Frozen LHA rates leave renters unable to afford PRS homes

Less than 2% of private rented homes are affordable to people on housing benefit, as charities call on the government to unfreeze Local Housing Allowance (LHA) rates.

Data from Zoopla reveals that fewer than two in 100 private rental properties listed across Britain (1.9%) are now affordable for people receiving housing benefit.

The average gap between housing benefit payments and the cheapest third of rents for a two-bedroom home has reached £403 per month.

Citizens Advice, Crisis and other housing charities are urging the government to unfreeze LHA rates, warning that keeping them frozen will push more households towards homelessness.

People on low incomes are facing an impossible situation

According to data from Crisis and Zoopla, just 1.2% of properties in London were considered affordable for households relying on housing benefit. Wales was the worst-affected nation, with only 0.7% of private rental properties advertised being affordable, compared with 1.8% in England and 5.5% in Scotland.

Citizens Advice also reported that more than 6,600 private renters in England and Wales with housing benefit issues needed to access food banks, a 79% increase from just  3,700 people in 2021/22.

Matt Downie, chief executive at Crisis, has called on the government to unfreeze LHA rates to tackle the cost-of-living crisis.

He said: “Across Britain, people on low incomes are facing an impossible situation. With housing benefit frozen, more and more people are struggling to cover the cost of rent and essentials like food and bills, forcing them into a cycle of debt, poverty and homelessness.

“What’s more, the freeze puts unsustainable pressure on an already overworked system. With local authorities already under immense strain and temporary accommodation costs at an all-time high, without urgent change we will only see more people trapped in this vicious cycle.

“To bring rates of homelessness down, we must have a welfare system that supports people on the lowest incomes. It’s crucial that housing benefit is uprated to cover the cheapest third of rents so it can work as intended and so that no one is faced with the trauma of losing their home.”

Rents are spiralling

Dame Clare Moriarty, chief executive of Citizens Advice, added: “Many families are already at breaking point, cutting spending back to the bone and still finding themselves unable to pay the rent or put food on the table.

“Every day our advisers are hearing from more and more people who have simply run out of options. While housing benefit remains frozen, rents are spiralling, meaning private renters are cutting back, going without, or falling deeper into debt.

“If the government is serious about turning the tide on the cost-of-living crisis, getting to grips with the soaring cost of housing is essential. Private renters are struggling to keep their heads above water; unfreezing housing benefit would throw them a vital lifeline.”

According to Citizens Advice, nearly half of private renters (48%) in the UK receiving Universal Credit in the UK have had to cut back on essentials like food, transport and energy costs in the last six months.

The data also reveals that the number of private renters with housing benefit issues needing support with rent arrears has increased by nearly 20% over the past four years, while those requiring advice on homelessness rose by 58% over the same period.

As previously reported by Property118, the government has defended freezing LHA rates, claiming a range of factors were considered before the freeze, including “the challenging fiscal context”.