Housing Benefit Freeze Leaves Low-Income Renters Struggling as Rent Soars, Experts Warn

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Low-income renters in the UK are expected to face mounting financial challenges due to the government's decision to freeze housing benefits, despite escalating rent prices. Experts are raising concerns over Rachel Reeves's recent budget decision to keep the Local Housing Allowance (LHA) at its current levels until 2026. The decision comes amidst an ongoing housing affordability crisis, exacerbating the difficulties faced by vulnerable renters.

 

The announcement was confirmed by Liz Kendall, the Work and Pensions Secretary, who stated that LHA, which determines the amount of housing benefit for claimants based on local rent rates, will remain unchanged. This freeze extends a trend seen over the past decade, with the Conservative Party having previously frozen LHA for seven of the last twelve years, before briefly increasing rates earlier in 2024.

 

Cara Pacitti, a senior economist at the Resolution Foundation, expressed disappointment over the decision, stating, “We were really disappointed not to have seen an increase in local housing allowance, to support low-income renters with their housing costs.” Pacitti highlighted the rapid rise in rental prices, adding, “LHA was increased to match local rents last year. Since then, we’ve seen 8% rental growth. That’s obviously totally unsustainable and, for a lot of families, that’s going to mean really significant gaps between the housing support they’re given and the private rents they’re trying to pay.”

 

A study by the Joseph Rowntree Foundation reveals that private renters relying on LHA to cover their housing costs will, on average, be £243 worse off annually due to the freeze. This figure could climb to £703 by the end of the current parliamentary term if rent prices continue to rise at current rates. The Office for National Statistics reported that average private rents in the UK have surged by 8.4% between September 2023 and 2024, compounding the financial strain on tenants.

 

Ben Twomey, the chief executive of Generation Rent, noted that the LHA freeze is a critical yet understated aspect of the recent budget. “The LHA freeze was in the [budget] small print,” he said, adding, “But that is going to affect 4.6 million people who receive LHA. That seems to us to be a choice made by the government that denies support to those most in need of it.” Twomey emphasized that the freeze disproportionately impacts families, as “Half of those people receiving LHA have children who depend on them. So it’s really going to cause major problems in terms of driving people into poverty, driving people into homelessness, and increasing rent arrears.”

 

According to Chris Norris, policy director at the National Residential Landlords Association, rising rental costs are influenced by a shortage of rental properties and the financial pressures landlords face, including rising costs and increased regulations. “They’re rising because costs have really gone up over the past couple of years,” he said. Norris also pointed to the chancellor’s decision to increase stamp duty on second homes and buy-to-lets from 3% to 5%, which he argued would further limit the supply of private rental properties. “Simply put, it’s just more expensive to add stock to the marketplace,” Norris stated.

 

Twomey added that a lack of rent regulation has also contributed to the escalating rental prices, stating, “Rents go up because they can. There’s no check on the way rents increase. Collectively, the market rate of rent is basically what every landlord sticks their finger in the air and decides.” He summarized the situation faced by tenants, noting, “Landlord costs go up, landlord costs go down – either way, tenants’ costs go up.”

 

In addition to freezing LHA, the budget introduced increased funding for housing projects, including £500 million to support affordable housing initiatives. Pacitti recognized this investment as crucial, commenting, “We heard them announce funding for affordable housing, increasing the social housing stock, which is really important for a lot of low-income families who are renting privately when in previous generations they would be in social housing.”

 

A government spokesperson defended the budget’s approach to housing and social support, stating, “We are committed to the biggest increase in affordable housing in a generation, and to ensuring our social security system is fair and sustainable.” They also highlighted recent increases in LHA, noting, “Local Housing Allowance rates were increased earlier this year, worth an additional £800 on average to low-income households, and we have announced £1bn to support low-income families through the Household Support Fund and Discretionary Housing Payments.”

 

While some welcome these measures, the LHA freeze continues to be a point of contention for experts and advocacy groups who argue that without additional support, low-income renters will continue to face an uphill battle in meeting basic housing needs. As rent prices show no sign of stabilizing, the impact of the freeze is expected to weigh heavily on the most vulnerable segments of society.

 

Based on a report by the Guardian 2024-11-05

 

 

 

[john donson]

I wonder how thai people cope, with no handout

 

the moo baan I lived for 15 years, saw rent increases from 25.000 baht just after covid, to 40.000 baht now, for exactly the same old houses

[JonnyF]

After freezing pensioners they've now gone after low income renters. 

