Report urges government to ensure LHA rates cover cost of renting

Research reveals the LHA rate now available for nine in 10 private renters across 279 local areas across the country is lower than their rent.

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More than 100,000 people would be protected from financial hardship and homelessness across the country if Local Housing Allowance (LHA) rates were lifted to cover the cost of renting, new research for the Local Government Association (LGA) reveals.

In today’s (5th February) report, the LGA is calling on the government to use the Budget to lift LHA rates to help provide people with more stable housing and tackle in-work poverty, homelessness and rough sleeping.

As outlined, thousands of eligible private renters in England receive LHA in order to help them cover the cost of their rent – with the amount they receive calculated based on rents in their local area with rates frozen since 2016, when on average they covered the cheapest third of private rents (30th percentile).

As reported by 24housing, the government confirmed it will end the LHA freeze from April this year and rates will increase in line with inflation.

However, as rents have continued to rise over the past four years, the LHA rate is said to cover just 13% of market rents on average as a result.

New research for the LGA by Policy in Practice and reveals the LHA rate now available for 9 out of 10 private renters across 279 local areas across the country is lower than their rent.

This means that in many parts of the country there are no properties available to those entitled to full support with their housing costs.

According to reports, the four-year freeze has left some families and vulnerable people – including single parents and disabled people – struggling to pay their rent and cover other household bills, and in the worst cases, is causing homelessness.

The freeze has also meant councils have had to divert funding away from long-term approaches to homelessness prevention in order to tackle immediate financial hardship and help people keep their tenancies.

A lack of genuinely affordable housing means councils are increasingly having to place homeless households in temporary accommodation – for every 1,000 households experiencing a shortfall between their LHA rate and rent, 44 households will require temporary accommodation, the report shows.

If LHA rates were restored to pre-2016 levels on average, the research for the LGA estimates that:

  • an average council would need to house 300 fewer people in temporary accommodation across the country, or 101,000 nationally, and the average cost of using temporary accommodation for a council would reduce by between £1.4m and £3m
  • the average council would see 650 more households able to cover the cost of their rent with their LHA payments, or 220,000 nationally. This would help reduce financial hardship on them when trying to meet their housing costs

Alongside lifting the LHA rate, councils are also calling on government to properly recognise and resource local safety net services, and provide them with sustainable, long-term funding and powers to resume role of builder of affordable homes.

This includes being able to keep 100% of Right to Buy receipts to replace sold homes and the ability to set RTB discounts locally.

Cllr Richard Watts, Chair of the LGA’s Resources Board, said: “Scrapping the LHA rate freeze this year is a step in the right direction by the Government to help provide much-needed security to tenants, but more needs to be done.

“Over the past four years LHA rates have not kept pace with the rising cost of renting. It has left many people facing a growing gap between their incomes and the cost of rent.

“This has pushed households into financial hardship, in-work poverty and homelessness, and driven demand for councils’ housing, homelessness and local welfare services.

“Everyone deserves a decent, secure and affordable home and more needs to be done to protect tenants, including the most vulnerable, from falling into the trap of financial instability.

“By restoring LHA rates to cover at least the lowest third of market rents, the government can deliver more of the security that tenants need and support households who need help to meet their housing costs.”

Deven Ghelani, Director and founder of Policy in Practice added: “Our analysis shows that the freeze in the Local Housing allowance has played a part in driving homelessness, with councils picking up the costs.

“Tackling high housing costs needs a cross-government solution in the upcoming Budget.”

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