Housing allowance cap could force thousands of Londoners out of their homes

The Local Housing Allowance was introduced two years ago to link rents to market value. But in last month’s emergency Budget, George Osborne announced that these will now be capped at £400 a week for a four-bedroom home and £340 for a three-bedroom property.

It is estimated the move will save £1.8bn a year.

London Councils says Londoners will be among the hardest hit as the rental market is so expensive in the capital. It estimates that 18,645 households in London could be forced to leave their homes due to the cap.

Of these, 14,661 households include children. Around half of affected families are in inner London boroughs.

It is estimated that of the 650,000 privately rented properties in London, one in three is occupied by families in receipt of benefits.

London Councils is calling on ministers to either revise the caps or allocate a budget to help Londoners cope with the expected shortfall.

He said the caps are likely to lead to a migration of families from inner London to outer boroughs.
 
London Councils chairman Jules Pipe said: "While we understand what the government is trying to achieve, setting an arbitrary cap without any consideration to London’s high property values will have unforeseen consequences.
 
"Many of the people who will be affected are in work but on low incomes and play an important role in keeping London’s economy and public services going."