Charities cautiously welcome unfreezing of housing benefit in autumn statement

The chancellor confirmed the rise in Local Housing Allowance (LHA) rates. Credit: PA

Councils and housing charities have broadly welcomed the expected unfreezing of housing benefit announced in the autumn statement, but there are concerns over how quickly it will take effect and how long it will last.

The chancellor confirmed the rise in Local Housing Allowance (LHA) rates - which determine the level of support in each area of England - to cover the cheapest 30% of market rents, as first reported by ITV News last week. 

Jeremy Hunt said it would give 1.6 million households an average of £800 of support next year. 

In some areas of England, where rents have increased rapidly since 2020 when housing benefit was last increased, renters will get significantly more a month towards rent as Zoopla analysis for ITV News has revealed.

The increase will be applied from April 2024, but charities are urging the chancellor to bring in the rise immediately to alleviate the pressure on struggling low-income renters and local councils, who are under increasing financial pressure housing homeless families in temporary accommodation. 

"Homelessness is at a record high and unfreezing housing benefit to cover the bottom third of local rents is an essential lifeline to keep people in their homes," said Polly Neate, Chief Executive of Shelter. 

"However, pushing this to April 2024 will leave many families facing an uncertain winter with the threat of homelessness and spending their Christmas in grotty one-room temporary accommodation looming large. 

"We are pleased that the chancellor has listened and taken a crucial step to stop rising homelessness, but we urge the government to bring this decision forward and unfreeze housing benefit immediately."

The increase is also time-limited. As ever with major fiscal events the devil is in the detail and the fine print reveals Local Housing Allowance rates will be frozen again from 2025/26.

Since 2020 housing benefit has been frozen and rents have risen dramatically, so affordability has fallen well below the 30th percentile.

In some areas of England, there are virtually no affordable rental properties for housing benefit recipients, as ITV News reported in June.

"Sigh of relief is much smaller seeing the confirmation from the OBR that LHA will be re-frozen again from 2025-26," said Rachel Earwaker, Senior Economist at the Joseph Rowntree Foundation.

"Not having LHA increase in line with private rents erodes the value of the benefit - it means low-income renters cannot afford their rents and increases hardship.

"It creates the same problem again. It means that any rent increase from October 2023 onwards won't be reflected in the amount of housing benefit until it is unfrozen again… we've been seeing record rent rises in recent months that haven't shown many signs of slowing down."

Peter Apps of Inside Housing also warns the same problems of increased homelessness will return if LHA is frozen again in two years time.

"Also remember LHA at the lowest 30th percentile of local rents is an austerity measure anyway,” he said.

"It was at the 50th percentile before 2010 when we had half as many families in temporary housing as we do now.”

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