How the LHA freeze is squeezing tenants in the private rental market

If you’re paying rent from a Universal Credit or Housing Benefit award, you may have noticed that your support has not kept pace with soaring market prices. This is because Local Housing Allowance (LHA) – the cap on housing support for private‑rented homes – has been frozen since April 2024, leaving many households to shoulder an ever‑widening shortfall.

LHA links the maximum payment to the 30th percentile of rents in each Broad Rental Market Area (BRMA). The most recent calculation, published in April 2024, used rent data collected up to September 2023. Since then the rates have not been adjusted, even though rental prices have continued to climb, meaning the allowance often falls well below the cost of a modest property.

The scheme was introduced after the 1989 deregulation of private rents, with the aim of curbing benefit spending and encouraging claimants to choose accommodation that matches their genuine need. Over the years reforms – notably the shift from the median (50th percentile) to the 30th percentile in April 2011 and the removal of the “keeping the difference” top‑up – have steadily reduced LHA’s generosity.

A 13% rise was applied in April 2020 and an 18% increase in April 2024 when LHA was returned to the 30th percentile. The subsequent freeze has halted any further increases, leaving many still facing a shortfall.

The Department for Work and Pensions estimates that the 2024 move back to the 30th percentile benefitted roughly 1.6 million households, adding an average of £785 to their annual support. The cost of that uplift was about £1.3 billion for 2024/25 and is projected to rise to £1.7 billion by 2028/29.

Since the freeze, the gap between current LHA rates and the 30th‑percentile rents measured to September 2025 has widened again, matching or exceeding the shortfalls that existed before the 2020 reset.

Charities and housing campaigners are now urging the government to restore LHA levels in the next budget, warning that frozen rates have increased homelessness and the number of families in temporary accommodation, as well as the costs borne by local authorities. By contrast, the Conservative Party has signalled an intention to cut LHA for working‑age claimants to the 10th percentile of local rents, a move aimed at trimming welfare spending while boosting defence outlays.

The Institute for Fiscal Studies has criticised the pattern of periodic uprating followed by indefinite freezes as “incoherent policy design”, arguing that regular, predictable adjustments would provide certainty for tenants and the public purse.

For renters relying on LHA, the practical takeaway is to monitor the BRMA maps on Directgov and be prepared for potential shortfalls. If your rent exceeds the current allowance, you will need to cover the difference yourself, which may mean seeking a cheaper property, negotiating a lower rent, or exploring additional local assistance schemes. Staying informed about upcoming budget announcements can give you a heads‑up on any changes that might affect your housing support.