 

Labour, the compassionate party looking after the needy 😄. I guess Starmer doesn't need to worry as he gets 18 million pound houses to live in rent free from his mate Lord Ali. Plus the free clothes, concert tickets etc. He's really making hay while the sun shines.

 

I wonder who is next on Labour's hitlist? Perhaps the disabled?

[Chomper Higgot]

Redirecting money from supporting rents to building affordable homes makes sense.

 

Far too much tax payer’s money is being piped through to the pockets of buy to let landlords.

 

Time to build the affordable homes the nation needs and stop funding private profits from public need.

 

 

 

Edited 3 hours ago by Chomper Higgot

[black tabby12345]

Does none of the major political powers  in USA take the homeless issue serious enough?

 

 

[JonnyF]

3 hours ago, Chomper Higgot said:

Redirecting money from supporting rents to building affordable homes makes sense.

 

You think these people who cannot afford to pay rent can afford to buy homes?

 

House prices are astronomical in the UK. Largely due to a massive supply and demand issue caused by the influx of huge numbers of immigrants. 

 

What they are doing is removing much needed assistance for low income indigenous people and handing it out to (often illegal) immigrants. 

 

Once again, betraying the British people, especially poor ones. 

 

 

[James105]

3 hours ago, JonnyF said:

After freezing pensioners they've now gone after low income renters. 

 

Labour, the compassionate party looking after the needy 😄. I guess Starmer doesn't need to worry as he gets 18 million pound houses to live in rent free from his mate Lord Ali. Plus the free clothes, concert tickets etc. He's really making hay while the sun shines.

 

I wonder who is next on Labour's hitlist? Perhaps the disabled?

 

Students apparently.  They are putting up the University fees.  This one makes me chuckle though as I can almost feel the anger from the blue haired Hamas supporting leftists all the way over here after they discover their pointless gender/media studies course will be more expensive. 

[roo860]

23 minutes ago, black tabby12345 said:

Does none of the major political powers  in USA take the homeless issue serious enough?

 

 

This is about the UK, not the good old US of A.

[JonnyF]

2 minutes ago, James105 said:

 

Students apparently.  They are putting up the University fees.  This one makes me chuckle though as I can almost feel the anger from the blue haired Hamas supporting leftists all the way over here after they discover their pointless gender/media studies course will be more expensive. 

 

I would have thought they had done enough damage to students by removing the VAT exemption on independent schools, which will disrupt many children's education and put further strain on state funded schools as parents move their children to state schools since they can no longer afford to pay for their schooling.

 

They don't think anything through. Totally incompetent. 

 

[James105]

3 minutes ago, JonnyF said:

 

I would have thought they had done enough damage to students by removing the VAT exemption on independent schools, which will disrupt many children's education and put further strain on state funded schools as parents move their children to state schools since they can no longer afford to pay for their schooling.

 

They don't think anything through. Totally incompetent. 

 

 

That was a policy born out of jealousy though and has no impact on government tax receipts and could well end up costing money.  The university fees though, it took the Lib dems many, many years to recover from saying things like "we will abolish tuition fees" only to increase them when in coalition government.   Labour have been speaking the same language over the years about tuition fee abolishment and they will have some very annoyed students now they are putting them up.  They should probably count themselves lucky that even though Universities sell education in much the same way as private schools do that they were not also inflicted with the 20% VAT increase instead of the 3.1% increase that is being implemented, so they are still benefitting a bit from the 2 tier nature of this government.   

[Chomper Higgot]

19 minutes ago, JonnyF said:

 

You think these people who cannot afford to pay rent can afford to buy homes?

 

House prices are astronomical in the UK. Largely due to a massive supply and demand issue caused by the influx of huge numbers of immigrants. 

 

What they are doing is removing much needed assistance for low income indigenous people and handing it out to (often illegal) immigrants. 

 

Once again, betraying the British people, especially poor ones. 

 

 

Who said people in low incomes are going to buy homes?

 

I see you are back to blaming immigrants.

 

Schrödinger's Immigrants, who are one and the same time living on benefits and buying up all the expensive housing.

 

 

[Chomper Higgot]

16 minutes ago, JonnyF said:

 

I would have thought they had done enough damage to students by removing the VAT exemption on independent schools, which will disrupt many children's education and put further strain on state funded schools as parents move their children to state schools since they can no longer afford to pay for their schooling.

 

They don't think anything through. Totally incompetent. 

 

Oh dear, people buying privilege have to pay VAT on it.