Budget must fix broken housing benefit system
Warning comes as almost a million private rented households have a gap between housing benefit payments and the rents they pay.
Almost a million private rented households reliant on Universal Credit experience a shortfall between the benefit payments they receive and the amount they pay in rent.
In total, 1.5 million households renting privately in Britain receive Universal Credit which includes support for their housing costs, known as the Local Housing Allowance (LHA).
However, an analysis of government data by the National Residential Landlords Association (NRLA) suggests that of this group, two thirds (64 per cent, nearly one million households) have a shortfall between their LHA payment and their monthly rents.
As of April, the LHA rate will once again be pegged to the lowest 30 per cent of rents in any given area.
This follows a freeze which was introduced in April 2020 which has caused benefit rates to be detached from market rents.
According to the Institute for Fiscal Studies, it led to just five per cent of private rental properties being affordable for those relying on the LHA.
The Institute for Public Policy Research has warned that even when the LHA rate is unfrozen, over 800,000 households on Universal Credit will continue to face shortfalls between their housing support payment and the rents they pay.
The picture is set to worsen given that LHA rates are due to be frozen again after April, leading to the rates becoming divorced from rent levels once again.
Ahead of next week’s Budget, the NRLA is calling on all parties to provide certainty to renters and responsible landlords by ensuring housing benefit rates remain pegged to at least the lowest 30 per cent of rents throughout the next Parliament.
Ben Beadle, Chief Executive of the National Residential Landlords Association, said: “It is time to fix the broken housing benefit system once and for all.
"The repeated freezes of the support available and the lack of clarity about rates in the future is causing insecurity and anxiety for renters and landlords alike. It is making it impossible for anyone to plan for the future.
“All parties need to commit to ensuring housing benefit rates permanently track average rents. This would end the bizarre and morally absurd spectacle of the support available being completely detached from the cost of housing for renters.”
-ENDS-
Notes:
- According to Stat Xplore, as of November 2023, there were 1,503,035 household in the private rented sector in receipt of Universal Credit with the housing cost element to it. Of this group 962,505 (64%) had a gap between the Local Housing Allowance they were paid and their monthly rents.
- An analysis by the Institute for Fiscal Studies in June last year found that since April 2020, the proportion of new private rental properties listed on Zoopla affordable for those in receipt of the LHA had fallen from 23% to just 5%.
- A recent report by the Institute for Public Policy Research, has noted: “We estimate that even when LHA is unfrozen, over 800,000 households on UC will continue to face shortfalls – while 30 per cent of private rented sector homes in an area may be affordable under LHA rates, those properties may not be available. “We expect that the situation will deteriorate as local housing allowance rates are frozen again from April 2024, leading the rates to become divorced from reality once again.”
- In its report on the private rented sector last year, the Levelling Up, Housing and Communities Select Committee called on the Government to commit to “conducting a review as soon as possible into whether they should once more be aligned with the 50th percentile.”
- Further information about the NRLA can be found at www.nrla.org.uk. It posts on X @NRLAssociation.
- For further information contact Ed Jacobs by emailing [email protected] or telephone 0770 6386 773.
- The NRLA’s press office can be contacted by emailing [email protected] or by calling 0300 131 6363.
