Lifting benefits freeze will not mean major rent rises
Reversing the benefits freeze will not drive increasing rents, according to our new analysis of official figures.
Successive governments have frozen Local Housing Allowance (LHA) rates in an effort to limit welfare spending, with new PM Andy Burnham, during his leadership campaign, speaking of the Government being 'forced to chase rents in the private-rented sector through the benefits system'.
However, after examining data from the English Housing Survey, we are arguing there is no evidence to back the suggestion that lifting the freeze will see any major increase in rents.
We have now written to the new social security minister, Sir Stephen Timms MP, asking for the freeze to be lifted and Local Housing Allowance (LHA) rates re-linked to at least the lowest 30% of rents as quickly as possible.
Vital support
According to the English Housing Survey (EHS), 24% of private renters receive housing support to help with the payment of their rent, with Local Housing Allowance (LHA) introduced in April 2008 to support claimants to cover the cost of the lowest 50% of rents in any given area. Three years later this was cut to cover the lowest 30%.
Between 2008/09 and 2015/16 when the LHA rate increased in line with rents each year, weekly rents increased by an average of 2.5 per cent a year.
However, between 2016/17 and 2024/25 when the LHA rate was frozen for all but two years, average weekly rents increased by 3.4 per cent a year.
Having been realigned with the bottom 30 per cent of rents in 2024/25, the previous Government took the decision to freeze the housing support available to renters from April 2025. It ended the link again between rent levels as they are today and the housing support available.
Impact
According to homeless charity, Crisis, less than 2% of homes in the PRS are now affordable for those in receipt of the benefit as a result of the freeze, with the Resolution Foundation arguing that restoring housing allowance rates to cover at least the lowest 30% of rents could lift 75,000 children and 125,000 adults out of poverty. Increasing it to cover the lowest 50% of rents would lift a total of 130,000 children and 215,000 adults out of poverty.
Locked out
Our chief executive Ben Beadle said: “Our analysis clearly shows that unfreezing housing benefit rates does not lead to an explosion in private sector rents.
“Those making this argument fail to see that rent levels are determined by a wide range of factors including tax and mortgage rates, demand from tenants and the costs of adhering to regulations.
“Freezing housing benefit rates merely locks many of those financially squeezed out of the rental housing altogether and undermines all efforts to tackle the scourge of homelessness.
“It is time for the Government to act and unfreeze housing benefits to reflect housing costs as they actually are, not as they were in the past."
Time for change
This week’s letter to Sir Stephen Timms MP, follows a joint letter which was sent to then-PM Sir Keir Starmer last year, calling for urgent action calling for the restoration of LHA rates to at least the 30th percentile and a full assessment of the likely social and economic impact of restoring LHA rates to the median rent.
Coordinated by the NRLA, Crisis and the Chartered Institute for Housing (CIH), it was signed by around 40 further organisations representing tenants, landlords and letting agents, local councils and key advice services and charities.
