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What causes London's eviction 'hotspots'?

Author: Karen Barker, Senior Researcher, New Policy Institute

Evictions have been rising quickly in London, up by 79% in the last five years - an eviction rate among renters more than twice as high as the rest of England. Why is the rate so much worse in London than the rest of England?

A large rental sector, high rates of poverty, high housing costs , and high demand (which continues to push up rents and means landlords have little incentive to keep tenants who fall into arrears) all contribute.  However, there is huge variation in the rate of evictions between different London boroughs.  A common sense hypothesis to explain this would be that boroughs with more people in poverty are likely to have higher eviction rates. However, comparing eviction rates across boroughs indicates that the areas with the highest deprivation are not always eviction ‘hotspots’- so poverty alone is not driving London’s eviction spike.  Rather, we have found evidence that it is boroughs with a high proportion of low-income families with children living in the private rental sector (PRS) that is correlated with high eviction rates.   

 The highest eviction rates are mostly concentrated in Outer London- nine of the ten worst boroughs for evictions are in Outer London. Previous London Poverty Profiles have shown that the pattern of poverty in London is shifting from the inner core to outer boroughs, so one might assume that poverty in outer London is driving this phenomenon. However, there is not a straight-forward relationship between boroughs with high levels of deprivation and evictions. In 2015/16, Enfield had the highest rate of any borough (and indeed, any Local Authority in England) with 30 possession orders per 1,000 renting households. While Enfield is in the 20% of most deprived boroughs in England as a whole (it was ranked 64th out of 326 in 2015), there are many London Boroughs that rank as more deprived. Tower Hamlets, for example, is ranked the 10th most deprived borough, but has a much lower eviction rate than Enfield (8.5 possession orders per 1,000 renting households- the fourth lowest rate in London).

It seems evictions are not solely driven by a prevalence of people in poverty, but by a prevalence of low-income people in the private rental sector (PRS) - especially low-income families with children living in the private rented sector. In Enfield, one quarter of all children in the borough live in a family receiving Housing Benefit and living in the private rental sector. This is the second highest concentration of children whose families receive housing benefit living in the private rented sector in Great Britain (the highest is Blackpool).

Eight of the ten boroughs with the highest eviction rates are also in the ten London boroughs with the highest rates of children living in a family receiving housing benefit for a private rent.  Conversely, boroughs like Tower Hamlets with a small proportion of these children (only 7 per cent of all children) have far lower eviction rates. In fact, we found a strong, significant correlation between eviction rates and the proportion of children in the private rental sector whose families receive Housing Benefit. 

It is therefore a worrying trend that the proportion of families receiving Housing Benefit living in the PRS has been steadily growing over the past decade.  In 2008, one quarter (25 per cent) of families in London receiving Housing Benefit lived in the PRS- by 2016 the proportion had increased to almost a third (31 per cent), equivalent to 240,000 households.

High costs and short leases have long meant the PRS is precarious for low-income families in London. Welfare changes, mostly notably the lowering of rate of Local Housing Allowance (LHA) in 2011, reductions in how these are increased relative to rents over time and the benefit cap introduced in 2013 have made it even more so.  

In London’s high-demand rental market, landlords have no incentive not to evict a family that falls into arrears - they expect to be able to find new tenants who will be able to pay the full rent.  Freezes in LHA uprating or the benefit cap mean families receiving Housing Benefit in the private rental sector may also be particularly vulnerable to not having their tenancies renewed, as the benefit cap means their housing benefit may not cover rent rises. The majority of landlords in London are unwilling to let to tenants receiving Housing Benefit, making finding a new home extremely difficult for these families.  The end of a short hold tenancy was the single biggest reason for becoming homeless among statutorily homeless households in London in 2015/16, and the number of households who were homeless for that reason was five times higher in 2015/16 than in 2010/11.

This squeeze for families with children in the private rented sector is getting worse, with further reductions in the benefit cap and below target increases in affordable housing. The challenges associated with ‘eviction hotspots’ are likely to continue to intensify in coming years.