New analysis suggests that unfreezing housing benefits would not drive increasing rents. It comes as ministers consider whether to continue freezing housing benefit rates from April next year.

Successive governments have frozen Local Housing Allowance (LHA) rates in an effort to limit welfare spending. Most recently the Prime Minister, Andy Burnham, argued that the housing benefit system is being “forced to chase rents in the private rented sector”.

As a result of the freeze, the homelessness charity, Crisis, suggests that fewer than two per cent of private rented properties are affordable for those in receipt of the benefit. Now, new analysis by the National Residential Landlords Association (NRLA) suggests there is no clear link between benefit levels and rent increases.

The LHA was introduced in April 2008 with the aim of supporting claimants to cover the cost of the lowest 50 per cent of rents in any given area. In April 2011 it was cut to cover the lowest 30 per cent of rents.

Between 2008/09 and 2015/16 when the LHA rate increased in line with rents each year, weekly rents increased by an average of 2.5% a year. However, between 2016/17 and 2024/25 when the LHA rate was frozen for all but two years, average weekly rents increased by 3.4% a year.

Having been realigned with the bottom 30 per cent of rents in 2024/25, the previous Government took the decision to freeze the housing support available to renters from April 2025. It ended the link again between rent levels as they are today and the housing support available.

The Institute for Fiscal Studies (IFS) has estimated that it would cost £1.5bn a year to uprate and maintain the LHA rate to cover the bottom 30% of rents. This represents just over half the £2.8bn spent by councils on temporary accommodation in 2024/25, a figure which could be significantly offset by uprating housing benefit rates. Around a quarter of private renters receive housing support to help with their payment of their rent.

The Resolution Foundation has found that restoring housing allowance rates to cover at least the lowest 30% of rents could lift 75,000 children and 125,000 adults out of poverty. Increasing it to cover the lowest 50% of rents would lift 130,000 children and 215,000 adults out of poverty.

Separately, the IFS has warned that a tight fiscal environment is “no excuse for a system that creates uncertainty for renters and unfairness between local areas.”

Ben Beadle

Ben Beadle, chief executive of the NRLA, said: “Our analysis clearly shows that unfreezing housing benefit rates does not lead to an explosion in private sector rents. The reality is that rent levels are determined by a wide range of factors including tax and mortgage rates, demand from tenants and the costs of adhering to regulations.

“Freezing housing benefit rates merely locks many of those financially squeezed out of rental housing altogether and undermines all efforts to tackle the scourge of homelessness.

“It is time for the Government to act and unfreeze housing benefits to reflect housing costs as they actually are, not as they were in the past.”