Government urged to allocate £6 billion for affordable housing support
The government has been urged to commit £6 billion at the upcoming Budget to tackle unaffordable UK rents faced by millions across the UK, reports BritPanorama.
According to a new report from the Resolution Foundation, over 1.1 million low-income tenants are facing a “cost of housing crunch” as the gap between rental costs and housing benefits continues to hit record highs. This increasing disparity threatens the financial stability of many households.
The influential think tank is calling on Andy Burnham and new chancellor John Healey to intervene by correlating the benefit rates to local market prices during next month’s Budget. The Local Housing Allowance (LHA), which serves as a measure for housing benefit levels, has been frozen since April 2024, failing to keep pace with market realities.
The report warns that the shortfall between LHA rates and affordable rents is set to reach a record 23.3 per cent in October. This translates to a monthly deficit of around £200 for renters in London and £100 for the rest of the UK. If left unaddressed, this gap could soar to 30 per cent by early 2028, pushing the London shortfall to £260 a month, with a UK-wide figure of £130.
Recent research from Citizens Advice and Crisis highlighted that less than 2 per cent of properties in the UK are now deemed affordable for renters reliant on housing benefits. Official findings indicate that an increasing number of renters are being forced to skip essentials to meet housing costs, with 58 per cent of working-age adults in private tenancies receiving housing support experiencing material deprivation in 2024/25. Many reported being unable to keep their homes warm or afford sufficient meals.
Addressing concerns that unfreezing the LHA would prompt landlords to increase rents, the Resolution Foundation’s analysis of the April 2024 relinking discovered that only 10p of every additional pound in support resulted in rent increases at the lower end of the market. This adjustment allowed over 150,000 Universal Credit households to escape rental shortfalls.
Stephen Hunsaker, an economist at the Resolution Foundation, stated, “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 per cent by March 2028.”
He emphasized that when LHA was previously repegged to local rents, it significantly reduced the number of recipients facing shortfalls. Hunsaker urged the government to restore the automatic annual linking of LHA to ease the burden on low-income families in the private rental sector.
The think tank has called for a £2 billion annual investment to relink LHA to local market rents, amounting to £6 billion by 2029/30. This echoes the concerns of many housing campaigners, who argue that the existing policy exacerbates pressures on renters and increases the risk of homelessness.
Mairi MacRae, director of policy and campaigns at Shelter, articulated the challenges faced by families amid rising private rents and a prevailing cost-of-living crisis. She stated, “Caught between an escalating cost-of-living crisis and skyrocketing private rents, families should be able to rely on housing benefit as a safety net to help cover costs. Yet with the freeze on housing allowance, thousands are left desperately grappling to plug the gap between their income and rent.”
The economic landscape continues to evolve, underscoring the necessity for a robust response to the housing crisis. The implications are profound, affecting not just individual households but the broader fabric of society. The government’s next steps will be closely scrutinized as the pressure mounts for tangible solutions in an increasingly challenging environment.
