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Rents set to rise sharply with housing benefits on hold push more people into trouble A new report warns if Labor doesn’t act.
Affordability gap between rental prices and Assistance for low-income tenants That’s set to reach a record 17 percent next year, findings from the Impressive Resolution Foundation show. This represents an average reduction of £104 per month – or just over £1,200 per year – as households forced to face increasing debt Or homelessness.
The think tank says that without action this figure will reach 25 per cent by 2029-2030, which would mean an average shortfall of £180 per month.
Local Housing Allowance, which sets housing benefit ratesThe freeze has been extended by the Labor government until at least 2026, after a brief unfreeze in April 2024. This is the formula that determines how much funding the Department for Work and Pensions (DWP) will give each council to administer housing benefit, upgrading it to cover at least the cheapest 30 per cent of rents in the area that year.
The one-time increase announced by the previous Conservative administration means housing support is now linked to private rent levels from September 2023. During this period, the average fares There has already been an increase of 14 percent.
unlike many benefits Housing benefit rates, which typically increase by inflation each year, have also been readjusted only twice in the past decade, in 2020 and 2024.
The Resolution Foundation report warns that this is having a huge impact on living standards, with more and more families being forced into temporary accommodation as they are forced out of the private rental sector.
The number of children living in these emergency settings is reaching a record high, reaching 172,420 by the end of June, according to the latest figures from the Office for National Statistics.
this intense crisis Cash-strapped councils have also been forced to manage rising bills, with the temporary accommodation bill reaching £2.8 billion last year – double the annual cost a decade ago, the report said.
Finding that freeing up the allowance would cost £2.5 billion, the think tank argues that it is a “false economy” for the government to withhold the allowance to achieve “short-term savings”.
Hannah Aldridge, senior research and policy analyst at the Resolution Foundation, said: “Rents have been rising rapidly since [September 2023] has created a worrying gap in affordability for nearly two million low-income people FamilyWithout government intervention in the budget, this freeze in support will be a major drag on families’ living standards.
“The gap between local Housing Allowance rates and the 30th percentile of rents is expected to surpass the previous record of 17 per cent next year, and is on track to reach 25 per cent by the end of Parliament. The government needs to re-link housing support to local rents before the gap causes further damage to living standards.”
The report’s authors also note that, while the funding gap is highest in London – with an average of £350 in Hackney – there is not a single area in England that does not have a local authority with an average gap of at least £100.
Francesca Albanese, executive director of policy and social change at Crisis, said: “This latest report from the Resolution Foundation shows just how damaging the freeze on Local Housing Allowance has become.
“We are already seeing record numbers of families trapped in temporary accommodation. Yet as this continues to the end of this Parliament, the gap between housing benefit and private rents will only widen. We cannot sit by as more families are pushed to the breaking point, struggling to keep a roof over their heads and afford essentials like food and heating.
“We must see ministers lifting the freeze on housing benefit in the Autumn Budget to lift people out of poverty. Now is the time to end the harmful cycle of giving with one hand and taking with the other, and ensuring families can keep their homes rather than being forced into homelessness.”
A government spokesperson said: “We are tackling the impact of rising rents and the housing shortage with our commitment to build 1.5 million homes – including the biggest boost to social and affordable housing in a generation.
“We are putting more money in people’s pockets as part of our transformation plan by boosting benefits, making universal credit cuts fairer and helping people get out of poverty and into good, secure jobs.”