Prime Minister Andy Burnham has admitted that the freeze on Local Housing Allowance (LHA) rates is contributing to the costs councils face for temporary accommodation. Speaking in Parliament, Mr Burnham suggested that modifications to LHA could be included in his strategy to tackle the housing crisis.
These comments follow Mr Burnham's announcement of plans to provide accommodation for every rough sleeper in England this winter. Former Labour leader Jeremy Corbyn questioned the Prime Minister on the issue, noting that less than 2% of private sector rents are within the LHA level and suggesting rent controls.
In response, Mr Burnham stated that repeated LHA freezes have widened the gap between benefits and rents, leading to significant temporary accommodation bills for councils, with London's bill reportedly exceeding half a billion pounds. He added that the freeze does not save money but instead creates an unfunded pressure on council budgets. He indicated that a package of measures is needed to address the housing market.
During the Autumn Budget 2025, ministers confirmed that LHA rates would remain frozen for a second consecutive year in 2026/27. Government data from August this year shows that almost 1.7 million private rented households receive housing cost support, with 53% of these households experiencing a gap between their housing benefit payments and their monthly rent.
Proposals for reforming the housing market are under consideration, including potential changes to property taxation. One suggestion involves replacing council tax and stamp duty with an annual property tax, with one model previously backed by Mr Burnham proposing a 0.48% annual charge on property value. A newer proposal from a think tank suggests a higher rate of 0.96% for second homes, empty properties, and homes owned by non-residents, though published plans do not indicate that all privately rented properties would automatically face this higher rate.