Scottish ministers call on UK to reverse Local Housing Allowance freeze

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Scottish ministers call on UK to reverse Local Housing Allowance freeze

The Scottish Housing Secretary has written to the UK government, warning that the continued freeze of Local Housing Allowance (LHA) is making it harder for lower-income renters to access the private rented sector.

During the Autumn Budget, ministers announced that LHA rates will remain frozen for a second consecutive year in 2026/27.

In a letter to Housing Secretary Steve Reed, Màiri McAllan urges the government to rethink its position on LHA rates and to raise them to cover the 30th percentile of local rents.

Deeply worrying for PRS tenants

In the letter, Ms McAllan says: “At a time of continued high rents, the decision to freeze LHA rates makes it harder for low-income households to access and sustain tenancies in the private rented sector.

“In Scotland, freezing rates of support in 2026-27 will mean that 87 of the 90 LHA rates will fall below the 30th percentile of local market rents. We estimate that up to around 45,000 households in Scotland, including approximately 31,000 children, will be adversely impacted by the end of 2026-27.

“UK-wide analysis by the Joseph Rowntree Foundation shows that around half of those receiving housing support are already living below the poverty line. This is deeply worrying for private rented sector tenants who rely on housing support to keep a roof over their heads.”

Ms McAllan added that decisions taken at UK level on LHA are limiting the Scottish government’s ability to prevent homelessness and tackle child poverty, and urged the government to reverse the freeze and for rates to permanently meet the 30th percentile of local rents.

Freezing LHA will exacerbate the affordability crisis

An industry body warns the freeze of LHA rates will only exacerbate the housing crisis and urges the government to consider rates to meet the 50^th percentile of local rents.

Timothy Douglas, head of policy and campaigns at Propertymark, told Property118: “Propertymark has long called for Local Housing Allowance (LHA) rates to be restored so they reflect real market rents. The longer the UK government continues to freeze LHA, the greater the gap becomes between support and actual housing costs, and the more expensive it will be to realign LHA with the market in the long term.

“Freezing LHA for 2026/27 will only exacerbate the affordability crisis facing many renters, pushing some further into financial hardship and making it harder for them to secure or sustain a stable home. Increased regulatory and financial pressures, including tax rises for landlords, alongside a growing imbalance between supply and demand, are continuing to drive rents up across many parts of the UK.”

He adds: “As a result, keeping LHA rates frozen widens the shortfall between housing support and real rents, increasing the risk of homelessness and placing additional strain on already stretched local services. Propertymark is clear that LHA should, as a minimum, be set at the 30th percentile of local market rents, if not the 50th percentile, to give renters a realistic chance of accessing and maintaining suitable housing.

“We urge the UK government to reconsider this freeze and work with the devolved administrations to ensure housing support keeps pace with the realities of the rental market.”

Unfair burden on councils

Ms McAllan also raised concerns over housing benefit subsidy arrangements for the provision of temporary accommodation.

She said: “Councils currently receive a subsidy equivalent to 90% of the 2011 Local Housing Allowance rate to cover temporary accommodation costs. This arrangement has been frozen for almost 15 years, despite substantial increases in the cost of providing temporary accommodation over that period.

“The subsidy system is placing an unfair burden on local authorities.”

She called for an urgent review of the funding arrangements, adding that subsidy levels should reflect the true costs faced by councils.

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