JRF responds to Local Housing Allowance increase

13 Jan 2020 06:04 PM

Helen Barnard, Deputy Director of Policy and Partnerships, responded to the Local Housing Allowance increase

“The Government’s decision to lift the freeze on Local Housing Allowance is a step in the right direction, and we welcome this signal of a new approach for the decade ahead. But on its own this move won’t be enough to free people from being pulled into poverty and homelessness by high housing costs. To halt homelessness and free people from in-work poverty, the Government must use the next Budget to ease the pressure on households struggling with high housing costs.

"Re-setting Local Housing Allowance rates to cover the bottom third of local rents would give people on low incomes the lifeline they urgently need when they’re being swept into poverty by rising rents. To turn the tide in the longer term we also need significant investment to increase the supply of truly affordable social housing. Without this, gains created in other areas, like higher pay and lower taxes, will continue to be lost.”

Below are two examples of how the end of the freeze would impact on low-income households’ finances.

Case study one: a single parent of a 3-year-old, working 16 hours a week on minimum wage, and privately renting a two bed house in York.

Assuming their weekly rent is the average rent of the cheapest third of 2-bed properties, this family’s housing benefit is currently £20.26 short of what they need to cover their rent. After the proposed increase to LHA and the increase to minimum wage, this family would still have a weekly shortfall of £15.14 (or £790 a year).

Case study two: couple parents of a 3 and 8-year-old privately renting a two bed house in York. Together they work a full time (35 hours) and part time (16 hours) job on minimum wage.

Assuming their weekly rent is the average rent of the cheapest third of 2-bed properties, this family’s housing benefit is currently £20.26 short of what they need to cover their rent. After the proposed increase to LHA and the increase to minimum wage, this family would still have a weekly shortfall of £10.65 (or £555 a year).

Around 900,000 could receive increased Housing Benefit from April