent of a single room in a shared house or flat, rather than, for example, a self-contained one-bed flat. But as uncovered in No Access, No Way Out, a recent report commissioned by Commonweal Housing, and authored by Becky Rice, the SAR has become a significant barrier to combatting homelessness.
Introduced by John Major’s Conservative Government in 1996, the then-SRR (Shared Room Rate) capped Housing Benefit for single under-25s at the 50th percentile – enough to cover rents of the bottom 50% of shared room lettings. Fifteen years later, George Osborne ignored the recommendations of the Social Security Advisory Committee and raised the age threshold to 35, whilst reducing the allowance to the 30th percentile (from the 50th) of local room rent averages. The reduction of social housing stock over this period has raised the importance of private routes out of homelessness, whether they exist or not.
For single under-35s, housing options at SAR rates increasingly do not exist. As No Access illustrates, the SAR is not routinely able to facilitate homelessness move-on. Recent London analysis (carried out by Savills) found the rental market totally divorced from LHA rates:
“Annual rental growth of 6.3% in London in 2023 led to the proportion of rental listings below LHA rates falling to a low of 3.1% of total listings by Q4 2023. The recent increase to LHA rates has pushed up the proportion of listings affordable to 5.0% of total listings in Q2 2024. While a slight recovery, this remains well below 30% of the market that is intended to be affordable on LHA.”
The same challenges are being observed all over the UK. The supply shortage is also changing behaviour in real time. Landlords, particularly those that specifically accommodate tenants on benefits, have taken advantage of the tilted playing field. Some are now only renting to claimants over 35 who can access the one-bed rate. Others are going further, with No Access interviewees (particularly those in London) reporting a wave of HMO to studio conversions, whereby houses of multiple occupation (shared accommodation stock, in other words) are split up into small studio apartments, often with shared facilities. This allows the landlord to charge the higher one-bed rate to tenants, and leaves those seeking to exit homelessness on the SAR with fewer, if any, options.
Article 4 directives, which force landlords to gain planning permission for conversion to HMO, are limiting the amount of newly available shared stock entering the market. In these circumstances, homelessness service providers are fishing from an ever-shrinking pond.
The effects of this unavailability are predictable and costly. Practitioners report being forced to use supported accommodation for clients under 35, who do not need such expensive services. As one provider reported,
“[Lack of move-on] blocks our … supported accommodation beds. They’re expensive and you need to keep them for those people that desperately need them. Unfortunately, you do have a case where they’re silted up with people who can’t move on.” (p. 53).
This matched other accounts:
“For under 35s my note says, ‘Nothing available.’ We basically have to go [to] supported accommodation for those people. So, we see a massive amount, we’re [seeing] 45% under 35 and so we know that it’s much harder, nearly impossible, to house in PRS for those under 35.” (p. 27).
Three months in supported accommodation provides one with an exemption from the SAR, but having to wait forces people to suspend hopes of long-term stability, and takes up a place others would benefit more from (not dissimilar to NHS beds being taken up by those healthy enough to leave, but with nowhere else to go). Homelessness support providers even report advising those close to turning 35 just to stay put before seeking move-on accommodation after their birthday.
It’s easy to frame this challenge as an inevitable result of a national housing shortage, exacerbated by landlord opportunism, clunky framework, and urban population growth driven by internal movement and immigration. What is harder to agree on is how to respond.
A potential solution would be to abolish the SAR altogether. This would provide more stability for those moving on from homelessness. Supported housing places would be freed up for those in genuine need, and councils would feel less inclined to hire private relocation companies to send homeless people to other parts of the country with more LHA supply. But tradeoffs are inevitable – the rental market is overheated as it is, and boosting demand to any significant extent would drive further price increases, which may fuel voter backlash.
A roll back option would be to reverse the Osborne measures – lowering the age threshold back to 25 and returning the benefit rate to the 50th percentile. The risk here would be the failure to help 18–24-year-olds, with further reform on the issue probably unlikely. Other measures worth considering include a widening of the exemption thresholds to ease current backlogs and finding a way to challenge excessive use of Article 4 directives. What is clear is the need for revision of some kind, and a halt to the escalating bidding wars between councils (and in some cases, between council departments) for the dwindling number of affordable units.
As is so often the case, issues like these cannot be discussed without returning to the question of general (and publicly owned) housing supply. No Access makes a range of timely recommendations, much broader than the SAR – including the urgent requirement for new homes delivered at scale. SAR revision or abolition, and reform of the LHA more generally, must be linked to this delivery, along with the wider protection of tenants (something Labour have wasted little time on). This Government remains the UK’s best chance at easing and fixing the housing crisis, helping homeless people of all ages move on, and delivering better outcomes for renters more generally. Reform of the SAR is a necessary step in that direction.
Fraser Maclean is Policy and Communications Manager at Commonweal Housing. No Access, No Way Out, researched and written by Becky Rice with Commonweal’s support, can be read here.