You are viewing 1 of your 1 free articles
Homelessness charities ‘extremely disappointed’ by government’s failure to unfreeze LHA
The Labour government is facing criticism from leading homelessness charities over its “extremely disappointing” failure to unfreeze housing benefit in last week’s Budget.
The sector had hoped chancellor Rachel Reeves would use her first Budget to raise Local Housing Allowance (LHA) rates, which determines the amount of housing benefit private renters can claim.
Yet no statement on LHA was forthcoming, and it was later confirmed in a statement to the Commons by Liz Kendall, the work and pensions secretary, that the LHA would remain at current levels until 2026 “following their increase in April 2024”.
The decision, which is the latest in a series of LHA freezes over the past decade, sparked warnings from charities including Shelter, Crisis, Homeless Link and the Joseph Rowntree Foundation (JRF) that tenants will struggle to cover payments when rents rise.
READ MORE
Rick Henderson, chief executive of Homeless Link, described the decision as “extremely disappointing”.
He added: “We know that affordability is one of the key drivers of homelessness. Unfreezing LHA and reviewing the benefit cap to ensure that everyone benefits from the rate increase is one of the single most decisive actions government could take to prevent further people from facing the trauma of homelessness.”
Matt Downie, chief executive of Crisis, said it was “deeply concerning” that LHA rates will be frozen once again, especially given that homelessness was currently at a record high.
“To end homelessness in the long term we need to build more genuinely affordable homes. Until that happens, it’s critical that Local Housing Allowance rates stay in line with rising rents, so they cover at least the bottom third of private rents.”
JRF has repeatedly called for the government to permanently link LHA to local rents.
It estimates that a freeze next year will leave private renters who get housing benefits £243 worse off per year on average.
“It’s deeply worrying that we haven’t seen changes to social security that will seriously bring down hardship,” the anti-poverty charity said.
“In particular, private renters will feel let down by the choice to keep Local Housing Allowance frozen, meaning that it will become further out of step with local rent levels, which have soared in recent years.”
Polly Neate, chief executive of Shelter, also voiced concern. “Housing benefit was designed to cover the bottom third of local rents, but as rents continue to skyrocket, people who rely on it are faced with having to make up the shortfall.
“This, combined with so few social homes available, is forcing families into homelessness, often living out of suitcases in grotty, cramped temporary accommodation.”
Ms Neate called on the government to unfreeze the LHA so that families can “afford to keep their homes”.
LHA rates were restored to the cheapest 30th percentile in response to the COVID-19 pandemic in 2020, but were then frozen for four years until then-chancellor Jeremy Hunt reset them in his Autumn Statement in October 2023.
Ms Reeves’ decision will mean next year’s LHA rate will be kept at 2023 rent levels despite sharp rises in private sector rents since then. Data from the Office for National Statistics in August showed the average UK rent had increased by 8.6% in the 12 months to July 2024.
A recent study commissioned by London Councils and Trust for London revealed the impact the discrepancy was having, finding just 5% of private rental listings in London were affordable for low-income households using the LHA.
Yet other parts of the Budget have been welcomed, particularly the pledge of £233m in additional funding for local authorities to prevent increases in the number of families in temporary accommodation and to prevent rough sleeping.
However, Homeless Link said it was not yet clear through which mechanism the funding would be distributed, and whether it would be a new funding stream absorbed into existing programmes or “help plug the holes in local authority temporary accommodation overspends”.
