There has been a notable drop in the number of private landlords letting to tenants in receipt of local housing allowance or Universal Credit, according to the National Landlords Association (NLA).
A number of landlords have been deterred by the freeze on Local Housing Allowance (LHA) rates, introduced in 2016 by then-chancellor George Osborne, replacing the existing regime which saw LHA rates broadly cover the cheapest third of rents within the government’s broad rental market areas.
But as rents have increased over the years, so has the disparity between what claimants receive in housing benefit and the amount they have to pay towards rental payments.
Although the government announced this week plans to end the LHA rate freeze after four years from April, the proposed increase is simply not enough to help those already unable to afford their rent.
Payments, which are based on private market rents being paid by tenants in the broad rental market area (BRMA) - within which a person might reasonably be expected to live - will rise by inflation, which currently stands at around 1.5%, from the start of the new tax year.
Given that rents have risen by an average of 5%, and in some areas more than that over the past four years, a 1.5% hike in the benefit level is going to be of minimal benefit to a tenant struggling to afford the rent, according to the NLA.
Meera Chindooroy, policy and public affairs manager at the NLA, said: “While we are pleased the government will finally end the freeze on LHA rates, an inflation-based increase is insufficient to address the shortfall between LHA levels and market rents in many areas.
“The financial support offered by the government is simply not enough for many tenants to cover their rent.
“Our research shows that a decreasing proportion of landlords are letting to tenants in receipt of local housing allowance or Universal Credit, and that there is a wide variation across the country.
“It’s vital the government re-aligns LHA rates with current market rents, in order to ensure vulnerable tenants continue to be able to access properties in the private rented sector.”