An all-party House of Commons committee is calling on Local Housing Allowance to be updated automatically and annually.
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.
One of 19 recommendations made by the Work and Pensions Committee’s new report, out this morning, says: “The evidence is clear that support for housing costs cannot be viewed in isolation from wider support provided through other benefits. When and if claimants experience a shortfall in rent, this can impact other parts of household budgeting and erode income otherwise intended for daily living costs. The Government should make a commitment to uprate annually Local Housing Allowance so that it retains its value at the 30th percentile of rents in a Broad Rental Market Area (BRMA).”
A more general recommendation made elsewhere in the report, and applying to all benefits and not just LHA, says: “There remains uncertainty for some benefits each year as to whether they will be uprated. We agree with the assessment of the Secretary of State that it is important that “there is an element of fairness to the consistency” of how uprating decisions are made. From financial year 2025–26, the Government should make an ‘Uprating Guarantee’ to uprate benefits annually with a consistent measure, for example prices … If the Government decides to deviate from the ‘Uprating Guarantee’, it should clearly set out its reasoning to Parliament. The Government should also undertake work to understand what impact the decision to not follow consistent practice would have on its benchmark of objectives for benefit levels.”
Sir Stephen Timms, the Labour MP who is the committee chair, says: “It is right that our benefit system incentivises work, but it should also provide an effective safety net for jobseekers, people on low incomes, carers and those with disabilities. We have heard plenty of evidence that benefits are currently at a level that leaves many unable to afford daily essentials or meet the unavoidable extra costs associated with having a health impairment or disability.
“The Government has previously said that it is not possible to come up with an objective way of deciding what benefits should be. Our recommendations are a response to that challenge, and the ball is now back in the Government’s court.
“On top of acknowledging and acting on a new benchmark and objectives linked to living costs, Ministers should commit to consistent uprating of benefits each year. It is time to end the annual ‘will they or won’t they’ speculation and all the worry that brings to those who rely on the social security system for financial support.”
Responding to the proposals by MPs on the Work and Pensions Select Committee, the chief executive of the National Residential Landlords Association - Ben Beadle - says: “We welcome the Committee’s call for housing benefit rates to be reviewed annually in line with housing costs. This has been a longstanding call by the NRLA and others. Too often the housing benefit system has left tenants and responsible landlords not knowing if rents can be covered from one year to the next. What should be a safety net has become a source of frustration and anxiety.
“All parties need to provide certainty for those reliant on benefits that they can keep a roof over their heads by ensuring rates permanently remain linked to market rents.”
Activists in Generation Rent also back the move. Chief executive Ben Twomey says: "This recommendation is very welcome and guaranteed support for renters in need is long overdue. Certainty for people receiving Local Housing Allowance means that the situation of the last few years, where these benefits remained frozen while rents soared, would not be able to be repeated.
"Generation Rent have been campaigning on this issue for a long time and are glad to see that reflected in the committee's report. We urge the government to adopt these findings at the earliest possible opportunity to reduce homelessness and mend the broken safety net for those in need.
"However the reliance on LHA is a concern and leads to the government effectively subsidising sky-high rents and putting money straight into landlords' pockets. This change must come with a commitment to address the cause of this issue. The government must slam the brakes on soaring rents to give renters the breathing space we need during the cost of living crisis."
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I recommend updates too. Withdrawal being the chief update. Many people don’t even try and support themselves these days!
One question to these MPs, “WHERE IS THIS MONEY COMING FROM?” 🤔
Taxpayers do not all get an annual increase and they are the ones who will be paying for this. 😡
Whilst I appreciate that increases in LHA help people already renting there are 3 big problems that come with the increases:
1. LLs increase the rent in line with the LHA allowance so these tenants are no better off
2. Anyone looking to move still can't because new rents are often significantly higher than existing rents so nothing on the market is at these rates
3. All rents go up because more people an afford higher rents.
The answer is to build more social housing.
LHA is still way below the cheapest available properties in my area.
Even though LHA has increased and the rent of my UC aided tenants has increased accordingly all it really means is that rent increases for my self funding tenants have been a bit lower this year.
I agree with all of your points
As we are businesses, not charities, supply and demand will, or at least should, dictate prices
The best solution to high rents is to increase supply of flats to rent by giving landlords more rights to get their properties back very easily. It doesn't take long then for there to be more available properties to rent than there are tenants who are looking. Rents fall and landlords will let to people on universal credit and those that require local housing allowance.
If the rental reform proposals had increased rights for landlords, not decreased them, then there would be no housing crisis.
More Social Housing means more people on the Social which is what the Government is trying to reduce.
That’s the main reason for getting rid of Section 21, a Court Order to vacate the private landlords property virtually guarantee them Social Housing and often jumped the queue. Sometimes the Tenants filed the Application themselves and the Landlord had to go along with it or else he had big trouble but no hope of Councils telling the truth about this reason just blame the Landlord, there you have it, S.21 RIP Housing Market RIP.
People don't have to be on the Social to get Social Housing. Different areas have different income and savings criteria. Some have £27K income for a single person and up to £86K for a family with a 4 bedroom entitlement. Others have £50K as the maximum income or savings.
A Section 21 eviction used to be a fast track route to Social Housing but it rarely works now. Councils are far more likely to try to place people in the PRS whenever possible.
BRMAs need to be much, much smaller. It's a nonsense basing LHA on a 500 square mile area when most of the jobs are in a 20 square mile area.
Giving people the choice of paying way more than LHA to live close to work or pay cheap rent and high travel to work costs is ridiculous. Either way that extra money is coming out of the food, clothing or emergencies part of their income.
LHA needs to be based on the 30th percentile of housing within a 5 miles radius of major employment areas.
Not to mention the reduction in pollution Far too sensible so will never be adopted!
Generation Rant at it again, more money going into landlords pockets? The reason for the sky high rents is because you lot have kicked this off by creating a storm where there didn't need to be one.
Do they not realise that mortgages are higher, Council Tax is higher, Defaults are higher, Councils telling tenants not to pay rent is higher, Damages need to be paid for, Taxation is higher and cannot be offset.
So the higher costs of running a portfolio outweighs whatever we get in rents. They should change the sentence to more money coming out of landlords pockets.
It will never go into my pocket because claimants cannot afford my rents. 😀
Best way A L keep those rents well above LHA that way you keep the dross out of your properties, it's just another way of saying NO DSS legally
The benefits bill will continue to rocket endlessly until claimants are required to to be, to a greater or lesser degree ‘productive’ and return some or all of the cost by contributing to society by working and/or giving some of their time constructively.
The root cause of crippling benefit costs is the entrenched ‘money for nothing culture’.
And labour will give even more money away in benefits as these people are their voters
It's disgusting. It's worse since Covid too with people WFH. Councils wanting 4 days weeks for the same pay....
What they ( want ) is to mind their own business and leave things alone they have no idea at all. If things aren’t working take solid advice. Not just waffle out bull.
How do Gen Rent get away with their nonsense. Landlords in the South East or making a 5% return. Why would anyone who (say) inherits a property worth £200K rent it out for less than 5%? Why bother? High rents are caused by high property prices and, I, as a existing landlord do not disagree with more house building.. How many new homes were built last year in respect to not only the population increase but increasing amount of smaller and single person households?
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