A recent decision by the UK government to keep Local Housing Allowance (LHA) rates frozen until April 2026 has raised concern among housing advocates and social policy experts.
The move is likely to intensify financial strain on private renters, especially in high-demand areas such as London, where rental prices continue to rise. Although most other welfare benefits are set to increase with inflation, LHA will not follow the same trend.
According to a report by DevonLive, the freeze may lead to widening gaps between rental obligations and benefit entitlements, leaving many tenants at risk of mounting arrears or even eviction.
What Is Local Housing Allowance and Who It Affects
Local Housing Allowance is a type of benefit used to calculate housing-related support under Universal Credit or Housing Benefit, depending on the recipient’s circumstances. It applies to private renters and varies by local authority based on rent levels and household composition.
Those under the age of 35 and living alone, for example, can only receive LHA to cover the cost of a single room in a shared house.
Rates were raised in 2023, but the government confirmed this week that no further increases are planned until at least April 2026. The freeze comes despite other benefits increasing, raising concerns about an emerging gap between housing costs and support levels.
The Resolution Foundation warned that freezing LHA in 2025/26 could leave many renters with a £14 per week shortfall, the equivalent of over £800 across the financial year.
In high-cost areas such as London, this gap could grow to as much as £60 per week, or over £3,000 annually. These projected losses have led to growing concern among housing advocates and benefit claimants.
Advice for Those Behind on Rent
Citizens Advice recommends that renters struggling with arrears seek guidance without delay. As they note,
your landlord may consider eviction if you’re two months or more behind on your rent.
For those receiving Universal Credit, landlords are permitted to request that rent payments be made directly to them. In these situations, tenants can contact the Universal Credit helpline on 0800 328 5644 to request smaller deductions towards rent arrears, which could help preserve part of the benefit.
That said, this approach has risks. As Citizens Advice warns,
This could potentially lead to dissatisfaction from the landlord regarding the amount they receive from your Universal Credit, which could result in potential eviction.
Discretionary Housing Payments for Additional Support
Discretionary Housing Payments (DHPs) may offer a financial cushion to those experiencing housing stress. Available to claimants already receiving Housing Benefit, Local Housing Allowance (LHA), or the housing component of Universal Credit, these payments can cover a shortfall in rent, deposits, or advance rent when moving home.
Applications are submitted to local councils, and awards are made on a case-by-case basis. While DHPs are not guaranteed, they can be a vital safety net in periods of transition or hardship.
Budgeting Loans and Eligibility Limits
The Department for Work and Pensions (DWP) offers Budgeting Loans to help with essential costs, including rent. These loans are only available to those who have been on qualifying benefits — such as Income Support, Jobseeker’s Allowance, or Pension Credit — for at least six months.
Importantly, those currently receiving Universal Credit are not eligible for Budgeting Loans. However,
If you’ve switched from Universal Credit to Pension Credit, the time spent claiming the latter will count towards the six-month requirement – according to government guidelines.
Eligibility may also be affected if the applicant is already repaying an existing Budgeting Loan or Crisis Loan.
Loan amounts range from a minimum of £100 up to £812 for those with children and Child Benefit claims. The exact amount depends on savings levels and repayment capacity. One advantage is that these loans are interest-free, and repayments are automatically deducted from benefits.
Government policy states that repayments should typically be completed within two years of receiving the loan.
