Shocking new figures show that frozen housing benefit is driving homelessness - the government must act

New research from a coalition of organisations, including Shelter and led by Crisis and Citizens Advice, illustrates the devastating impacts of the housing emergency. The report shows that just 1.9% of properties in Great Britain are affordable for people on housing benefit, pushing families into debt, poverty and homelessness. And for families in the private rented sector who claim housing benefit, insufficient support means they are being forced into the bottom end of the market, where poor conditions prevail.

With a record 134,210 households homeless in England, including 85,800 families and 176,130 children, the government must act urgently by unfreezing Local Housing Allowance to keep it in line with the real cost of renting.

What is Local Housing Allowance?

Local Housing Allowance (LHA) is used to set the maximum amount of housing benefit that people claiming Universal Credit can receive to help cover the cost of rent in the private rented sector, based on bedroom entitlement and family size. LHA rates are set within areas known as Broad Rental Market Areas (BRMAs).

When first introduced in 2008, LHA was set to cover the cheapest 50% of rents (the median, or the fiftieth percentile) in each BRMA. Rates automatically changed annually in response to movements in local rents. So, the cheaper 50% of homes in each BRMA were covered by LHA:

However, in 2011, LHA rates were reduced to the cheapest 30% of rents (the 30th percentile) as part of the then-government’s austerity measures. This meant that a smaller share of homes in each BRMA were affordable on LHA:

And in 2012, the automatic link between rents and LHA rates was broken – since then, rates have been subject to inconsistent uprating and repeated freezes, staying at the same level even if rents increased. In fact, LHA has only been uprated back to the 30th percentile twice since then (in 2020/21 and 2024/25).

While rents have continued rising, LHA has stayed frozen at 2025 levels. This means that today it covers the rent on just 1.9% of privately advertised homes across Great Britain. This figure is even lower in areas such as London, where fewer than 1.2% of listings were affordable. The freeze also impacts existing tenancies as the shortfall between LHA and rent has increased. The average gap between LHA rates and the cheapest 30% of local rents for a two-bedroom home in England is now £403 a month.

We see through our services every day the desperate lengths to which families go to cover this shortfall, including cutting back on other essentials such as food, going into utilities arrears, or using benefits not meant for housing to pay the rent.

Frozen LHA is forcing families into the bottom end of the private rented sector

Shelter’s contribution to the report used new analysis from the English Housing Survey to examine the relationship between LHA and poor housing conditions. We found that amongst survey respondents, those living in the private rented sector and claiming LHA experienced higher instances of poor conditions.

• 26% of households who claimed LHA were classed as ‘non-decent’ by the EHS, compared to 21% of non-claimant households

• 16% of households who claimed LHA had at least one category 1 hazard (i.e. hazards posing a serious risk to health and safety), compared to 8% of non-claimant households

• 13% of households who claimed LHA experienced dampness problems, compared to 8% of non-claimant households

Our findings suggest that inadequate LHA could be preventing private renters from accessing better-quality homes. This could be either due to a lack of affordable alternatives, or because people feel they cannot ask their landlord for improvements in case this results in a rent increase. Coupled with huge waiting lists for social homes, low-income households have no choice but to accept poor conditions.

Frozen LHA is trapping families and children in temporary accommodation

When families can’t afford their rent, this can directly cause homelessness and damaging stays in temporary accommodation (accommodation provided by councils to people facing homelessness). Our report, ‘Still Living in Limbo’, the largest ever survey of people living in temporary accommodation, demonstrates the devastating impacts that these stays have on physical and mental wellbeing. Three quarters of households experienced poor conditions and 40% had experienced damp, mould or condensation. Poor conditions can have fatal consequences: from April 2019 to March 2025, 104 children died with temporary accommodation indicated as a contributing factor to their vulnerability, ill-health or death.

Temporary accommodation is also inherently unstable. Frequent out-of-area placements mean that families are moved hours away from support networks, GPs and schools at short notice, disrupting their children’s routines and education. And although the government’s national homelessness strategy aims to ensure that ‘where homelessness does occur, it is brief’, frozen LHA is undermining this goal by blocking people from leaving temporary accommodation. Over half of families (55%) with children in the private rented sector claim housing benefit to help them pay rent. So, if LHA doesn’t cover the cost of rents, it’s extremely difficult for families to find a permanent and affordable home. In fact, over two thirds of the families we surveyed in temporary accommodation had been there for over a year.

Frozen LHA also means that landlords are increasingly incentivised to let for more lucrative temporary accommodation, rather than direct private renting on limited LHA rates. In 2024/25, local councils spent £2.8bn on temporary accommodation, a 25% increase in one year. Shelter has found evidence that private brokers are making millions in profit from the housing emergency by acting as intermediaries between landlords and councils to broker temporary accommodation contracts. As even fewer private rented homes are available to families, they are further forced into temporary accommodation or the bottom end of the private market. This is a vicious cycle driven by inadequate LHA:

What needs to be done

After decades of campaigning from Shelter and other housing allies, the government has made welcome reforms and commitments aimed at improving conditions in both the private rented sector and temporary accommodation. These include applying new standards such as the Decent Homes Standard and Awaab’s Law to private rented homes and temporary accommodation; implementing new operating and enforcement health and safety guidance for local authorities; and regulating landlords who are providing poor-quality and excessively expensive temporary accommodation.

However, some of these measures are years away from being enforced, and any changes risk being undermined by inadequate LHA.

Landlords are still able to increase the rent once a year up to market rates. They may choose to do this if they undertake improvements on the property. This means LHA claimants, who are currently stuck in poor conditions because they can only afford homes in the bottom end of the market, will no longer be able to afford the rent and will have to surrender the tenancy. If they are unable to access an alternative home within LHA rates, this may well result in homelessness. Alternatively, if the landlord decides they cannot afford to undertake the work and instead chooses to sell the home, as they are entitled to do under the Renters’ Rights Act, tenants will have four months’ notice; limited time to find another home affordable within LHA rates. This could again result in homelessness.

The evidence indicates that the government can no longer afford to leave the freeze unaddressed. Earlier this month, the Housing, Communities and Local Government Select Committee, made up of cross-party MPs, released a report on housing conditions recommending that the government unfreeze LHA. This would ‘help reduce the risk of rent increases leading to households on the lowest incomes being displaced into poorer accommodation or made homeless’.

We know that there is an effective solution to the housing emergency: namely, a new generation of genuinely affordable social rent homes, where rents are linked to local incomes. But building these homes will take time, and the over 176,000 children growing up homeless simply can’t wait.

It’s essential that the role of housing benefit in preventing homelessness is recognised by the government. It must be available to those who can’t afford rents, such as pensioners, and enable families to find decent, affordable and permanent homes. This is why the government must unfreeze local housing allowance and permanently restore levels to at least the 30th percentile of local rents, to keep in line with the real cost of renting.