Call for Govt to End LHA Uncertainty

The UK Government has been urged to assess the “inadequacy and volatility” of the Local Housing Allowance (LHA) in response to new figures showing private rent inflation. The Office for National Statistics (ONS) recently reported that private rental prices have risen by 8.4% across the UK between August 2023 and August 2024.

Average rents have soared to £1,327 (8.5%) in England, £752 (8.5%) in Wales, and £969 (7.6%) in Scotland over the past 12 months. LHA is crucial in determining housing benefits for private renters, yet it has been frozen for four years prior to a recent increase in April 2024.

Despite the adjustment in April, LHA is already falling behind the actual cost of rents due to rent increases in the private rental sector since September 2023. This situation is creating hardship and uncertainty for many low-income individuals who rely on LHA to secure housing.

Private renters, especially in high-demand areas like London and the South East, are facing a shortage of affordable rental properties. As LHA fails to cover most available rental homes in these regions, tenants are forced to choose between unaffordable housing or sacrificing other essentials to meet rent payments.

The freeze on LHA exacerbates the financial burden on renters, forcing them to bridge the gap between support received and higher rental costs, leading to increased hardship. Moreover, the uncertainty of LHA levels leaves renters without security, relying on additional support from local councils or going without essentials to meet rent obligations.

Rachelle Earwaker, a senior economist at the Joseph Rowntree Foundation, emphasised the need for the government to take action during the upcoming Budget. Earwaker highlighted the necessity of permanently aligning LHA rates with rental costs to alleviate the uncertainty faced by low-income private renters.

She pointed out that a significant number of low-income private renting households are already struggling to afford essentials like food and heating, underlining the urgency of addressing the LHA issue. A commitment to consistently tying LHA to the cheapest 30% of private rent prices would represent a vital step towards reducing hardship in the private rental sector.