Increasing the Local Housing Allowance would be the quickest way for the government to improve access to affordable homes, say housing charities.
According to analysis by the Institute for Fiscal Studies (IFS), in 37 local authorities, the gap between market rents for three-bedroom homes in the cheapest 30% of the market and the actual local housing allowance rates is £100 or more.
Housing benefits or universal credit payments are capped by LHA rates which were last updated in March 2020 to cover the rent for the cheapest 30% of properties in each local authority.
With increasingly higher rents during the last two years, more than half (54%) of renters claiming housing benefits have to cover a shortfall in their payments, according to Shelter.
Cost of living The cost of raising the allowance in line with 2022 rents would be £650m and would help 1.1m households, the IFS calculates. It warns that if the government does not step in to ease the housing crisis, an additional 73,000 families will become homeless in 2023, bringing the total to 300,000.
Hunt’s budget Shelter hopes Chancellor Jeremy Hunt will bring some relief by removing the freeze on LHA tomorrow.
“Housing benefit isn’t even doing the job it was designed to do,” Polly Neate, chief executive of Shelter, tells The Telegraph.
“Private rents are rocketing and it’s almost impossible to find a home within the local housing benefit rate. Thousands of families are at risk of falling into homelessness as they desperately try to plug the gap between housing benefit and the cost of real rents.”
“In many parts of the country, the private rental sector is really the only place these families can go. That is hard for landlords to manage.
“Even if they want to help, they can’t make the numbers work. This is putting pressure on the rental sector that shouldn’t be there,” adds Jasmine Basran, head of policy and campaigns at Crisis.
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