Landlords face widening Local Housing Allowance gap

Landlords face a greater risk of arrears and failed tenancies when housing support leaves benefit-receiving tenants unable to meet the full rent, Propertymark says.

It has written to DWP minister Baroness Sherlock and urged her to restore Local Housing Allowance (LHA) to at least the 30th percentile of local rents and update rates every year.

The professional body also wants the government to consider moving support to the 50th percentile when public finances allow, alongside better local market data.

It has asked the DWP to publish the number of Crisis and Resilience Fund applications, repeat requests, approvals and refusals, plus how much is paid towards rent.

Emergency payments questioned

In the letter, Propertymark’s head of policy and campaigns, Timothy Douglas, said: “We welcome the Crisis and Resilience Fund, which amongst other things, helps those facing a financial crisis faced with shortfalls in rent.

“We fully understand that Local Housing Allowance rates are not intended to meet all rents in all areas but during a period of rising rents we have repeatedly warned that the frozen Local Housing Allowance rates undermines affordability in the private rented sector and reduces access to housing for those who need support most.”

He added: “This increases the risk of homelessness, places additional strain on local authorities and temporary accommodation budgets.”

LHA affordability falls

LHA sets the maximum that many private tenants can receive towards their rent through Universal Credit or Housing Benefit.

Research published in February 2025 found that just 2.7% of private homes advertised to let were affordable to housing benefit recipients, down from 12% in 2021-22.

Low-income households must find the difference from stretched budgets as the gap between support and market rents grows.

Propertymark said the shortage of affordable and social housing means the private rented sector is the only realistic option for many people receiving benefits.

Affordability checks remain

Propertymark supports provisions in the Renters’ Rights Act intended to prevent discrimination against people receiving benefits.

However, it said those protections would have limited effect while housing support leaves most available homes beyond claimants’ means.

Letting agents must still complete fair credit and affordability checks to establish whether applicants can pay the rent and upfront costs, including a deposit.

Adequate LHA rates would help more tenants pass those checks, sustain their tenancies and give landlords greater confidence to offer them a home, Propertymark says.