Poverty traps alert over new benefits

Reforms to housing benefit could create poverty traps in Greater Manchester, a housing charity has warned.

Shelter says the Government’s new system, called Local Housing Allowance (LHA), which is replacing housing benefit in the private rented sector, will mean many tenants are left with significant shortfalls in rent. They will either have to find the extra cash themselves or move to a poorer area.

Glossop and the surrounding area are in particular danger of becoming far too expensive for LHA claimants and people will move to less affluent parts such as Rochdale instead, the charity warns.

But anecdotal evidence also shows that in cheaper areas like Rochdale some landlords are hiking up rents in the knowledge that local housing allowance will pay out the charge.

LHA is a flat rate of benefit, after means-testing, according to household size and location. It is calculated using the average rent in a given area.

But there are often huge differences in the rents that people are asked to pay across the area, pricing claimants out of many parts.

LHA has already been heavily criticised for housing claimants in expensive properties.

The research by Shelter now shows it’s causing extreme inequities between North and South.

It also revealed that the majority of landlords are unwilling to let properties to LHA claimants in areas they can afford — but don’t state this in their adverts.

Shelter chief executive Adam Sampson said: “Our findings show that as more claimants move on to LHA, greater social division is almost certain to emerge.”