More than 1.1 million low-income families in privately rented homes face a growing struggle to cover their rent after Local Housing Allowance was frozen while market rents continued to rise.
The Resolution Foundation has warned that without action from John Healey in the Budget on 28 October, the gap between housing support and actual rents will widen further. LHA has been frozen in cash terms since autumn 2024, meaning every rent increase since then has fallen directly on tenants.
A low-income family renting a typical two-bedroom home now faces an average shortfall of £158 a week. In some parts of London, the gap exceeds £300 a week. Families are expected to find this money from benefits and wages already intended to cover food, heating, electricity, clothing and every other necessity.
The predictable result is hunger and cold homes. Survey evidence cited by the Resolution Foundation suggests that one in five working-age adults in families receiving housing support in the private rented sector can’t afford to keep their homes warm. One in eight can’t afford three meals a day.
This isn’t an accidental mismatch between two sets of figures. Freezing LHA is a real-terms cut which transfers the cost of rising rents onto some of the poorest sections of the working class. Landlords remain free to demand whatever the market will bear. The tenant must either pay the difference, fall into arrears or lose their home.
When LHA was introduced in 2008, it was pegged to the median rent in each local area. In 2011, this was cut to the 30th percentile, theoretically leaving recipients able to afford only the cheapest 30 percent of local properties. Even that limited connection with the market has since been repeatedly severed. LHA has been frozen for nine of the past 14 years.
Resolution Foundation economist Stephen Hunsaker said: “The gap between average rents and Local housing allowance levels is set to reach a record high this October, and failing to repeg LHA to actual rents in next month’s budget could lock in a freeze for another year, and see the gap reach 30 percent by March 2028.”
Opponents of restoring the link between LHA and rents often claim that the money would simply be captured by landlords through higher prices. The Resolution Foundation’s analysis of previous changes found that around 90p of every additional £1 went to tenants rather than feeding through into rent increases.
That doesn’t mean the LHA system is anything other than a subsidy for private landlordism. Public money is still being passed through tenants and into the hands of property owners. But freezing the allowance doesn’t weaken the landlords’ position. It forces tenants to make up the difference by going without food and heating. The landlord continues collecting the rent either way.
Britain’s dependence on housing benefits is the product of decades spent selling off council homes, failing to replace them and leaving housing provision increasingly in the hands of private landlords. Instead of directly providing secure homes at rents based on social need, the state pays private owners to accommodate workers whom the private market would otherwise exclude. The higher rents rise, the greater the burden placed on tenants and the public purse.
The Resolution Foundation estimates that restoring the link between LHA and local rents would cost £2bn a year by 2029–30. Hunsaker said that “with many tenants receiving housing support already going without essentials to pay their rent today, the government should restore the automatic annual linking of LHA to relieve the pressure on low-income families in the private rented sector.”
But the thinktank proposes paying for this by increasing the Universal Credit taper rate, meaning benefits would be withdrawn more quickly as recipients’ earnings rise. It presents this as a transfer within the system towards those in greatest need.
In reality, that would make another section of low-paid workers finance the change. A tenant facing an impossible rent shortfall would receive more help, while another claimant would lose more of each additional pound earned. The government could then claim to have protected the poorest without taking anything from landlords, property wealth or the capitalist class. Poverty would simply be redistributed among workers.
The government has already begun hiding behind inflation, interest rates and the so-called fiscal context. These are presented as external forces which dictate policy from above, rather than conditions mediated through political choices about which class must bear the cost.
A government spokesperson said: “Local housing allowance rates are reviewed annually, and future decisions will be taken in the context of the government’s welfare priorities, and the fiscal context.”
For the families skipping meals to keep a roof over their heads, the review has already taken place every time the rent was due. The freeze preserves the landlord’s income by pushing the whole adjustment onto the tenant. Behind the language of fiscal restraint lies a familiar class priority: private property remains protected, while working-class families are told that warmth, food and secure housing must depend on what the Budget can supposedly afford.
