A cross-party House of Commons committee is urging for the automatic and yearly revision of Local Housing Allowance (LHA) rates to address pressing affordability concerns.
Since April 2020, LHA rates have remained stagnant, resulting in significant challenges for individuals reliant on this support. The Institute for Fiscal Studies highlights a concerning trend, noting a drastic decrease in the availability of affordable private rental properties for LHA recipients. Their research indicates that the proportion of new listings deemed affordable has plummeted from 23% to a mere 5%.
This call for automatic annual updates underscores the critical need to adapt LHA rates in line with evolving housing market dynamics, ensuring continued accessibility to suitable accommodation for vulnerable populations.
Starting this April, the Local Housing Allowance (LHA) rate will once again encompass the bottom 30% of rents within specific areas. Despite this adjustment, concerns persist as highlighted by the Institute for Public Policy Research (IPPR), which warns that over 800,000 households relying on universal credit will still grapple with shortfalls between their housing support payments and actual rents.
Looking ahead, housing benefit rates are slated to be frozen once more from the following year. Among the 19 recommendations proposed in the newly released report by the Work and Pensions Committee, a key suggestion emphasises the interconnected nature of housing support and broader welfare provisions. Addressing the implications of rental shortfalls on household finances, the committee urges the government to commit to annually updating the Local Housing Allowance, ensuring its alignment with the 30th percentile of rents within a Broad Rental Market Area (BRMA).
In addition to specific recommendations regarding the Local Housing Allowance (LHA), the report also advocates for a broader approach to benefit uprating. It suggests implementing an ‘Uprating Guarantee’ for all benefits, ensuring annual adjustments with a consistent measure, such as prices, starting from the financial year 2025–26. This measure aims to bring fairness and predictability to uprating decisions, with any deviations requiring clear justification to Parliament.
Sir Stephen Timms, the Labour MP and committee chair, underscores the importance of balancing work incentives with a robust safety net for vulnerable groups. He emphasizes the necessity of benefits adequately supporting individuals on low incomes, jobseekers, carers, and those with disabilities. Concerns have been raised about the current benefit levels, which often leave recipients unable to cover daily essentials or meet the additional costs associated with health impairments or disabilities.
“The Government’s assertion that there’s no objective method for determining benefit levels prompted our recommendations, putting the onus on them. We urge Ministers to adopt consistent annual benefit uprating alongside new benchmarks linked to living costs, ending the uncertainty for beneficiaries,” stated the committee.
Ben Beadle, CEO of the National Residential Landlords Association, welcomed the Committee’s proposal for annual housing benefit rate reviews aligned with housing costs. He highlighted the longstanding call for this adjustment, emphasizing the need to alleviate the uncertainty faced by tenants and responsible landlords regarding rent coverage, turning the safety net into a source of frustration and anxiety.
“All parties must ensure that benefit rates are permanently tied to market rents to provide certainty for those dependent on benefits to maintain housing,” emphasized activists from Generation Rent. Chief Executive Ben Twomey welcomed the recommendation, highlighting the overdue support for renters. He stressed the importance of ending the freeze on benefits while rents increase, urging the government to implement the committee’s findings promptly to address homelessness and fix the safety net for those in need.
Twomey expressed concern about the reliance on Local Housing Allowance (LHA), stating that it effectively subsidizes high rents and benefits landlords. He called for a commitment to address the root cause of this issue by controlling rent increases to alleviate the cost of living crisis for renters.
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