Local Housing Allowance - momentum grows for annual increase

Propertymark is joining a growing chorus demanding an annual uprate of working age benefits and Local Housing Allowance.

LHA rates have been frozen since April 2020. The Institute for Fiscal Studies has noted that since then, the proportion of new private rental properties listed on Zoopla affordable for those in receipt of the LHA has fallen from 23 per cent to just 5 per cent.

From April this year the LHA rate will once again cover the bottom 30 per cent of rents in any given area. However, the Institute for Public Policy Research has warned that even when the rate is unfrozen, over 800,000 households on universal credit will continue to face shortfalls between their housing support payment and the rents they pay.

At present, housing benefit rates are set to be frozen again from next year.

Now Propertymark is backing calls from the House of Commons Work and Pensions Committee and the National Residential Landlords Association for an annual increase.

Timothy Douglas, Head of Policy and Campaigns at Propertymark, provided evidence to the Work and Pensions Committee’s inquiry in June last year: he  stated that vulnerable tenants are being pushed out of the private rented sector due to benefits not keeping pace with rents, and reiterated calls for the Local Housing Allowance to at least be set to the thirtieth percentile.  

In order to stop the uncertainty experienced by people claiming benefits, the Committee last week issued a report on benefit levels in the UK, which urges the UK Government to implement a fresh ‘uprating guarantee’, to uprate working-age benefits alongside the Local Housing Allowance rate every year.   

The Committee stated these recommended measures as part of a 2022 cost of living report to explore the suitability of benefit levels, despite the UK Government stressing that there was no objective method of determining what benefits should be.   

Douglas says: “It is positive to see that the Work and Pensions Committee has reiterated Propertymark’s calls for an annual uprate of working age benefits and Local Housing Allowance. 

“The UK Government must set the Local Housing Allowance at the fiftieth percentile and increase this annually to keep pace with market rents. 

“Benefits are currently at a rate that result in many unable to pay for daily essentials, and the welfare system should provide a substantial safety net for the most vulnerable people in society. It is down to the UK Government now to provide an effective way of determining what benefits should be.”