MPs warn frozen LHA rates leaving families struggling to afford rent

MPs have warned the gap between housing benefit and rents is putting pressure on tenants.

During a debate on housing costs, MPs from across political parties raised concerns over the local housing allowance (LHA) freeze and the risk of tenants falling into rent arrears.

The news comes as a charity has called on the Chancellor to unfreeze LHA rates at the upcoming Budget this week.

Government policy is not working

During the debate, Liberal Democrat MP Andrew George warned that frozen Local Housing Allowance (LHA) rates are leaving families struggling to afford private rents.

In his St Ives constituency, a family in Penzance faces a £987.24 monthly shortfall between their £812.76 housing allowance and the £1,800 cost of the cheapest three-bedroom property he found on Rightmove in nearby Marazion.

Mr George claims the government’s policy is not working and raised concerns over how the housing benefit freeze is calculated.

He said: “Current government policy is not working. It is driving the poorest into debt, food banks, homelessness and, in many cases, sadly, destitution.

“If the government know that a person’s private rental is bound to be at least x, why in my area of Kernow West, when the Valuation Office Agency assesses these factors, is the benefit level set at x minus 30% to 40%?

“Have the government reviewed the adequacy of the present methodology for LHA calculations, and are Ministers confident that the present arrangements do not risk tipping families and individuals in areas of high-priced private rental accommodation into rent arrears and potential destitution?

“I understand that the Valuation Office Agency collects the rental data from landlords to determine the LHA, but how accurate and up to date is that data?”

Rental inflation across the country varies

In response, Stephen Timms, minister for equalities, said: “Rental inflation across the country varies according to specific challenges in each area.

“The local housing allowance determines the maximum financial support for renters in the private rented sector. Households in similar circumstances living in the same area are entitled to the same maximum rent allowance, regardless of the rent that they are required to pay.

“Local housing allowance was never intended to cover all rents in all areas. The rates for that are set annually by the Secretary of State for Work and Pensions. Future decisions will be based on the Government’s priorities, and those are the priorities that the Chancellor will have in mind as he makes his announcements in the Budget.”

Elsewhere in the debate, Labour MP Chris Hinchliff called for rent controls, claiming research by the Autonomy Institute suggested freezing rents at 2027 levels could save renters more than £14 billion over four years.

However, Mr Timms argued against rent controls, saying they “do more harm than good”. The government has previously said it has no plans to introduce them.