Keeping LHA Rates Frozen Widens the Shortfall Between Housing Support and Real Rents, Says Propertymark
The current housing crisis in the UK has been a growing concern for many years, with rising rents and a shortage of affordable housing leaving many struggling to find a place to call home. In an effort to alleviate this issue, the government introduced Local Housing Allowance (LHA) rates, which provide financial support to those in need of housing assistance. However, according to Propertymark, the freezing of LHA rates is only widening the gap between housing support and real rents, making it even more difficult for individuals and families to secure suitable accommodation.
Propertymark, the UK’s leading professional body for property agents, has recently released a report highlighting the impact of frozen LHA rates on the rental market. The report reveals that since 2016, LHA rates have been frozen at the same level, while rents have continued to rise. This has resulted in a significant shortfall between the amount of support provided by LHA and the actual cost of renting a property.
According to the report, the average LHA rate for a one-bedroom property is £73 per week, while the average rent for the same type of property is £130 per week. This means that those relying on LHA to cover their housing costs are facing a shortfall of £57 per week, or £2,964 per year. For a two-bedroom property, the gap is even wider, with an average LHA rate of £91 per week and an average rent of £160 per week, leaving a shortfall of £69 per week or £3,588 per year.
This significant shortfall is not only causing financial strain for those in need of housing support, but it is also making it increasingly difficult for them to find suitable accommodation. With rents continuing to rise, many landlords are reluctant to accept tenants who are reliant on LHA, as they are unable to cover the full cost of rent. This has resulted in a limited number of properties available for those in need of housing support, further exacerbating the housing crisis.
Mark Hayward, Chief Executive of Propertymark, has expressed concern over the impact of frozen LHA rates on the rental market. He states, “The government’s decision to freeze LHA rates has had a detrimental effect on the rental market. It is simply not sustainable for LHA rates to remain at the same level while rents continue to rise. This is not only causing financial hardship for those in need of housing support, but it is also limiting their options when it comes to finding suitable accommodation.”
The report also highlights the regional disparities in LHA rates, with some areas having significantly lower rates compared to the average rent for the same type of property. For example, in London, the average LHA rate for a one-bedroom property is £150 per week, while the average rent is £250 per week, leaving a shortfall of £100 per week or £5,200 per year. This is a significant gap that is making it increasingly difficult for individuals and families to afford to live in the capital.
In light of these findings, Propertymark is calling on the government to review and increase LHA rates to reflect the current rental market. This would not only provide much-needed financial support to those in need, but it would also help to address the shortage of affordable housing by encouraging landlords to accept tenants who are reliant on LHA.
Hayward adds, “It is crucial that the government takes action to address the widening gap between LHA rates and real rents. By increasing LHA rates, we can ensure that those in need of housing support are not left struggling to make ends meet and are able to secure suitable accommodation. This will not only benefit individuals and families, but it will also have a positive impact on the rental market as a whole.”
In conclusion, the freezing of LHA rates is only exacerbating the housing crisis in the UK. With rents continuing to rise, it is essential that the government takes action to review and increase LHA rates to reflect the current rental market. This will not only provide much-needed financial support to those in need, but it will also help to address the shortage of affordable housing and create a more sustainable rental market for all.
