LHA re-pegged to 30th percentile of local rents after four-year freeze

Local Housing Allowance (LHA) was re-pegged to the 30th percentile of local rents in April 2024, four years after being frozen, according to the Resolution Foundation's Housing Outlook Q2 2025, published on 11 July 2025¹. The change cut the share of families on Universal Credit with housing costs not fully covered by LHA from 67 per cent in March 2024 to 45 per cent in May 2024¹.

The same publication reports that 48 per cent of privately renting families on Universal Credit in Great Britain do not have their housing costs fully covered by LHA¹. LHA is the basis for help with rent in the private rented sector, and for many claimants it is paid as part of the Universal Credit housing element.

The re-peg sits alongside wider pressure in the rented sector. The Resolution Foundation reports that 128,000 households were living in temporary accommodation in England at the time of publication, up by 78,000, or 160 per cent, since 2010¹. Over half of those families, 72,000 or 56 per cent, were in London, although only 15 per cent of households in England are in London¹. Single-parent families make up 16 per cent of UK households but 35 per cent, or 45,000, of those in temporary accommodation in England¹. In the last quarter of 2024, 166,000 children were in temporary accommodation¹.

The publication also sets out spending figures. Councils in England spent £2.3 billion on temporary accommodation in 2023-24¹. In the same year, the Government spent £12 billion on housing benefit support for 1.6 million privately renting households in the UK, which the Resolution Foundation describes as five times as much as on temporary accommodation¹. It reports that 29 councils sought emergency financial support for the 2025-26 financial year, up from five in 2022-23¹.

On supply, the Resolution Foundation reports that annual social rent completions in England have fallen by 83 per cent since 1992-93¹. In 2023-24, 16 per cent of new below-market-rent homes were for social rent, down from 87 per cent in 1992-93¹. It says that if social rent's share of below-market-rent housebuilding had continued at the 1992-93 level, there would be 618,000 more social houses today¹. Social rents are typically set at roughly 50 per cent of market rents, while affordable or intermediate rents can be set as high as 80 per cent of market rents¹.

Why it matters for households

For private renters claiming Universal Credit, the LHA rate sets the maximum housing support payable, so the April 2024 re-peg changed the amount of rent that support could cover for households whose rent had risen during the four-year freeze. The Resolution Foundation's figures indicate that the proportion of affected families with a shortfall fell sharply between March and May 2024, but that a substantial minority, 45 per cent, still had housing costs not fully covered afterwards¹. The separate Great Britain figure of 48 per cent for privately renting families on Universal Credit is given for a different point and basis, and the publication does not reconcile the two¹.

The temporary accommodation figures describe households placed by councils in England, a group that includes families with children and single-parent families at rates above their share of households overall¹. The publication does not report how the LHA re-peg has affected temporary accommodation numbers, and no such link is stated¹.

What happens next

The Resolution Foundation says its 12 housing indicators will use the latest available data and be updated at least annually, and quarterly where possible¹. It reports that the Government announced it will allocate £39 billion to the Affordable Homes Programme over the next 10 years, with 60 per cent of that for social rent¹. The publication does not give a date for when that allocation takes effect¹.