Housing benefit to be frozen next year

The amount of housing benefit private renters can claim will be frozen again next year, the government has confirmed.

This means payments will not follow rent increases and claimants who trigger rent increases will face warnings of a shortfall.

Housing benefit has not automatically reflected rent increases since 2013, with the Conservatives freezing it for seven of the past 12 years.

Rising rents, combined with a shortage of social housing, are putting families at risk of homelessness, charity Shelter said.

Anti-poverty charity the Joseph Rowntree Foundation (JRF) said the move meant the cap would be “further disconnected” from the cost of rent.

The government said it was committed to building a “fair and sustainable” welfare system and committed to “the greatest growth in affordable housing in a generation.”

Housing Benefit is paid to low-income households to cover all or part of their rent, either as a separate payment or as part of Universal Credit.

The Local Housing Allowance (LHA) determines the maximum amount that people renting from private landlords can claim, and is set by local rent officers in around 200 areas across the UK.

Payments are based on property size, up to a maximum of four bedrooms, and are subject to a nationwide cap that limits claims in several areas of London.

They are also included in the overall Benefit capfirst launched in 2013, will also be frozen next year.

Charities complain that a four-year freeze on LHA rates between 2020 and 2024 has left claimants unable to meet rising rental costs, with Citizens Advice estimating that two-thirds are shortchanged as a result.

Housing benefit rates were once automatically linked to the cost of rent in different areas, but this ended under the Conservative-Liberal Dem coalition in 2012.

Since then, rates have been frozen for seven years under the Conservatives, the most recent of which was from 2020 to 2024.

However, the Conservatives have increased rates this year with a flat rate to cover the cheapest 30% of properties in any given area.

The government estimates that around 1.6 million households will benefit from the increase this year, averaging £785 a year.

But campaign groups expressed disappointment that LHA rates will be frozen again next year after the government confirmed the measure in the Budget.

The JRF, which has campaigned for the cap to be permanently relinked to local rents, estimates that next year’s freeze will make the average private renter on housing benefit worse off by £243 a year.

Chief executive Paul Kissack said the move would be “disappointing” for tenants, adding that rent prices had “soared in recent years”.

The NRLA, which represents landlords, also complained that next year’s freeze meant support for housing costs would be “different to rents”.

A government spokesman said this year’s increase meant LHA rates rose by 6.7 per cent, pointing to additional funding from councils confirmed in Wednesday’s budget to help low-income households pay for other costs such as food and energy.

They added that councils could provide discretionary housing payments to support households struggling with housing costs.

The cost of housing benefit has ballooned in recent decades, currently costing the Treasury more than £30bn a year and is expected to rise to £35bn by 2028.

Chartered Institute of Housing point out The rising bill means that by 2022, only 12% of government housing spending will be on new construction, compared with 95% in 1976.

Polly Neate, chief executive of homeless charity Shelter, said a lack of social housing meant the freeze on housing benefit meant low-income households in the private sector were at risk of losing their homes “as rents continue to soar”.

“The government must unfreeze local housing subsidies so that families can afford to keep their homes,” she added.

On Wednesday, the chancellor confirmed an extra £500m for the current affordable housing budget, which will run until 2026.

The government is also negotiating a deal that would allow social housing providers to raise rents above inflation for five to 10 years to encourage them to invest in new homes.