Nikka Sulton

The Prime Minister has acknowledged that the continued freeze on Local Housing Allowance (LHA) rates is adding to the cost of temporary accommodation for councils.

Andy Burnham made the comments during questions in Parliament, where he suggested that changes to LHA could form part of a wider package of measures aimed at tackling the housing crisis.

His comments came shortly after he announced plans to ensure every rough sleeper in England has access to accommodation this winter.

Calls for Rent Controls

Former Labour leader Jeremy Corbyn used the parliamentary session to raise concerns about the growing gap between LHA payments and private rents.

He argued that housing support is failing to keep pace with the cost of renting, leaving many tenants having to make up the shortfall from their benefits.

Corbyn pointed to figures suggesting that fewer than 2% of private sector rents currently fall within LHA rates.

He questioned whether increasing LHA simply results in the allowance continually trying to catch up with rising rents. Instead, he called for some form of rent control alongside an increase in LHA to provide more immediate support for struggling renters.

LHA Freeze Is Adding Pressure to Council Budgets

Responding to the concerns, Burnham acknowledged that LHA rates have been frozen repeatedly in recent years.

As rents have continued to increase, this has widened the difference between the amount tenants receive in housing support and the amount they are expected to pay in rent.

Burnham said this gap is a major factor behind the high temporary accommodation costs being faced by councils in London.

The bill for temporary accommodation across London councils has reportedly risen above £500 million.

Rather than reducing public spending, Burnham argued that freezing LHA simply shifts the financial pressure elsewhere. Councils are left dealing with additional costs that have not been properly funded.

His comments suggest that increasing housing support could potentially reduce some of the financial burden currently being absorbed by local authorities.

LHA Rates Remain Frozen

The issue has become more significant because the Government decided to keep LHA rates frozen for a second consecutive year.

The freeze was announced as part of the Autumn Budget 2025, with the rates remaining unchanged during the 2026/27 financial year.

This has left many private renters receiving housing support facing a growing gap between their benefit entitlement and their actual rent.

Government figures show that almost 1.7 million private rented households were receiving help with housing costs as of August 2026.

Of those households, around 53% were facing a shortfall between their housing benefit and their monthly rent.

For tenants already struggling with higher household costs, the difference can make it increasingly difficult to remain in the private rented sector without using other income to cover the rent.

Could Changes to LHA Be Part of a Wider Housing Plan?

Burnham indicated that LHA reform could be considered alongside other measures designed to address problems within the housing market.

He also pointed to Government investment in social and affordable housing, particularly in London.

London has received a significant share of the initial allocations under the social and affordable homes programme, with council housebuilding forming an important part of the investment.

However, Burnham suggested that no single measure would be enough to resolve the UK’s housing problems.

Changes to housing support, greater investment in affordable housing and wider reforms to the private rented sector could all form part of a broader strategy.

Property Tax Reform Also Under Discussion

The debate over LHA comes as policymakers consider wider changes to the way property is taxed.

One proposal would involve replacing council tax and stamp duty with an annual charge based on property values.

Under an earlier model supported by Burnham, properties could face an annual levy equivalent to 0.48% of their value.

A separate proposal from a think tank has suggested going further by applying a 0.96% annual charge to second homes, empty properties and homes owned by non-residents.

However, the proposals do not mean that every privately rented property would automatically be subject to the higher rate.

The potential changes form part of a much wider debate about how property should be taxed and how the costs of housing services should be funded.

What Could This Mean for Landlords?

Any changes to LHA could have implications for landlords operating in the private rented sector.

If housing support continues to fall behind market rents, some tenants may struggle to cover their full rental payments. This could increase financial pressure on households and potentially contribute to rent arrears.

At the same time, landlords may face greater uncertainty if further rent controls or property tax reforms are introduced.

For landlords who rely on tenants receiving housing support, changes to LHA rates could therefore become an important consideration when assessing rental demand, affordability and the risks associated with individual properties.

The Government now faces pressure to address the gap between housing support and private rents while also dealing with the rising cost of temporary accommodation.

For councils, the issue is particularly significant. If LHA remains below market rents, the financial burden may continue to appear elsewhere in local authority budgets.

With housing support, social housing investment, rent controls and property taxation all being debated, further changes to the housing market could be on the way.