DWP 'freezes' key benefit with UK households facing £3,129 shortfall

A blow for renters on Universal Credit has been issued - as a key benefit rate is FROZEN – with thousands facing a £3,129 shortfall. The Department for Work and Pensions ( DWP ) is set to freeze a key and crucial benefit in the wake of the Labour Party Budget.

Local Housing Allowance (LHA) rates will remain at their current level from April 2025. Local housing allowance (LHA) determines the amount of housing benefit a low-income renter can receive to cover their rent. It is intended to cover the bottom 30% of private rents but has failed to keep pace with rising rents in recent years.

Tory chancellor Jeremy Hunt uprated LHA rates at last year’s autumn budget, ending a four-year freeze that saw rents become unaffordable for many people on low incomes. Paul Kissack, chief executive of the Joseph Rowntree Foundation (JRF), said: “It’s deeply worrying that we haven’t seen changes to social security that will seriously bring down hardship. In particular private renters will feel let down by the choice to keep Local Housing Allowance frozen means that it will become further out of step with local rent levels, which have soared in recent years.”

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Ben Twomey, chief executive of Generation Rent, echoed fears that Reeves’ budget will see more renters struggling to stay in their homes. “Renters were hoping for bold measures that would make rents more affordable. Extra investment in building social homes, and improving councils’ ability to build, through changes to Right to Buy, are steps in the right direction,” said Twomey.

“But renters who rely on universal credit or housing benefit are getting their support frozen once again while rents continue to climb. The chancellor’s failure to raise local housing allowance next April will put more renters at risk of rent arrears and homelessness.”

Rachelle Earwaker, senior economist at JRF, said: “Until there are enough social homes, the government can’t abandon the millions of people on low incomes who are living in the private rented sector because they have no other option.

“Instead of not knowing whether they’ll be able to pay their rent because the support they get has been frozen, private renters need the security of knowing LHA will rise in line with local rents each year.”