SimplyPhi’s Q2 2025 Regional Housing Market Report found that average rents in all nine regions of England were higher than local housing allowance (LHA) rates.
There was a national shortfall of at least £417 between average rents and LHA rates, rising to £1,349 in London.
This gap meant people depending on LHA could not afford to rent locally, putting more households at risk of homelessness.
According to SimplyPhi, London had the widest gap between average market rent and LHA in Q2 2025, at £1,349.
The firm said a main reason for the gap was the ongoing decline of the private rented sector as landlords left the market, leading to higher rents due to lower supply.
SimplyPhi said the shortage of affordable private rented sector homes meant London Boroughs were now spending £4m daily on temporary accommodation in the capital.
Omar Al-Hasso, CEO at SimplyPhi, said: “The limited availability of genuinely affordable private rented accommodation at LHA rates is creating an ever-growing wealth gap which is pricing residents out of local areas.
“This is making it even harder for people to move out of expensive and unsuitable temporary accommodation into settled accommodation of their own.
“The widening disparity between LHA rates and rental market rates means that many families will require additional funds to afford privately rented homes, as benefit rates have not kept pace with market rates.”
Al-Hasso added: “On average across all nine regions of England, a household relying on Universal Credit would need an extra £618 per month to afford a private rented home.
“This fact alone highlights the inadequacy of affordable homes on the market for those who need them.
“This imbalance pushes even more families into precarious housing situations or temporary accommodation.”
Additionally, SimplyPhi found less than 2% of all private rental homes on the market were available at LHA rates, equal to just 1,161 out of 77,458 properties in Q2 2025.
London had the lowest percentage of rental homes available at LHA rates at 1%, even though it had the highest number of rental properties overall.
In Q2 2025, there were 30,581 homes to rent in London, but only 304 were available at LHA rates.
There were 4,210 more rental homes available in London since Q1 2025, but the proportion at LHA rates had dropped.
SimplyPhi said there were 131,140 households in temporary accommodation in England.
The firm noted that local authorities would remain under pressure to find stable, affordable homes unless urgent action was taken.
Al-Hasso said: “The staggering number of people in need of affordable homes and the sheer lack of availability have made a safe place to call home a privilege for many.
“We continue to talk to both central and local government around ways of attracting institutional investment into this end of the housing market, helping to provide more affordable and reducing local authorities reliance on costly temporary accommodation.”
