Local Housing Allowance (LHA) rates will be refrozen from April despite a predicted increase in unemployment to 2.6 million next year.
A report by spending watchdog the Office for Budget Responsibility (OBR), issued as part of spending review documents published yesterday, revealed that the government has opted that LHA rates will be frozen in cash terms from 2021/22 onwards.
This means that the rate will fall below the current level which is set to cover the lowest 30% of rents in any given area, which is obviously bad news for private renters relying on benefits to help with their housing costs as they will see a growing shortfall in their income against rent.
The decision to freeze LHA has been criticised by the National Residential Landlords Association (NRLA), which says that both renters and landlords will struggle with the consequence of rent arrears through no fault of their own in light of rising unemployment.
Ben Beadle, chief executive of the NRLA, said: “Many renters and landlords are struggling with the consequence of rent arrears through no fault of their own yet the Government is failing to take the action needed to address this.
“Whilst the chancellor has spoken about the need to support those who find themselves homeless, it would be much better for all concerned to provide the funds needed to sustain tenancies in the first place.”