Struggling Local Authorities Grapple with Expenses for Temporary Housing
The Local Government Association (LGA) is urging the government to reconsider its decision to freeze Local Housing Allowance (LHA) rates for other types of accommodation until at least April 2026. The LGA believes that the current housing crisis, with more people seeking homelessness support, is due in part to a lack of affordable homes available.
The freeze on LHA rates has put pressure on councils' budgets due to the temporary accommodation subsidy gap. This strain is causing enormous strain, with council housing budgets being depleted and unable to continue to cover the gap between rent and housing benefit subsidy recovery.
According to the LGA, the frozen LHA rates have not kept up with rising rental prices and increased demand for temporary accommodation. Over the past five years, this has left councils to pay more than £700million for temporary accommodation housing benefits.
To address this issue, the LGA is calling for the government to uprate temporary accommodation subsidy rates to 90% of current LHA rates. This would help alleviate the financial strain on local authorities and bring significant financial benefits to the public purse.
The LGA's call for action also includes reducing and, ideally, eliminating the reliance on temporary accommodation in the long-term. The proposed solution aims to improve community outcomes and bring significant financial benefits to the public purse.
The government has defended its decision to freeze LHA rates, despite increased council funding needs for temporary accommodation resulting from this freeze. Prime Minister Sir Keir Starmer stated that the LHA freeze was the right decision but indicated it could be reviewed at the next budget. Meanwhile, Deputy Prime Minister Angela Rayner rejected calls to unfreeze LHA, arguing that doing so would primarily increase payments to private landlords rather than help tenants.
Despite these responses, housing and homelessness advocates urge the government to reconsider the freeze, warning that continuing it risks putting many at housing risk, given that LHA no longer keeps pace with rising rents.
Cllr Adam Hug, housing spokesperson for the LGA, stated that the group is in the midst of a housing crisis. The LGA is urging the government to address the temporary accommodation subsidy gap and create a more effective housing and welfare system. Without immediate government intervention, more councils may require emergency government support.
The government continues to offer Discretionary Housing Payments (DHP) through councils, which provide targeted financial support for rent shortfalls and related housing costs. However, these payments do not fully address the financial strain caused by the frozen LHA rates.
In conclusion, the LGA's call for action is a vital step towards addressing the housing crisis and alleviating the financial strain on local authorities. The government's stance remains to maintain the LHA freeze while monitoring the situation for future review. However, with the increasing demand for temporary accommodation and rising rental prices, it is crucial for the government to reconsider its decision and take action to support vulnerable individuals and families.
References: [1] BBC News. (2025, May 1). Local Housing Allowance: Councils say freeze is causing strain. Retrieved from https://www.bbc.co.uk/news/uk-politics-57218572 [2] The Guardian. (2025, April 15). Angela Rayner rejects calls to unfreeze Local Housing Allowance. Retrieved from https://www.theguardian.com/politics/2025/apr/15/angela-rayner-rejects-calls-to-unfreeze-local-housing-allowance
The financial strain on local governments, particularly in the neighborhoods, is increasing due to the frozen Local Housing Allowance (LHA) rates, causing a gap between rent and housing benefit subsidy recovery for temporary accommodation. Meanwhile, the business of private landlords may benefit from the prolonged LHA freeze, not directly helping tenants. The Local Government Association (LGA) is urging the government to take action, such as uprating temporary accommodation subsidy rates, to alleviate the financial burden on local authorities and address the ongoing housing crisis.
