20,000 renters could be pulled into poverty without change to housing allowance, charity warns

Analysis by the Joseph Rowntree Foundation given exclusively to ITV News shows renters will pay hundreds of pounds extra with local housing allowance frozen

Tens of thousands of low-income private renters could be pulled into poverty if the government doesn't unfreeze a key housing benefit, poverty charity the Joseph Rowntree Foundation has warned.

Analysis shown exclusively to ITV News found 20,000 renters, including 10,000 children, will be paying hundreds of pounds extra on their rent if the government doesn't rethink.

With the Budget just over two weeks away, they're urging the government to unfreeze Local Housing Allowance and instead link it to local rents, to help private renters.

Local Housing Allowance (LHA) is the rate used to determine how much extra financial support private renters on Universal Credit or housing benefit can receive.

It's currently set at a level that allows people to afford the bottom 30% of rental properties in their area.

The analysis by the Joseph Rowntree Foundation shows that if the Labour government doesn't unfreeze LHA in the Budget, private renters will be on average £243 worse off by 2025-2026.

Subscribe free to our weekly newsletter for exclusive and original coverage from ITV News. Direct to your inbox every Friday morning.

The increase is even more for a working age couple with children, who would be £340 worse off.

If the freeze continues until the end of this parliament in 2029, the average private renter will be £703 worse off, compared to £882 for a couple with children.

The Joseph Rowntree Foundation thinks this could drive 50,000 vulnerable private renters into poverty by the end of the parliament, including 30,000 children.

Housing and poverty campaigners say the rising cost of rent means housing allowance doesn't go far enough.

Office for National Statistics (ONS) private rent inflation figures out today also show rents in Great Britain increased by 8.4%, an average of £93 a month, in the year to September 2024. 

The previous government temporarily unfroze the allowance, but planned to freeze it again from 2025 - charities will be watching the Budget closely to see if Rachel Reeves sticks with the previous government's plan or responds to their calls.

But Reeves has warned of "tough decisions" in the Budget, as she tries to fill the £22 billion "black hole" in the public finances left by the previous government and avoid a return to austerity.

Rachelle Earwaker, senior economist at the Joseph Rowntree Foundation said: "Instead of not knowing whether they'll be able to pay their rent because the support they get has been frozen, private renters need to know that LHA will rise in line with local rents each year.

"The Budget presents a clear opportunity for the government to act now by permanently linking LHA to local rents to prevent this and show their commitment to improving the lives of some of Britain's poorest private renters." 

Have you heard our podcast Talking Politics? Tom, Robert and Anushka dig into the biggest issues dominating the political agenda in every episode…