Over one million private renters on Universal Credit will see the help they get with payments frozen next year, it is feared.

DWP 'freezes' key benefit leaving people who claim it £703 worse off

by · Birmingham Live

The Department for Work and Pensions (DWP) has announced it is freezing a crucial benefit - in a blow for renters. Over one million private renters on Universal Credit will see the help they get with payments frozen next year, it is feared.

Local Housing Allowance (LHA) rates will remain at their current level from April 2025. Liz Kendall, the work and pensions secretary, confirmed on Thursday that local housing allowance (LHA) – the localised rates that determine how much housing benefit claimants are entitled to – will be locked at the current levels until 2026.

Cara Pacitti, senior economist at the inequality thinktank Resolution Foundation, said of last week’s budget: “We were really disappointed not to have seen an increase in local housing allowance, to support low income renters with their housing costs."

READ MORE Martin Lewis addresses university tuition fee hike and says 'to be really clear'

“LHA was increased to match local rents last year,” she said. “Since then, we’ve seen 8% rental [price] growth. That’s obviously totally unsustainable and, for a lot of families, that’s going to mean really significant gaps between the housing support they’re given and the private rents they’re trying to pay.”

“The LHA freeze was in the [budget] small print,” said Ben Twomey, chief executive of Generation Rent. “But that is going to affect 4.6 million people who receive LHA. That seems to us to be a choice made by the government that denies support to those most in need of it.

“Half of those people receiving LHA have children who depend on them,” he said. “So it’s really going to cause major problems in terms of driving people into poverty, driving people into homelessness and increasing rent arrears.”

According to the Resolution Foundation, maintaining the rate freeze will leave renters relying on Housing Benefits to pay for their homes on average £243 worse off a year and £703 worse off by the end of parliament if rent prices continue to rise.