Arrears set to worsen as a result of Sunak’s LHA freeze

26 November 2020 | Renting

Arrears set to worsen as a result of Sunak’s LHA freeze

There’s widespread concern that a freeze on the Local Housing Allowance will worsen rental arrears.

Although Chancellor Rishi Sunak failed to mention it in his speech to MPs yesterday, it was discovered afterwards that he had frozen the LHA from next year.

The current rate was set in April to help tenants whose incomes had been affected by the pandemic to meet the cost of their rents. 

At least one trade body – the National Residential Landlords Association – says freezing the LHA will directly worsen arrears.

“Many renters and landlords are struggling with the consequence of rent arrears through no fault of their own yet the government is failing to take the action needed to address this” explains Ben Beadle, NRLA chief executive.

And he continues: “Whilst the Chancellor has spoken about the need to support those who find themselves homeless, it would be much better to provide the funds needed to sustain tenancies in the first place.”

A recent analysis by the Joseph Rowntree Foundation suggests that five per cent of households in the private rented sector are in arrears; some 30 per cent of all private rented households are worried about paying their rent in the next three months, compared to 19 per cent immediately pre-Covid-19.

In its submission ahead of yesterday’s spending review the NRLA had asked for a comprehensive financial package for landlords and tenants, in the form of a tenant loan scheme.

This would allow tenants affected by Covid-19 to borrow money, interest-free, to cover rent while they got back on their feet, which could then be paid back over a period of time.

This post has originally been featured in Letting Agent Today.