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Briefing
Housing
Child poverty
Deep poverty and destitution

Stop the freeze: permanently re-link housing benefits to private rents

If the Government wants to end emergency food parcels and tackle child poverty and homelessness, re-linking benefits to costs is the right thing to do.

Private renters are also highly likely to be experiencing financial hardship and going without basics. Our JRF cost of living survey shows that 81% of low-income private renting households in receipt of housing benefits are going without essentials like food, heating and warm clothing, and around 6 in 10 (59%) are in arrears with at least one household bill (Earwaker and Johnson Hunter, 2024).

Despite this, the benefit system has failed to adequately support low-income renters for much of the last 14 years.

The impact of low-income private renters finding it harder and harder to cover their rent is significant. As Figure 2 above shows, in different rental markets across England, while LHA has been frozen, renters have been forced to cover significant shortfalls between their rent and their housing benefits. In Inner South East London in 2017 this was as significant as £250 shortfall per month on average.

These shortfalls matter because growing gaps between rents and housing benefits mean that private renters need to dig into money intended for other bills to try to cover the essential expense of rent. Four-fifths (81%) of low-income private renters on housing benefits are currently going without essentials, and 59% are in arrears with their household bills. A combination of soaring rents and low levels of savings means making ends meet is extremely difficult. It is therefore unsurprising that we have seen homelessness soar and temporary accommodation numbers hit record highs over this period.

These changes have cost private renters on housing benefits £1 billion, leaving them £684 worse off annually

This new research finds that the average private renter in receipt of housing benefits will be £684 per year worse off from April 2025 as a result of all of the policy changes made to LHA since 2011. This is the equivalent of having to find more than a month’s worth of extra rent every year (Valuation Office Agency, 2024). Combining the impact of all of the changes between 2011 and 2025, we find that the total cost to private renters was around £1 billion.

Of course, this impact is not equally spread across renters. The shortfall rises to £887 per year for a working-age couple with children and £957 per year where the adults in the household are Black.

Our main poverty measure is calculated based on an income of 60% or less of the median income after housing costs. The lower the income under this threshold, the more severe the experience of poverty. Deep poverty is calculated as being 50% or less of the median income, and very deep poverty, as 40% or less.

Unsurprisingly, each policy change that reduces support for private renters also has an impact on poverty. We found that 60,000 more renters were pulled into poverty, including 30,000 children. The severity of the poverty experienced also matters: 90,000 private renters, including 30,000 children, are also projected to be pushed into deep poverty as a result of the changes from 2011–2025, and 60,000 into very deep poverty, including 20,000 children.

LHA remains frozen, impacting both renters’ finances and certainty, but also the transparency of our public finances

This new research demonstrates just how much these changes have cost private renters and how many have been pulled into poverty as a result over the last 14 years. It is a warning for the rest of this parliament if the Government does not act now.

LHA was re-linked to the 30th percentile of local rents in April 2024 but subsequently re-frozen by the previous Government, meaning that this new Government needs to make an explicit decision to unfreeze LHA for it to be re-linked to local rents. The Office for Budget Responsibility’s (2023) current forecasts show that it is presumed that LHA will be frozen over the forecast period.

As Figure 2 shows, housing benefits policy has been anything but consistent over the last 14 years. It is not right that we have this debate over freezing and unfreezing every year, both for renters’ certainty about their finances and ability to pay their rent and for transparency within the Government’s finances.

For private renters who are already in precarious financial positions, and for at least 1 million households whose rent takes up more than 50% of their income, it is vital to know whether or not their housing benefits will come close to covering their rent. The uncertainty created by the ad hoc nature of decisions is not right.

For other benefits like the pension, the country does not actively consider every year whether or not pensioners’ incomes should be frozen or if they should rise in line with costs. Prior to the years of austerity, the same could be said for main benefits like UC equivalents and legacy benefits.

Currently, the freeze to LHA is permanently baked into our public finances. This is simply wrong. If the Government is serious about tackling homelessness and child poverty, it cannot allow housing support to become detached from housing costs again. It is wrong and dishonest to approach spending and tax decisions like this. A far better approach would be to confirm that LHA will be uprated every year, in line with local rents, so that it can be included in future forecasts honestly and transparently.

As a government committed to ending the need for emergency food parcels, this matters. Being pulled into very deep poverty unsurprisingly means that one is more likely to experience hardship, such as not having enough money for food. In 2022/23, around half (49%) of all private renters on housing benefits who were in very deep poverty experienced low food security, compared to 16% of all private renters (Department for Work and Pensions, 2024).

Previous research has shown that lowering people’s housing costs is a key route out of deep poverty so that income for other essentials like food and clothing can increase. When housing benefits are reduced in generosity so that they no longer cover (as much of) housing costs, people are effectively paying more for their housing – the opposite of what is needed to find a route out of very deep poverty. We know that in households where housing costs increased, people entered very deep poverty at a rate of 6%, compared to 4% for people whose housing costs did not increase. For private renters whose housing costs increase, entry rates into very deep poverty are very high, at 10% (Schmuecker, 2023).

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