Housing benefit fails to cover rent for 61% of households
New figures show 61% of households in England and Wales are seeing a shortfall between the benefit payments they receive and the rent they must pay.
The Local Housing Allowance data, released by the Department for Work and Pensions showed the number of households experiencing a shortfall was 52.8% higher in May 2023 than in April 2020, when LHA rates were frozen at September 2019 prices.
This is the equivalent of 802,437 households, up from 525,088, with the average difference being £750 a year.
LHA rates are used to calculate benefit payments for housing costs. Historically rates were set at the average rental price for an area, with the sum regularly reviewed. However the rate was reduced to the 30th percentile in 2011.
They were frozen between 2016 and 2020 when they were realigned to the 30th percentile once more at the outset of Covid, based on rental prices as of September 19. They have remained at this level despite real-world rents going up by more than 10%.
The news comes just weeks after analysis from the Joseph Rowntree Foundation (JRF) suggested Local Housing Allowance (LHA) rates now cover just 18% of the cheapest private rents.
The foundation analysed Government data to arrive at the figure, with the Institute for Fiscal Studies claiming only 5% of private rental properties listed for rent on Zoopla in the first quarter of this year would be covered by LHA.
NRLA campaign
The NRLA has been campaigning on the issue for some time, claiming the Government must reverse the freeze to support both the 38% of private renters in receipt of housing benefit, and the landlords housing them.
NRLA Chief Executive Ben Beadle has recently given evidence to a House of Commons Work and Pensions Committee, which launched an inquiry into the adequacy of working-age benefit levels in the UK earlier this year. He said: “Unless action is taken now to change LHA rates to reflect real-life rents there is a real risk that some of the most vulnerable tenants may fall into significant arrears or homelessness.
“Keeping Housing Benefit rates pegged to market rents is vital – and the Government needs to carry out an impact assessment on its decision to freeze LHA rates this year as a matter of urgency, before determining rates for 2024 – 2025.”
As part of its welfare campaign the NRLA is asking the Government for:
• A reversal of the freeze on LHA rates – which should instead be aligned to at least the 30th percentile – based on today’s rents
• The abolition of the five-week wait for Universal Credit payments
• Payment of the housing element of Universal Credit in advance to better reflect rent payment cycles
• The replacement of the existing advance payment loan with a grant
• Housing benefit paid directly to landlords.
More information
To find out more about the NRLA’s campaigns work on benefits click here.
