Government to overhaul landlord benefit deduction scheme
1 year ago | 32 comments
NRLA demands reform as just 5% of PRS properties are affordable for housing benefit claimants
12:01 AM, 18th March 2025, 1 year ago
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Only 5% of private rented properties are affordable to benefit claimants, according to new research.
Data from the National Institute of Economic and Social Research (NIESR) reveals the figure has fallen dramatically from 20% of rental homes being affordable to those in receipt of benefits just five years ago.
The National Residential Landlords Association (NRLA) is calling on the government to unfreeze local housing allowance rates (LHA).
Less than 2% of the private rental market is affordable
According to the research by NIESR, in parts of London and Cornwall less than 2% of the private rental market is affordable to those on housing benefit, and even in Tees Valley, the most affordable area, the figure still only rises to 15% of the private rental market.
In April 2024, the LHA rate was once again set at the lowest 30% of rents in each area. This followed a freeze introduced in April 2020, which had caused benefit rates to fall out of step with market rents.
In a statement to Parliament, Work and Pensions Secretary Liz Kendall MP confirmed that local housing allowance rates will remain unchanged in April 2025.
The NRLA warns freezing LHA rates for the duration of this Parliament will pull 50,000 renters into poverty, 60,000 will be pushed into deep poverty and 80,000 will be pushed into very deep poverty.
Fix the broken housing benefit system once and for all
The NRLA says more than 1.5 million households renting privately in Britain receive Universal Credit with support for their housing costs through LHA included.
According to data by the NRLA, 48% of private tenants in receipt of Local Housing Allowance (LHA) have a shortfall between their allowance and their rents.
Ben Beadle, chief executive of the National Residential Landlords Association (NRLA), said: “It beggars belief that ministers are making it harder for those reliant on housing benefits to sustain their tenancies, especially in an already fiercely competitive rental market.
“Tenants shouldn’t be expected to endure the uncertainty of not knowing what support they can access from one year to the next. It is time to end the insecurity they face and unfreeze housing benefit rates.”
Tags:
benefit claimants, Housing benefit, housing benefit system reform, LHA, Local Housing Allowance, NRLA, private rented properties, Universal Credit
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Member Since December 2023 - Comments: 1582
9:01 AM, 18th March 2025, About 1 year ago
Rent increases typically lag behind inflation.
The current LHA Rates were set using data gathered in September 2023, when inflation (CPIH) was 6.7% and had been much higher.
By the time the new rates were payable, it barely covered any typical rents and certainly not the 30% that it was designed to cover,
One problem is that many landlords see LHA as the base rate for rent. If the taxpayer is paying it, charge the full LHA.
Another problem is that some areas have LHA rates set at ridiculously high rates. It can be more than £3k per month in some areas and just £575 in others (for a 4 bed).
The move to HMOs is also an issue. Apart from the damage these properties can do to a residential area, they suck much more money out of the system.
The bottom line is that the current system isn’t affordable. Unemployed people don’t need to live in the most expensive areas. There should be a new, lower rate based on square meters for HMOs.