Government to end Local Housing Allowance freeze

Government bosses have announced the 2016 freeze on Local Housing Allowance (LHA) rates will be lifted from April 1, meaning rates will rise by inflation. 

Minister for Welfare Delivery, Will Quince, said the change will provide an average of around £10 extra per month to 900,000 of the 1.4 million people in the private rental sector receiving LHA. He said:

‘We are committed to tackling all forms of homelessness – ending the freeze on housing benefits is just one part of achieving this.

‘We have announced an additional £263 million to help councils provide better support to homeless people, and importantly, prevent people from becoming homeless in the first place.

‘We will continue to work with the Ministry for Housing, Communities and Local Government, and others across government, to find ways to support the cost of living in the rented sector.’

Cllr Richard Watts, chair of the Local Government Association’s Resources Board welcomed the freeze but said that in many parts of the country there are no properties available to those entitled to full support with their housing costs. He said:

‘The announcement is a step in the right direction but more should be done to help meet the challenges renters and councils face.

‘Since LHA rates were frozen in 2016 they have fallen, on average, to just the thirteenth percentile of market rents. This means that in many parts of the country there are no properties available to those entitled to full support with their housing costs.

‘Without investing in LHA rates to cover the true costs of renting, the gap many people face between their incomes and the cost of rent risks continuing to push many into financial hardship, in-work poverty and homelessness, and further stretch councils’ housing, homelessness and local welfare services.

‘Everyone deserves a decent, secure and affordable home. Councils want to work with the government in order to deliver the security that tenants need and support households who need help to meet their housing costs.

‘As part of its forthcoming budget, the Government should to restore the LHA rate to at least the 30th percentile of market rents, something the LGA has long called for.’

Rick Henderson, chief executive of Homeless Link, said the 2016 LHA freeze has directly contributed to the numbers of people who are homeless in the UK.

He said when it was introduced in 2008, LHA covered 50% of local rents. In 2011, this was reduced to 30% and in 2012, the link between the rates and local rents was broken, leading to shortfalls between the level of LHA and the true cost of renting in many parts of the country.

He said: ‘It is clear that the freezing and capping of Local Housing Allowance rates has led to a rise in homelessness, so we are extremely pleased to hear that the lifting of the freeze is soon to be written into law, a move that we have long campaigned for.

‘However, this change alone will not be enough. To ensure that everyone has a home that they can afford, the government must do more to bring the LHA rate back in line with local rents.

‘Lifting the freeze will raise LHA rates in line with the Consumer Price Index (CPI) inflation rate, which is around 1.5%, but this still leaves a significant shortfall in many areas of the country.

‘Homeless Link will continue to work with government and our members to make sure that LHA covers the true cost of renting and does not contribute to homelessness in England.’

Photo Credit – Local Government Association