Propertymark renewed its call to end the freeze on Local Housing Allowance in front of MPs, in the face of higher interest rates and energy price rises.
The allowance for poorer tenants has remained static since the beginning of the pandemic in April 2020 when it was raised to cover the bottom 30% of private rents compared to rents set in September 2019.
But the estate agent’s body says the government should consider raising the benefit to 50% of private rents during these “unprecedented times” as it “causes many people on benefits to be completely priced out of the market”.
Just 11% of one-bedroom properties in England are affordable on Local Housing Allowance, down from 17% in April 2022, according to a study by homeless charity Crisis and property website Zoopla last October.
“Freezing the Local Housing Allowance has two broad consequences,” Propertymark policy and campaigns officer Tim Thomas told MPs at a Westminster Hall debate covering the Local Housing Allowance last month.
Thomas said: “First, the rise in rents is decreasing the amount of housing in the private rented sector available to those claiming housing benefits.
“Secondly, the support that low-income renters get with housing costs will be related not to the current level of rents in their area but rather to the rents of 2019.”
He pointed to forecasts that say continuing to freeze the rate at this level would cost the government £840m in 2022-23, which would fall to £345m by 2025-26.
In the meantime, the body has also called on its agents to submit as much data as possible on local rents to the Valuation Office Agency, which helps set Local Housing Allowance levels, and “theoretically determines where a person could be expected to live, considering access to facilities and services”.
Rent squeezes for those on lower incomes are particularly acute in Wales and the association has written to the Welsh government to “look at the feasibility of devolving these powers to Wales”, as they are currently held by Westminster.
