The Department for Work and Pensions (DWP) is facing renewed pressure to unfreeze Local Housing Allowance (LHA) rates, which have remained unchanged since April 2024. Baroness Ruth Lister of Burtersett, a Labour Party peer, has called for the allowance to be restored to a level that covers at least the cheapest 30 per cent of local rents, as originally intended when the policy was designed.
How Local Housing Allowance Works
The DWP uses LHA rates to calculate Housing Benefit for tenants renting from private landlords. These rates are set by the Valuation Office Agency (VOA) Rent Officers, who collect rental information from letting agents, landlords, tenants and other sources. LHA rates are based on private market rents being paid in the Broad Rental Market Area (BRMA), which can differ from advertised rents.
Baroness Lister made her comments as part of the '100 ideas for Andy Burnham's first 100 days as Prime Minister' plan, published by the thinktank Compass. In the document, she explicitly stated: "End the freezing of the local housing allowance and return it to a permanent level that covers at least the cheapest 30 per cent of local rents, as originally intended."
Impact of the Freeze
The Baroness highlighted that the LHA has been frozen since April 2024 and was also frozen for a number of years before that. According to a coalition of nine voluntary organisations, including Citizens Advice and Crisis, the result is that the LHA now covers the rent on fewer than two per cent of privately advertised homes in Great Britain.
Lister argued that this freeze is having severe consequences. She said: "The coalition argues that this is contributing to the number of children in temporary accommodation and is trapping them there. And it is driving people into homelessness, as well as worsening child poverty and children’s ill health."
False Economy Warning
The peer also warned that freezing the LHA is a false economy. She noted: "Research suggests that freezing LHA is a false economy, shifting savings from central government into costs to local government."
Baroness Lister concluded that de-freezing the LHA would be a step towards meeting the Prime Minister’s goal of ending rough sleeping, alongside measures to increase the supply of affordable housing. She added: "It would also strengthen the child poverty strategy."
