Charities call on Prime Minister to end Local Housing Allowance freeze

Charities have warned that the government’s decision to freeze Local Housing Allowance (LHA) rates could push nearly 200,000 families into poverty.

At the Budget, the government confirmed that LHA rates will remain frozen for 2027-28.

Shelter, Generation Rent and 19 other charities have now written an open letter to Prime Minister Andy Burnham, urging the government to reverse the decision and unfreeze the LHA rates.

Introduce rent cap

The charities are urging the Prime Minister to invest £1.7bn to end the freeze and introduce an inflation-linked rent cap.

As reported by The Independent, the letter says: “You have been clear that tackling homelessness is a top priority.

“These two steps would bring your vision within reach by tackling the cost of rent and ensuring that housing support for those who need it actually covers the cost of a home.”

However, as previously reported by Property118, rent controls do more harm than good.

According to the Institute of Economic Affairs (IEA), while rent controls may initially lower rents for existing tenants, they typically lead to higher rents in uncontrolled sectors and reduce housing supply and quality.

Even in Scotland, the rent cap has been blamed for soaring rents, which have increased by 11.6%.

Disappointing government has maintained freeze

According to the Resolution Foundation, the average shortfall between Local Housing Allowance (LHA) rates and the lowest 30 per cent of rents has reached an all-time high of 23.3%.

For a typical family renting a two-bedroom home, this represents an ‘affordability gap’ of £170 a month.

Generation Rent, chief executive, Holly Williamson said: “Homes are the foundations of our lives, so it is hugely disappointing the government has maintained the freeze of Local Housing Allowance. When housing benefit doesn’t cover the rent it forces families into impossible decisions, traps them in poverty and leaves them vulnerable to homelessness, with councils picking up the pieces.

“This decision also brings into question the government’s goal of ending rough sleeping, as it will mean there are very few affordable long-term homes for people currently sleeping rough.

“The government must tackle the root cause of the rental affordability crisis in our country by limiting annual rent increases, ensuring rents cannot continue to rise faster than wages and helping reduce the long-term cost to the taxpayer.”

Government defends decision

However, the government defended its decision, pointing to the increase in LHA rates in 2024 and arguing that wider measures will help renters in the long term through the Renters’ Rights Act.

A spokesperson told The Independent: “We’re determined to turn the tide on poverty and ensure people can access secure, affordable homes.

“That’s why we increased Local Housing Allowance rates in 2024 at a cost of around £7 billion over five years, while also investing over £40 billion in affordable and social housing and launched a £1 billion Crisis and Resilience Fund.

“Alongside this, our landmark Renters’ Rights Act will protect tenants from unfair rent hikes and bidding wars, while we’re building the homes this country needs to help tackle the root causes of housing affordability pressures.”