As many as 20,000 private renters – including 10,000 children – could be pushed into poverty in 2025-26 if the Government does not commit to unfreezing Local Housing Allowance (LHA) in the Autumn Budget, research by Manchester Metropolitan University (MMU) and commissioned by JRF has revealed.
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.
The research revealed that if the Government does not unfreeze LHA, private renters would be on average £243 worse off in 2025-26.
For a working age couple with children this average rose to £340.
The average private renter would be £703 a year worse off by the end of this Parliament in 2029.
The study also found that 60,000 more people would be pulled into deep poverty, including 10,000 children, and 80,000 people, including 30,000 children, would be pulled into very deep poverty by the end of this Parliament.
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, JRF argued that they will remain frozen indefinitely.
As well as freezing and unfreezing LHA levels, the firm suggested that a number of other policy changes to LHA since 2011 have negatively impacted private renters.
These included uprating LHA annually rather than monthly and uprating by CPI rather than local rents.
The average private renter in receipt of housing benefit could 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 £1bn, according to JRF, rising to £887 a year for a working-age couple with children, and £957 a year where the adults in the household are black.
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.”
