New analysis suggests that unfreezing housing benefits would not lead to increasing rents. This comes as ministers are considering whether to continue freezing housing benefit rates from April 2027.
Successive governments have frozen Local Housing Allowance (LHA) rates to limit welfare spending. Prime Minister Andy Burnham previously argued that the housing benefit system was being "forced to chase rents in the private rented sector".
The National Residential Landlords Association (NRLA) has now published analysis suggesting there is no clear link between benefit levels and rent increases. Ben Beadle, chief executive of the NRLA, stated that rent levels are determined by factors such as tax and mortgage rates, tenant demand, and regulatory costs.
Data shows that between 2008/09 and 2015/16, when LHA rates increased with rents, weekly rents rose by an average of 2.5% annually. In contrast, between 2016/17 and 2024/25, when LHA was frozen for most of the period, average weekly rents increased by 3.4% annually.
The homelessness charity Crisis suggests that fewer than two per cent of private rented properties are affordable for those receiving benefits due to the freeze. The Institute for Fiscal Studies (IFS) has warned that a tight fiscal environment is "no excuse for a system that creates uncertainty for renters and unfairness between local areas."
The Resolution Foundation has found that restoring housing allowance rates to cover at least the lowest 30% of rents could lift 75,000 children and 125,000 adults out of poverty. Increasing it to cover the lowest 50% of rents could lift 130,000 children and 215,000 adults out of poverty.