New analysis by the National Residential Landlords Association (NRLA) suggests there’s no clear link between benefit levels and rent increases, as ministers consider whether to continue freezing housing benefit rates from April next year.

As a result of the freeze on Local Housing Allowance (LHA), homelessness charity Crisis believes that fewer than 2% of private rented properties are affordable for those in receipt of the benefit.

Between 2008/09 and 2015/16 when the LHA rate increased in line with rents each year, weekly rents increased by an average of 2.5% a year. However, between 2016/17 and 2024/25 when the LHA rate was frozen for all but two years, average weekly rents increased by 3.4% a year.

Having been realigned with the bottom 30% of rents in 2024/25, the previous government decided to freeze the housing support available to renters from April 2025.

Estimated

The Institute for Fiscal Studies has estimated that it would cost £1.5 billion a year to uprate and maintain the LHA rate to cover the bottom 30% of rents. This represents just over half the £2.8 billion spent by councils on temporary accommodation in 2024/25, a figure which could be significantly offset by uprating housing benefit rates.

About a quarter of private renters receive housing support to help pay their rent. The Resolution Foundation has found that restoring housing allowance rates to cover at least the lowest 30% of rents could lift 75,000 children and 125,000 adults out of poverty.

Reality

Chief executive Ben Beadle says the reality is that rent levels are determined by a wide range of factors including tax and mortgage rates, demand from tenants and the costs of adhering to regulations.

“Freezing housing benefit rates merely locks many of those financially squeezed out of rental housing altogether and undermines all efforts to tackle the scourge of homelessness,” he explains. “It is time for the government to act and unfreeze housing benefits to reflect housing costs as they actually are, not as they were in the past.”

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