New analysis shows case for unfreezing Local Housing Allowance in next week’s Budget

The Northern Housing Consortium (NHC), which represents housing organisations in the North, is calling on the Chancellor to use next week’s Budget to uprate Local Housing Allowance (LHA) to provide a lifeline for struggling renters in the North.

The NHC and others welcomed the decision from government last November to protect the most vulnerable in society by increasing benefits in line with inflation in April. However, one key benefit was missing, Local Housing Allowance – which provides support for those renting in the private rented sector. This remains frozen at 2020 rates, limiting the support available to private renters and adding to cost of living pressures across the North.

Rents have risen across the North since the LHA was frozen and analysis from the NHC’s Northern Housing Monitor shows that only 7% of 2-bed rentals advertised in the North are affordable for someone reliant on Local Housing Allowance to pay their rent. These increases have accelerated over time with huge gaps emerging between rents and what people are entitled to receive from the LHA. New analysis from the Northern Housing Consortium shows that for a three-bedroom family home to rent in Tameside and Glossop, the gap between real rents at the 30th percentile (as determined by the government’s Valuation Office Agency) and the frozen LHA is now £24 a week – £104 a month, or £1,248 a year.

The NHC say the Chancellor must re-set the Local Housing Allowance to cover at least the 30th centile of local rents, and then relink the benefit to the real cost of renting for future years.

Tracy Harrison, Chief Executive of the Northern Housing Consortium said:

“This continued freeze on LHA impacts many different households – from people living alone, or in shared accommodation, to couples and families. Tenants need to find the extra money from somewhere, and people are now having to make a choice not just between heating and eating but keeping a roof over their heads. Councils in the North are particularly worried about the LHA freeze as it’s resulting in homelessness presentations and driving up the use of temporary accommodation.”

Dave Richmond Chief Executive at St Leger Homes of Doncaster said:

“The government have worked hard to support local authorities to tackle homelessness, but when it comes to the issue of welfare benefits being sufficient to pay for private rents they seem to be asleep at the wheel. In Doncaster we are seeing more people needing council housing because they simply cannot afford to rent privately. This isn’t people being choosy, but an inability to find any private home that meets their needs at the LHA rate.

“Whilst Doncaster has 20,000 council homes the private rental sector is larger and unfortunately only a small proportion of those private properties are affordable to people on benefits. As a result we are placing more people in temporary accommodation, including hotels until we can find them a suitable alternative. The impact on the public purse is concerning, but more concerning is the impact on families of having to live in such a way.”

The long-term solution to this crisis is more affordable housing – but the government needs to act now and use next week’s Budget to uprate Local Housing Allowance to protect private renters in the North.