Benefits win was vital to support the vulnerable - but more is needed

Tireless campaigning by the NRLA saw Chancellor Jeremy Hunt announce the Government will finally lift the freeze on Local Housing Allowance (LHA) rates. Here NRLA CEO Ben Beadle explains what this means for landlords as well as tenants – and what needs to happen next.

The Chancellor’s decision to lift the freeze on Local Housing Allowance rates is long overdue.

LHA rates are used to calculate the amount of housing benefit a claimant is paid under Universal Credit, and tenants have been left struggling to make ends meet since the rate was frozen in cash terms back in April 2020, based on rental prices in September 2019.

This is despite real-world rents having increased by a fifth since then.

The move left increasing numbers of some of the most vulnerable renters struggling to find a home, with figures from Zoopla showing only 5% of properties advertised on the site are affordable for benefits claimants under current rules.

What will lifting the freeze mean – and when will the change come in?

During the Autumn Statement last week Jeremy Hunt confirmed he will be increasing the LHA to the 30th percentile of local market rents, meaning renters’ benefits payments will reflect rents charged in the lowest third of the market – opening up the number of homes available to them.  

This will also help landlords whose tenants were facing a shortfall between their housing element of their Universal Credit payment and their rent.

The call for the lifting of the freeze was a key pillar of the NRLA’s submission to the Treasury ahead of the Autumn Statement, and the Government said that 1.6m low-income households will be made better off, gaining £800 on average in 2024/25.

According to the announcement the change will be introduced at the start of the new financial year, in April 2024, with the realignment likely to be based on September 2023 market rents.

So far, so good….

…. However there is a ‘but’.

As part of the Chancellor’s announcement he revealed a further freeze will be placed on LHA rates from 2025/26 onwards, meaning we’re likely to see the same issues we’ve witnessed over the last three years build once more.

Doing the same thing over and over again and expecting a different outcome is said to be the definition of insanity – which makes it difficult to understand the rationale behind this decision.

It is abundantly clear that restricting benefits by pegging them to historic rent levels doesn’t work.

It’s not right, its not fair and it is punishing some of the most vulnerable members of society and the landlords who house them.

Don’t get me wrong, we welcome the Chancellor’s decision, yet it needs to be the start of an ongoing commitment to uprating benefits each year, so that they continue to be linked to market rents. It will not work as a time-limited policy.

Earlier this year I told the Work and Pensions Select Committee that the Local Housing Allowance freeze has been 'disastrous', with our Policy Director, Chris Norris using the NRLA fringe event at the Labour Party Conference to describe it as ‘travesty’. 

We stand by these opinions, and will continue to challenge the decision to ensure landlords and tenants are properly protected, as well as continuing to fight for pro-growth measures to tackle the supply and affordability crisis affecting landlords and tenants across the board.

More information

Discover more about the NRLA's welfare campaign.

The NRLA also runs a course for landlords that rent to tenants in receipt of Universal Credit.