Homelessness risk as Universal Credit does not cover the cost of renting a room in Greater Manchester

Young people on benefits in Greater Manchester are feared to be at risk of homelessness due to the amount of money they are given not covering the cost of renting a room in most parts of the city-region.

ManchesterWorld has looked at figures analysed by our sister title NationalWorld to see how far Universal Credit would get people looking to rent a room in shared accommodation in each of the city-region’s 10 boroughs.

It shows that in some places there is a three-figure monthly shortfall between how much money they receive and how much they would have to shell out to afford some of the cheapest properties on the market.

A leading homelessness charity has warned that many young people are trapped in a “permanent cost of living crisis” with housing allowance only covering the cheapest rental properties in a minority of local authority areas across England.

What does the data show for Greater Manchester?

The data looks at the local housing allowance in each council area for a Category A property, which is a room in shared rental accommodation.

This has then been compared to the lower quartile rental price, which means that 25% of the private room rentals in that borough are at or below that price.

This enables us to work out how much of the cost of renting a room is covered by the benefits people can expect to receive.

Of Greater Manchester’s 10 boroughs residents in Rochdale take the worst hit in the pocket while trying to get a roof over their heads.

Local housing allowance of £290 covers just 64% of the £450 rate for the cheapest shared accommodation, leaving a shortfall of £160 per month.

In Wigan, Category A local housing allowance of £266.49 covered 76% of the £350 quartile rent rate, leaving a gap of £83.51.

In Bolton, the benefit covered 77% of the cheapest quarter of rental rooms, leaving home-hunters £78.51 short.

And in Bury and Salford the figures were identical, with 83% of the rate of £350 for the most affordable shared accommodation covered by the local housing allowance.

Category A local housing allowance also covered 83% of the rate for the cheapest 25% of shared accommodation in Oldham.

In Manchester it was 84%, with those seeking a room for rent some £70.17 short of being able to get somewhere in the cheapest quartile of rental properties.

In Stockport Category A local housing allowance covered 86% of the cost, while in Trafford it was 87%.

The only one of Greater Manchester’s 10 local authorities where renters would be sure of having enough money to get a cheap room was Tameside.

There Category A local housing allowance is £359.83, while a room in the lowest quartile of rented accommodation is £347.

What has been said about the data?

Analysis has been done by leading youth homelessness charity Centrepoint, which found the local housing allowance covered the full cost of privately renting for young Universal Credit claimants in only one in eight local authorities across England.

In theory, the local housing allowance rate should enable a young person claiming Universal Credit to afford the cheapest 30% of rooms in a shared house in the private rented sector.

However, Centrepoint’s analysis found that current rates only cover the full cost of renting the cheapest 25% of private sector room rents in 27 out of 230 local authority areas.

And the average shortfall was some £70 per month.

Centrepoint has warned that an increase in rental costs in 2021 reported by the Office for National Statistics (ONS) alongside current local housing allowance rates could put young people at risk of becoming homeless.

Balbir Chatrik, Centrepoint’s director of policy, said: “The local housing allowance is meant to make sure that the cheapest accommodation is accessible to those who need it.

“However, it has failed to keep pace with inflation and astronomical rents, making it even harder for young people to find affordable accommodation.

“This has trapped young people – who already lost more in the last Universal Credit cut than older claimants – in a permanent cost-of-living crisis.

“If it made sense to ensure the local housing allowance keeps pace with the lowest third of rents two years ago it surely does now with all the additional challenges those who need this support are facing.

“We cannot expect them to make up shortfalls in local housing allowance themselves. Local housing allowance rates must be urgently reviewed to ensure those already choosing between food and bills are not also facing homelessness too.”