30 September 2010 – DWP research report No. 698: 'Low income working households in the private rented sector'

New research published today by the Department for Work and Pensions (DWP) investigates what comparisons can be made between low income working households (LIWH) and Housing Benefit (HB) recipients in the private rented sector. It looks at the type and cost of housing, how they access it, and the characteristics of the respective households.

The research explored the experiences of LIWH in a variety of locations in England, with a particular focus on London.

The main findings include:

• Rents:
  • The average rent paid by LIWH was £158 rising to £217 in London. Rents in London vary a lot, containing both the highest and some of the lowest values.
  • Rents are around 35 per cent of LIWH incomes, rising to 39 per cent in London and the South East. Extended families and lone parents have the highest rent to income ratios, spending on average 50 per cent and 48 per cent of their incomes on rent respectively.
  • Most LIWH pay a rent which is, on average, less than the LHA rate set for the property they occupy although, other than in the case of large properties, the amount paid is usually 90 per cent or more of that rate.
• Accommodation:
  • The majority of LIWH live in the ‘right’ size accommodation as defined by the HB size criteria. A significant minority choose to occupy properties with more bedrooms than the HB size criteria would allow. These households pay around 13 per cent more than the LHA rate for an appropriately sized property. Conversely, some occupy smaller properties than the HB size criteria would allow. These households are predominantly those with children aged under 16 years and on average they pay a rent of around £75 to £90 per week less than the LHA rate for an appropriately sized property.
  • HB recipients tend to live in older properties, located in poorer neighbourhoods with higher crime rates, and to move home less frequently than LIWH.
• Tenure choice:
  • The qualitative interviews found that some interviewees appeared to have minimal awareness of the eligibility criteria for HB. Families who have had bad experiences with the system, as a result of frequent changes of circumstances, may be deterred from claiming. Some mentioned views reflecting the stigma attached to benefit claimants and an element of distrust of benefits and of relying on the government.
  • Among families who were aware of HB, most recognised that they would probably obtain inferior accommodation, due to a lack of choice, if they were to claim.
  • Only a very small proportion (around 4 per cent) of interviewees wanted to move into a social tenancy. Most interviewees in the qualitative interviews said they did not consider any other form of tenure than the private rented sector. Generally they felt that they earned too much, or were otherwise ineligible or too low a priority for social housing, and did not earn enough for home ownership.
• Characteristics:
  • The research shows that it would be a mistake to see ‘HB claimants’ and ‘low income working families’ as totally distinct categories. Many LIWH have claimed HB in the past, sometimes several times, so the same household could one day be a LIWH and the next a HB claimant. Further, where HB is claimed as an in-work benefit, households are essentially both low income working households and HB claimants at the same time.
  • Another finding is the wide diversity among LIWH in the private rented sector. For instance the ‘families with dependent children’ who took part in the qualitative work contained a wide variety of household size, composition and ethnicity.

Notes to Editors

1. The research is based on findings from quantitative and qualitative interviews with LIWH in the private rented sector in Brighton and Hove, Teignbridge, Coventry, Leeds and North East Lincolnshire and in several locations in London.
2. This report was written by Bruce Walker and Pat Niner, formerly of the Centre for Urban Studies at the University of Birmingham.

Media Enquiries: 0203 267 5108
Out of hours: 07659 108 883
Website: www.dwp.gov.uk