40 UK sector organisations unite in call for government to unfreeze LHA in next Budget

The number of homes covered by LHA reduced by more than a third this year, according to data from the Valuation Office Agency.

Additional research by Crisis in April found that less than 3% of private housing is affordable for people receiving housing benefit.

Restoring the LHA rates to the 30th percentile would lift 75,000 children and 125,000 adults out of poverty across the UK, the Resolution Foundation estimated in a report last year.

As of November 2024, nearly half of the 1.6 million private rented households receiving Universal Credit faced a gap between the support they received and their rent, the letter stated.

Signatories from across England, Wales, Scotland and Northern Ireland believe the freeze undermines measures in the Renters’ Rights Bill and highlighted warnings from the Local Government Association of the burden to councils from high temporary accommodation costs, which reached £2.8bn in England last year. 

They added: “While we welcome the UK government’s focus on developing strategies to end homelessness and child poverty, none of this will be possible without a welfare system that supports access to housing for those most in need. At present the system is simply not working.”

Gavin Smart, chief executive of the Chartered Institute of Housing, said: “The gap between what people receive in benefit and what they must pay in rent has become unbridgeable in many areas.

“The government must urgently restore LHA rates – at least to the 30th percentile of local rents – so that no one has to choose between keeping a roof over their head or heating their home this winter.”

Matt Downie, chief executive at Crisis, said: “With nearly 170,000 children living in temporary accommodation in England alone, urgent action is needed to support people who are being pushed to the edge and into homelessness right now.  

“Ministers must unfreeze housing benefit at the Autumn Budget, so that it covers at least the cheapest 30 per cent of private rents in a local area. In the immediate term, this is the most effective way to prevent homelessness rising further and to support people into settled homes within the private rented sector.  

“Without this, the UK government risks failing in its efforts to tackle homelessness, and councils will be forced to keep spending billions of pounds each year on poor-quality temporary accommodation.”

Florence Eshalomi, chair of the Housing, Communities and Local Government committee, said: “It’s shameful that so many families are without a home.

“Our committee heard compelling evidence that the decision to re-freeze LHA rates will leave families unable to afford private sector rents and place them at risk of homelessness.

“This is a false economy that increases temporary accommodation costs for councils and undermines the additional funding for homelessness services.

“At the Budget, the chancellor should look again at LHA and carefully consider the impact that freezing LHA is having on our homelessness services and families struggling to make ends meet.”

A government spokesperson said: “We’re tackling the impact of rising rents and the housing shortage with our commitment to build 1.5 million homes - including the biggest boost to social and affordable housing in a generation.

“We’re also putting more money in people’s pockets by uprating benefits, making Universal Credit deductions fairer, and helping people move out of poverty and into good, secure jobs as part of our Plan for Change.”