04 Dec 2023

LHA victory is just the starting point for creating a better private rented sector

On 22 November the Chancellor of the Exchequer, Jeremy Hunt, announced as part of the UK Government’s Autumn Statement that Local Housing Allowance (LHA) would be reinstated to the 30th percentile after being frozen since 2020. This means that from April next year, the cheapest 30 per cent of private rents should be affordable to those claiming benefits.

This was a welcome announcement, and one that CIH and others across the sector had been calling for. Our research published the week before showed that following the LHA freeze, just 8 percent of homes in Scotland’s private rented sector (PRS) are affordable to people who claim LHA. The average shortfall between LHA and the actual cost of renting a two-bedroom home has climbed to £108 per month – a huge amount for a household to find when food, fuel and other essentials remain at an all time high. In Greater Glasgow, the shortfall is almost double at £200 per month. 

However, lifting the LHA freeze is just the start of what’s needed. 

First and foremost, we need to treat the PRS as an intrinsic part of our housing system as we do social renting or homeownership. The PRS is no longer the transient tenure it has been viewed as in the past – a stop gap for students, young professionals or temporary workers. More people are living in the PRS for the long-term and we need to build long-term certainty for them. As welcome as the Chancellor’s announcement was, it only guarantees the uplift until 2025 which will provide some relief for renters but only for a few months.

As well as lifting the LHA freeze, our research calls for a more fundamental look at how the LHA system works, how the rates are calculated and the geographical boundaries they apply to. We need a system that is built on robust data, something that is sorely lacking at the moment making it difficult to develop evidence based policies whether considering LHA, or designing the new rent control mechanism the government has committed to. 

And affordability is only one of the barriers that needs to be addressed if we are to make better use of the PRS. We are currently working with local authorities and experts across Scotland to identify and suggest solutions to a range of issues that are preventing people from accessing or keeping a home in the PRS. We are looking at deposits, access to advice, information and support for tenants and landlords, and the role of local authorities.

The final report for the project will be launched at Scotland’s Housing Festival in Glasgow, March 2024. Find out more and book your place – free and exclusive to CIH members – we hope to see you there.

Written by Gavin Smith

Gavin is chair of the CIH Scotland Board and service manager at Fife Council.