DWP ‘freezes’ vital benefit – leaving one million Brits £703 worse off

A freeze on an important benefit affecting private renters has been announced by The Department for Work and Pensions (DWP).

More than one million private tenants who receive Universal Credit will have their payments frozen at current levels until next year.

The Local Housing Allowance (LHA) calculates the maximum Housing Benefit available for those renting from private landlords.

They are calculated based on the size of the property and its location, but they should equal an area’s lowest affordable housing rents.

The allowance rates are set to stay at their current levels from April 2025 as Work and Pensions Secretary Liz Kendall confirmed that LHA, localised rates will be frozen at their current allowance rate until 2026, CambridgeshireLive reports.

Referring to the autumn budget, senior economist at Resolution Foundation, Cara Pacitti said: “We were really disappointed not to have seen an increase in local housing allowance, to support low income renters with their housing costs.

“LHA was increased to match local rents last year. Since then, we’ve seen 8% rental [price] growth. That’s obviously totally unsustainable and, for a lot of families, that’s going to mean really significant gaps between the housing support they’re given and the private rents they’re trying to pay.”

LHA was frozen for seven out of the 12 years under the former Conservative government before it increased last year – failing to keep up with the rising rental costs.

Ben Twomey, chief executive of Generation Rent said: “The LHA freeze was in the [Budget] small print. But that is going to affect 4.6 million people who receive LHA. That seems to us to be a choice made by the Government that denies support to those most in need of it.

“Half of those receiving LHA have children who depend on them. So, it’s really going to cause major problems in terms of driving people into poverty, driving people into homelessness and increasing rent arrears.”

The Resolution Foundation has suggested that if the frozen rates continue, renters who rely on Housing Benefits will find themselves £243 worse off per year and with rent prices increasing, this could eventually result in a shortfall of £743 by the end of parliament.