Recommendation 20

The LHA sets the maximum amount of housing support that claimants of housing benefit and universal credit can usually receive, to help with housing costs in the private rented sector.26 Since 2011, DWP has introduced welfare reforms designed to reduce overall welfare spending and incentivise benefit recipients to take up employment. These reforms, including periodically capping and freezing LHA rates, have reduced the income that households can derive from benefits in real terms. At the same time, rents in the private rented sector have increased faster than wage growth and LHA rates in much of the country.27 DWP acknowledged that 45% of households now face a shortfall between the LHA they receive and the rent they pay.28