In a blow to low-income renters across the UK, the government has confirmed that housing benefits will remain frozen at current levels until 2026, despite the relentless rise in rental costs. The move, announced in the recent budget, has drawn sharp criticism from housing experts who warn that it will push many struggling families deeper into poverty and potentially onto the streets.
A Widening Gap Between Benefits and Rents
Local Housing Allowance (LHA), the system that determines housing benefit entitlements for private renters, has failed to keep pace with the escalating cost of renting for over a decade. The Conservative party’s decision to freeze LHA for seven out of the last 12 years has only exacerbated the problem, leaving many claimants facing a significant shortfall between the support they receive and the rents they must pay.
According to Cara Pacitti, senior economist at the Resolution Foundation, the inequality think tank, the failure to increase LHA in line with the 8% growth in rental prices over the past year is “totally unsustainable” and will leave many families grappling with “really significant gaps” in their housing budgets.
“We were really disappointed not to have seen an increase in local housing allowance, to support low income renters with their housing costs.”
– Cara Pacitti, Resolution Foundation
The Human Cost of the Freeze
Research by the Joseph Rowntree Foundation paints a stark picture of the impact the LHA freeze will have on the lives of private renters who rely on the benefit to keep a roof over their heads. On average, claimants will be £243 worse off per year, a figure that could rise to £703 by the end of the current parliament if rental prices continue their upward trajectory.
For the 4.6 million people who receive LHA, half of whom have dependent children, the consequences could be devastating. Ben Twomey, chief executive of Generation Rent, warns that the freeze will drive people into poverty, increase rent arrears, and ultimately lead to a surge in homelessness.
“It’s really going to cause major problems in terms of driving people into poverty, driving people into homelessness and increasing rent arrears.”
– Ben Twomey, Generation Rent
The Root Causes of Rising Rents
The factors behind the relentless increase in rental prices are complex and multifaceted. Chris Norris, policy director at the National Residential Landlords Association, points to a shortage of rental properties driven by landlords exiting the market, as well as the rising costs they face and increased regulation of the sector.
However, Twomey of Generation Rent argues that the fundamental issue is the lack of any meaningful check on rent increases, allowing landlords to charge whatever the market will bear, regardless of their own costs.
“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.”
– Ben Twomey, Generation Rent
A Drop in the Ocean?
While the budget did include some measures aimed at increasing the supply of affordable housing, such as £500m for the affordable housing programme, many believe it falls far short of what is needed to address the scale of the crisis.
Pacitti of the Resolution Foundation welcomes the funding for affordable and social housing but stresses that it will do little to help the millions of low-income families currently struggling in the private rented sector.
“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.”
– Cara Pacitti, Resolution Foundation
A Ticking Time Bomb?
As the cost of living crisis continues to bite and rents show no signs of abating, the government’s decision to freeze housing benefits risks pushing an already precarious situation to breaking point. With homelessness on the rise and more and more families teetering on the brink of financial ruin, the calls for urgent action are growing louder by the day.
For now, however, it seems that the pleas of renters and housing campaigners have fallen on deaf ears, leaving millions of low-income households to face an uncertain future as they struggle to keep pace with the relentless march of rising rents.
As one renter, who asked to remain anonymous, put it: “It feels like we’re just being left to sink or swim. I work hard, but every month it gets harder to make ends meet. I don’t know how much longer we can go on like this.”
The question now is whether the government will heed the warnings and take meaningful action to address the housing crisis before it spirals out of control, or whether it will continue to turn a blind eye as more and more families are pushed to the brink.
