Housing Benefit freeze sees tenants falling ‘£200 short’ every month

Families on low incomes are grappling with a monthly deficit of £200 due to a stagnant housing benefit that doesn’t cover soaring rents, a charity warns.

Housing advisors from Wiltshire Citizens Advice told the BBC that tenants relying on Housing Benefit are facing a severe shortage of rental properties that are covered by it.

And the result is causing a financial strain on vulnerable households.

Claire Waltham-Smith from the charity says tenants are resorting to sacrificing essentials to pay their rent.

She also says that families are on the brink of eviction due to the insufficient benefit support.

‘People are falling into rent arrears’

Ms Waltham-Smith told the BBC: “People go without energy or food, they are falling into rent arrears, they face eviction.

She points out that a tenant’s LHA is £650 per month but the cheapest flat available is £850 – and most are more than £900.

She says: “That leaves them with a shortfall of £200, £250 per month.

“People on these incomes can’t find that kind of money every month.

“They end up going without other essentials or falling into rent arrears.”

Renters on low incomes qualify for Universal Credit

Most renters on low incomes qualify for Universal Credit which includes a housing component based on the Local Housing Allowance (LHA).

Since April 2020, however, the LHA has remained frozen, despite rental costs nationwide surging by more than 20% since 2020.

Recent statistics indicate an additional 5.3% rise in rents over the past year alone.

The BBC report highlights that the shortage of homes isn’t confined to Wiltshire – in North Somerset, there are virtually no available rental properties available for anyone on housing benefit.

Private rented properties covered by the Local Housing Allowance

Economists from the Institute for Fiscal Studies (IFS) have found that there has been a huge decline in private rented properties covered by the Local Housing Allowance.

The freeze initially covered around 23% of such properties but by this year, this coverage had plummeted to just 5%.

Tom Waters, the IFS researcher, expressed concern over the dramatic decline, highlighting the fact that four in 10 private renters rely on housing benefit.

A cross-party committee of MPs has also recently called for a revision of the Local Housing Allowance, condemning the stagnancy of benefit rates.

A government spokesman said: “We are set to spend over £30 billion on housing support this year, on top of significant cost of living help worth around £3,300 per household.

“On top of this we have raised benefits and the state pension in line with inflation and increased the National Living Wage as we bear down on inflation to help everyone’s money go further.”

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