Universal Credit claimants face housing affordability crisis despite benefit increase

Universal Credit claimants face a severe shortage of affordable rental properties, with a recent rise in housing benefit failing to keep pace with soaring rents.

While Local Housing Allowance (LHA) will increase for the first time in four years from this week, research by Savills reveals a significant gap.

It says that the average LHA rise of 17% falls short of the 28% average growth in private rents over the past four years.

This translates to just 8.5% of properties being affordable for benefit claimants, far below the targeted 30% minimum.

‘Issues of affordability are not exclusive to those reliant on LHA’

Steve Partridge, a director at Savills’ affordable housing consultancy, said: “Issues of affordability are not exclusive to those reliant on LHA or the private rented sector.

“They impact all tenures and are a result of a shortage of supply of housing to both rent and buy, combined with a spike in housing demand.

“This emphasises the need for delivery of more homes of all tenures.”

He added: “Increased housing supply would also help reduce the numbers of people living in temporary accommodation.

“According to government figures, there were 105,750 households living in temporary accommodation in England in 2023.

“This was the highest level on record and 10.5% above the year before.”

Research also reveals regional disparities

The firms’ research also reveals regional disparities with Scotland having the highest proportion of affordable listings (14.9%), followed by England (8.2%) and Wales (5.5%).

However, no area meets the 30% target, with Lincoln boasting the highest coverage at 24.5%.

The issue is further complicated by property size, Savills says.

While LHA covers more one-bedroom properties (15.7%) than others, followed by four-bedrooms (9.8%), it falls short of the demand for two and three-bedroom properties, typically preferred by families with children, which make up 59% of benefit claimants in the private rented sector, according to the English Housing Survey.

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