Keeping LHA Rates Frozen Widens the Shortfall between Housing Support and Real Rents, Says Propertymark
The current state of the housing market in the UK has been a cause of concern for many individuals and families, especially those who rely on housing support. The Local Housing Allowance (LHA) rates, which determine the amount of support individuals can receive for their housing needs, have been frozen for the past five years. This has caused a significant shortfall between the support provided and the actual cost of renting a property, as highlighted by Propertymark, the leading professional body for the UK property industry.
According to Propertymark, the LHA rates have not been updated since April 2016, despite the rising costs of renting a property in the UK. This has resulted in a widening gap between the support provided and the real rents, making it increasingly difficult for those on low incomes to find suitable and affordable housing.
The LHA rates are used to determine how much housing benefit or Universal Credit housing element individuals can receive to help cover their rent costs. These rates are based on the 30th percentile of local market rents, meaning that they should cover the cost of renting a property in the bottom 30% of the market. However, with the freeze in place, the rates have not kept up with the current market trends, leaving many people struggling to afford a decent place to live.
In addition to the frozen rates, Propertymark also points out that the LHA rates do not take into account other costs associated with renting a property, such as utility bills and council tax. This further compounds the problem and makes it even more challenging for individuals to meet their basic housing needs.
The consequence of the frozen LHA rates is that many people are finding themselves in a state of financial insecurity, with a lack of affordable housing options. This is particularly worrying for those on low incomes, including single parents, the disabled, and the elderly, who are already vulnerable and may be at risk of homelessness.
Propertymark has been advocating for an increase in the LHA rates to reflect the current market conditions. They believe that the rates should be linked to the Consumer Price Index (CPI) to ensure that they are adjusted to reflect any changes in the cost of living. This would help bridge the gap between the support provided and the real rents, and provide more stability for those relying on housing support.
The impact of the frozen LHA rates is not just limited to individuals and families in need. It also affects landlords who rely on rental income to cover their mortgage payments and other expenses. With the LHA rates frozen, landlords may struggle to find suitable tenants who can afford the rent, resulting in a decrease in their rental income and potential financial difficulties.
Moreover, the shortage of affordable housing options also has wider implications for the economy. It can lead to an increase in homelessness, which can have a domino effect on other social issues such as mental health, unemployment, and crime rates. It can also discourage people from seeking employment or better job opportunities in different areas, limiting their potential for social and economic mobility.
In light of these concerns, Propertymark is urging the government to take immediate action and increase the LHA rates to reflect the current market conditions. This would not only provide much-needed support to those in need but also benefit the property industry as a whole. By keeping the rates frozen, the government is essentially creating a barrier for individuals and families to access suitable and affordable housing, which goes against its commitment to providing a safety net for those in need.
In conclusion, the frozen LHA rates have caused a significant shortfall between housing support and real rents, making it increasingly challenging for individuals and families to find affordable housing. Propertymark is calling on the government to take swift action and increase the rates to reflect the current market conditions. This would not only benefit those in need but also have a positive impact on the property industry and the economy as a whole. It is time for the government to prioritize the well-being of its citizens and address this pressing issue.
