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Lenders blame LHA freeze on 1000s of landlords falling into mortgage arrears

uk finance

UK Finance has called on the government to review the local housing allowance (LHA) to prevent more private landlords falling behind on their mortgage repayments and potentially having to evict their tenants.

The trade association for the UK banking and financial services sector says thousands of private landlords with buy-to-let mortgages are now in arrears and that the figure is rising because housing benefit '� frozen at 2019-20 levels - doesn't cover private rents, leaving low-income renters with a shortfall.

It reveals that there were 6,060 buy-to-let mortgages where landlords were 2.5% or more behind on their total outstanding balance at the end of 2022 - up 5% on the previous quarter.

Within this group, 1,770 buy-to-let mortgages were in significant arrears of 10% or more of the total outstanding balance.

Affordable

'Around two million households rely on housing benefit to pay private rent, and re-coupling LHA rates with local rent levels will make more properties affordable to them,'� said a UK Finance spokesman. 'With the rising cost of living, it is essential that these families are able to stay in their homes.'�

The Bank of England has raised interest rates for the 11th consecutive time by 0.25% to 4.25% which will cause mortgage rates to go up and could add to the costs private landlords face, which could then be passed on to tenants. According to the latest government data, 1,998,755 private renters rely on state support to pay their rent.

A spokesman from the Department of Work and Pensions told The i newspaper: 'During the pandemic, we increased local housing allowance significantly, beyond inflation, and we are committed to protecting the most vulnerable which is why we're maintaining that boost '� keeping support for private renters above pre-pandemic levels.'�

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