Andy Burnham warns LHA freeze is driving up temporary accommodation costs

The Prime Minister has admitted Local Housing Allowance (LHA) rates being frozen are contributing to councils’ temporary accommodation costs.

Answering questions in Parliament, Andy Burnham hinted at changes to LHA could form part of his plan to tackle the housing crisis.

Mr Burnham’s comments come as he has unveiled plans to offer every rough sleeper in England accommodation this winter.

Bring in a form of rent control

Former Labour leader Jeremy Corbyn asked Mr Burnham to consider bringing in rent controls to tackle rising rents.

He said: “Could I ask him to look seriously at the issue facing renters living in the private rented sector, where the local housing allowance, in most cases, comes nowhere near the level of rent being charged?

“In reality, less than 2% of private sector rents are within the local housing allowance. Raising the local housing allowance often means chasing the market all the time, and it therefore costs more and more.

“He must know the numbers of people living in the private rented sector. Surely the obvious answer is to bring in a rent control of some sort to the sector, and immediately look at not postponing the rise in the local housing allowance, but to bring real relief to people who are desperately up against it and subsidising their rent out of their benefits”.

LHA freeze does not save money

In response, Mr Burnham said: “LHA rates have been repeatedly frozen in recent years, and that has meant that the gap between benefits and rents has grown bigger and bigger.

“It is the biggest reason that London councils have a huge temporary accommodation bill, which I think has gone over half a billion pounds now. The freeze does not save money, because it just creates an unfunded pressure in council budgets.

“He may have seen that in our first allocations from the social and affordable homes programme, London is the biggest beneficiary by some distance, particularly through the building of council homes in London.

“We have made a significant down payment there. I hear what he says about local housing allowance. We need a package of measures to turn the housing market around”.

During the Autumn Budget 2025, ministers announced that LHA rates will remain frozen for a second consecutive year in 2026/27.

According to government data, almost 1.7 million private rented households across the country were receiving housing cost support as of August this year, with 53% of those households facing a gap between their housing benefit payments and their monthly rent.

Annual property tax

The Prime Minister’s comments come as a number of proposals for reforming the housing market are being considered, including potential changes to the way property is taxed.

As previously reported by Property118, landlords could face an annual property tax under proposals to replace council tax and stamp duty with a charge paid by property owners.

The model previously backed by Mr Burnham would see properties subject to an annual charge of 0.48% of their value.

A new proposal from one think tank would go further, suggesting a rate of 0.96% for second homes, empty properties and homes owned by non-residents.

However, the published plans do not suggest that every privately rented property would automatically be subject to the higher rate.