Renters planning finances

The government has come under heavy criticism from the National Association of Residential Landlords (NRLA) for maintaining a freeze on housing benefit rates.

The freeze to the Local Housing Allowance, which is the basis for calculating housing benefit element of the Universal Credit payment, was put in place in April 2021.

With the cost of living spiking, as a result of increases in food, energy and fuel costs and more, the association has said the decision to keep a freeze in place is ‘absurd’.

Speaking on behalf of private landlords

When looking at tenants within the private rental sector (PRS), who are in receipt of Universal Credit, the NRLA found that over 50% will receive less from their benefits payment than will cover their rent.

The disparity, for private renters in receipt of Universal credit, is on average £100 a month. A considerable sum to have to find elsewhere, especially at this time of crisis for the cost of living.

Regional and demographic impact

Within the statistics for tenants facing a struggle to make ends meet, as a result of the housing benefits rate freeze, 60% are two children families.

PRA tenants in Wales appear to fair the hardest, with 68% being affected by the shortfall. In the capital, 40% of tenants in London are impacted.

The change to housing benefit and possible solution

When the Local Housing Allowance was frozen last year, the upshot was  that the link between current rents and housing benefit was removed.

If this benefit does not keep pace with rising rents, fewer people will be able to live in private rental property as it will simply be too expensive.

The NRLA are amongst many voices urging the government to reverse the freeze, its chief executive Ben Beadle had this strongly worded message for the government:

“It is simply absurd that housing benefit support fails to reflect the reality of rents as they currently stand. All the freeze is doing is exacerbating the already serious cost of living crisis.

“The Chancellor needs to listen and respond to the concerns of both renters and landlords and unfreeze housing benefits as a matter of urgency.”

Mr Beadle speaks with particular concern for landlords who house tenants in receipt of Universal Credit, but he is not alone in his message.

Director of policy for Centrepoint, the charity supporting homelessness amongst young people, Balbir Chatrik said that LHA rates:

“must be urgently reviewed to ensure those already choosing between food and bills are not also facing homelessness too.

She added;

“The Local Housing Allowance is meant to make sure that the cheapest accommodation is accessible to those who need it.”

Speaking on behalf of the Local Government Association, Councillor David Renard echoed the sentiment of Beadle and Chatrik:

“The confirmed freeze in the Autumn 2021 budget of LHA rates at 2020/21 levels is significant as while the cost of living is increasing, the freeze will leave even less money in the pockets of those on low-incomes.

“We want to see the end of this freeze, along with permanently restoring LHA rates to at least the cheapest third of private sector rents.”

Commercial Trust will continue to follow this story, as the pressure mounts on the government to affect change.