New research conducted by Manchester Metropolitan University (MMU) and commissioned by JRF shows that failing to unfreeze LHA will see private renters on average £243 worse off in 2025/26. For a working-age couple with children, this is even more acute with them being £340 worse off in 2025/26.

By the end of this parliament in 2029, the average private renter will be £703 a year worse off, 50,000 more private renters would be in poverty, including 30,000 children, while 60,000 more people would be pulled into deep poverty, including 10,000 children, and a huge 80,000 people, including 30,000 children, would be pulled into very deep poverty.

The research demonstrates the severe impact that LHA freezes have had on private renters, who have had to pick up the shortfall in the cost of their rents as they rise, while LHA and housing support remained frozen. 

Office for National Statistics (ONS) private rent inflation figures out today show rents in Great Britain increased by 8.4%, an average of £93 a month, in the year to September 2024. This was even higher in London where rents have increased by an average of £177 a month. 

The latest freeze 

LHA is the rate used to determine the maximum amount of support for housing that private renters in receipt of Universal Credit or housing benefit can receive. 

LHA is currently frozen at the 30th percentile of April 2024 rents in cash terms, a decision made by the previous government, which is also reflected in the Office for Budget Responsibility’s (OBR’s) public finance forecasts. Unless the current government decides to unfreeze LHA levels, they will remain frozen indefinitely.  

As well as freezing and unfreezing LHA levels, a number of other policy changes to LHA since 2011 have negatively impacted private renters. These include uprating LHA annually rather than monthly and uprating by CPI rather than local rents.  

This means that the average private renter in receipt of housing benefit will be £684 a year worse off by April 2025 as a result of all the policy changes to LHA since 2011, compared to if the 2010 policy settings had remained. 

These changes have cumulatively cost private renters close to £1 billion, although the effects have not been spread evenly. The shortfall rises to £887 a year for a working-age couple with children, and £957 a year where the adults in the household are Black.

According to JRF, the upcoming Budget on October 30 presents the perfect opportunity for the Chancellor and the government to distinguish themselves from the previous administration’s approach to housing benefits, which created financial uncertainty for vulnerable private renters, made it less likely they would be able to pay their rent and pushed them into hardship. 

JRF is calling on the government to use this Budget to announce they will permanently link LHA to local rents instead of actively choosing to push further costs onto low-income private renters. 

Rachelle Earwaker, senior economist at JRF, said: “The government is committed to building more social homes, which are better for people on low incomes as they are more affordable and provide a more secure, long-term foundation for people’s lives. 

“Until there are enough social homes, the government can’t abandon the millions of people on low incomes who are living in the private rented sector because they have no other option. Instead of not knowing whether they’ll be able to pay their rent because the support they get has been frozen, private renters need the security of knowing LHA will rise in line with local rents each year.

“The government has committed to tackling child poverty and ending homelessness, but 80,000 more private renters could be forced into very deep poverty by the end of this parliament if LHA remains frozen. This Budget presents a perfect opportunity for the Government to choose to make progress against hardship in the UK, and permanently re-link LHA to local rents.”