Welfare reforms will force people to borrow more or cut basic living expenses says CIH

More than 800,000 homes will be out of reach to low-income families as a result of welfare reforms says the Chartered Institute of Housing (CIH).

Research conducted by the CIH for the Guardian has revealed that as well as leaving low-income families with shortfalls in their rent payments the reforms will also mean that housing benefit claimants will face the choice of debt or cutting back on basic living expenses to avoid the risk of homelessness as they are confronted with being unable to afford to pay their rent.

In-depth analysis revealed a significant number of properties are no longer fully covered by local housing allowance for private tenants as a result of the changes which start to take effect from 1 January 2012.

The research shows that across the UK more than 800,000 homes will be out of reach to low- income families. This is, due to measures that restrict housing benefit payments to rents paid in the cheapest third of lettings and the placing of absolute caps on the amount of housing benefit to be received by a household. Taken together, the measures restrict choice even further for claimants - in particular in parts of the country where the cost of rented housing is high.

It says that in many cities and towns across the UK, there will be more tenants than available homes that are within the LHA rates for those who rely on housing benefit. The cuts will affect all four countries with an estimated 720,000 homes becoming unaffordable in England, a further 60,000 in Scotland and 30,000 in Wales. The gap is most noticeable in London and the South East, where over a quarter of a million homes are now beyond the reach of housing benefit.

The changes will force people to move from areas where there are jobs available to areas where there are far fewer. This will affect a large number of people in low-paid work as well as the unemployed and those who are unable to work such as people with disabilities, lone parents, pensioners and carers.

Grainia Long, interim chief executive of CIH said: “These findings are astonishing. Welfare reforms will see for the first time more people chasing homes than the market currently provides. The only feasible option for many families who want to stay in their communities will be to borrow more or to spend less on essential items such as food.

“This could mean that more than 1.3 million private tenants face the New Year with dread, confronted with an uncomfortable prospect of homelessness or debt. Low-income families could move to more affordable areas, creating ‘benefit ghettoes’ and resulting in increased social disorder and a breakdown in community cohesion.”