In May 2023, Propertymark responded to the Committee’s inquiry explaining that housing opportunities in a suitable area should be as wide as possible for those receiving benefits and that benefits should cover all living essentials, but this should be achieved through a reformed benefit system.
Giving in-person evidence to the inquiry in June 2023, Timothy Douglas, Head of Policy and Campaigns at Propertymark, emphasised the serious impact on vulnerable tenants of LHA rates lagging years behind market rents, leading to the unfortunate reality that many people in receipt of benefits are excluded from some housing options in the private rented sector (PRS).
Raising member voices
Our position has always been that LHA should be set at the thirtieth percentile if not the fiftieth, and we repeated our calls in our 2023 Autumn Budget Representation, outlining how it would reduce cases of rent arrears and ensure stability for landlords and tenants, as well as helping recipients secure better accommodation.
The UK Government heeded this call and rates were unfrozen in the Autumn Budget. Since then, we have continued to urge them to go further and increase the LHA level to the 50th percentile.
Prevent rates falling behind again
The lack of a statutory requirement to annually uprate all working-age benefits creates uncertainty for stakeholders each year.
Propertymark strongly backs the Committee's recommendation that the UK Government should make an ‘Uprating Guarantee’ to annually increase Local Housing Allowance, so it retains its value at the 30th percentile of rents in a Broad Rental Market Area (BRMA).
Setting a benchmark for benefit levels
This latest inquiry followed the 2022 Cost of Living Report, which highlighted that a root cause of the financial challenges faced by households was the fundamental inadequacy of social security support, but the UK Government insisted that there was no objective way of deciding what benefits should be.
It has now been identified that there are no set objectives for what benefit levels ought to be achieved or prevented. While there is an aim to incentivise work, there is no clear goal for how benefits will support claimants with daily living costs.
The Committee recommends that the UK Government should develop a framework of principles and set a benchmark and objectives linked to living costs to measure the effectiveness of benefit levels.
It is positive to see that the Work and Pensions Committee has reiterated Propertymark’s calls for an annual uprate of working age benefits and Local Housing Allowance.
The UK Government must set the Local Housing Allowance at the fiftieth percentile and increase this annually to keep pace with market rents. Benefits are currently at a rate that results in many being unable to pay for daily essentials, and the welfare system should provide a substantial safety net for the most vulnerable people in society.
It is down to the UK Government now to provide an effective way of determining what benefits should be.
