Blog: Homelessness and the cost of living crisis

News | Posted on Thursday 8 December 2022

Homelessness, as most people think of it, involves people living rough on the street, but it actually encompasses a much larger population whose existing housing has become unsustainable.

The triggers for homelessness can be financial, as it disproportionately affects the poorest in society, the ever upward trend in private sector rents becoming unaffordable or the interest rates on the next mortage deal cannot be managed.

Homelessness, particularly what we call ‘family’ homelessness, also results from domestic abuse, as most of the families are actually women lone parents whose relationships have broken down, frequently as a result of domestic abuse. Some groups, such as people who have experience of the care system as a child, or who are low level offenders with repeated short spells in prison, are at heightened risk. There is also evidence that wider socioeconomic disadvantage, like belonging to some cultural and ethnic minorities in UK society, is also reflected in higher rates of homelessness and people who are LGBTQI can also be over-represented. Among those experiencing long-term and recurrent homelessness, rates of severe mental illness, learning difficulties, addiction, limiting illness and disability can be high.

The cost of living crisis is important for homelessness in the UK in four ways.

The first is that homelessness services may be struggling to keep their doors open as energy bills and other costs spike upwards. Public spending has not been adjusted to allow for the sudden increases in costs that hostels, night-shelters, day centres and the housing-led and Housing First services using ordinary housing to prevent and end homelessness. A poll taken by Homeless Link, the federation of English homelessness services, reported that homelessness services will start to close without an inflation matching increase in funding, in a context in which homeless service funding has been falling and becoming increasingly precarious for more than a decade.

The second is that as homelessness is triggered by poverty, the risk of families, couples and individuals facing eviction and possible homelessness is increasing rapidly, as both energy costs and – in much of the UK – private sector rents reach unprecedented levels and mortgage interest rates increase. In 2020/21, 10.5 million people (16 per cent) were in relative low income before they paid their housing costs, once rent and mortgage payments were taken into account, 13.4 million people were in relative low income after-housing cost, including some 3.9 million children.

Recent estimates by colleagues at the University of York show that with the current £3,000 ‘cap’ set for April 2023, there will be some 18.6 per cent of households spending 25 per cent plus of their income after housing costs on energy. For millions of people, there is no slack, no financial reserve to fall back on, if rents and mortgages continue to rise. Homelessness systems are already overwhelmed in much of the UK. In June 2022, 94,870 homeless households were in temporary accommodation arranged by local authorities in England, containing 120,710 dependent children. In London, there were 15 households in temporary accommodation for every 1,000 households.

The third issue is that exits from homelessness will become more expensive and difficult because shortages of housing are forcing up private rented costs and not reducing house prices significantly, even as the UK economy contracts. UK housing supply is inelastic, creating a situation where there is always far less affordable housing than is needed across most of the UK. This means that while house prices do fall, owner occupation remains out of reach of around 40 per cent of the population, and, as interest rates increase within the wider cost of living crisis, people who had planned to buy are resorting to an ever more overheated private rented sector. Poor standards in the private rented sector and landlord behaviour have driven calls for greater regulation. New affordable and social/council housing development in the UK dropped to next to nothing from the early 1980s onwards and has never recovered while, in England, some 1.9 million social rented homes have been sold, 40 per cent of which are now owned by private sector landlords. Those most in need of an adequate, affordable and secure home, people experiencing homelessness, face a situation in which housing that they could afford is often simply not available. As housing costs continue to rise, alongside energy and food costs, affording an exit from homelessness is becoming an ever greater challenge.       

The fourth issue is the thermal efficiency of the UK’s housing stock, which is among the worst in Europe. Much of the housing people will be living in 30 years from now has already been constructed and constructed rather badly in terms of addressing the climate crisis and keeping energy costs manageable. Housing inequalities, housing exclusion and homelessness have become inextricably linked with questions of climate justice, because a home that can help prevent or reduce homelessness, will need to be a thermally efficient home if low income families and individuals are to remain secure from homelessness. Pushing the costs of retrofitting housing onto lower income people will raise housing costs still more, while not supporting them and enabling them to retrofit their housing will mean that their energy costs, not their rent or mortgage payments, could be the trigger for homelessness. The UK has cut programmes that, prior to 2013, were reducing thermal inefficiency in the housing stock, to pieces.  

The refusal to move beyond false images of homelessness just meaning people living rough, to recognise that England typically has around 120,000 homeless children in temporary accommodation at any one point, is political. Rough sleeping can be portrayed as a function of addiction and mental illness, even if those narratives are actually false, whereas large numbers of homeless families, whose main characteristic is being poor, looks more systemic, a result of poverty, failed housing policy and draconian and inadequate welfare systems. The UK’s broken housing markets, broken energy systems, a broken welfare system and broken food system, all of which have costs that are spiralling out of control, will only make homelessness worse.

Nicholas Pleace and Carolyn Snell

School for Business and Society