Housing Insecurity and Homelessness: Evidence from the UK

Abstract Homelessness and precarious living conditions are on the rise across much of the Western world. This paper exploits quasi-exogenous variation in the affordability of rents due to a cut in rent subsidies for low income households in the United Kingdom in April 2011. Using comprehensive district-level administrative data, we show that the affordability shock caused a significant increase in: financial distress, evictions, property crimes, insecure temporary housing arrangements, statutory homelessness, and actual rough sleeping. The most notable rise in statutory homelessness is driven by families with children, lone parents, individuals with existing health conditions, and as a result of having been evicted. We estimate that the fiscal savings were low and shifted towards the local administration: savings by the central government were partially offset by increase in council spending to meet statutory obligations for homelessness.