Housing Benefit Freeze Cuts Affordability

Housing charities warn that frozen housing benefits will lead to more rent arrears and homelessness.

Renters claiming housing benefit could only afford one in 40 private rented homes in England last year - and the benefit freeze starting today is likely to worsen matters.

Chancellor Rachel Reeves has capped local housing allowance at current rates for at least a year, impacting 5.7 million low-income households which rely on the payment to cover private and social housing rents.

Research by housing charity Crisis and campaigners Health Equals revealed last year that only 2.5 percent of private rented homes were affordable to tenants claiming housing benefit between April and October last year - equivalent to 115,000 out of 4.6 million private rentals in England.

Three years ago, in 2021-22, housing benefit tenants could choose from 1 in 8 private rented homes, compared to the 1 in 40 now.

Benefit claimants must find hundreds of pounds a month

The latest data from the Office for National Statistics shows rents have soared by 8.3 percent in England in the year to the end of January, pushing private rented homes even further out of reach of housing benefit claimants.

The average rent for a private home in England is now £1,381 a month - although the amount paid varies from an average of £2,235 monthly in the capital to £715 monthly in the North East, the region with England's cheapest homes.

However, the freeze means tenants claiming housing benefits must find, on average, an extra £337 a month for a one-bed home, £326 for a two-bed and £486 for a three-bed property.

Crisis chief executive Matt Downie argues the freeze is an effective real-terms cut in benefits for claimants renting private homes.

"There is no doubt that today's freeze on housing benefit will lead to rising homelessness," he said.

Unaffordable rents

"It also risks overwhelming local authorities who are already struggling to cope with the demand for support, and will leave more people stuck in unfit temporary accommodation that damages their health and wellbeing."

A government spokesperson said: "We have inherited the worst housing crisis in living memory with rent levels unaffordable for far too many.

"We're building 1.5 million homes to improve affordability for renters and helping those on the lowest incomes pay their housing costs by extending the household support fund and maintaining discretionary housing payments. Alongside this, we recently announced a £2 billion investment for up to 18,000 new social and affordable homes, while our renters' rights bill will fundamentally reform the private rented sector by empowering tenants to tackle unreasonable rent hikes."

Nevertheless, although building 1.5 million homes is a lofty ambition, low-income families will find they are priced out of the market for some time as tens of thousands of homes will take years to build.

In 2023-24, 62,289 homes were constructed in England - a 2 percent drop from 2022-23.