Labour MP Says Landlords' Rents Are Driving Welfare Budget: What It Means for Renters

What the Labour MP argued

A Labour MP argued in comments reported by Landlord Today on 26 June 2026 that the scale of the UK welfare budget -- particularly housing-related benefits -- reflects the failure to build sufficient affordable housing and regulate private sector rents. The argument is that Local Housing Allowance (LHA) and housing benefit payments flow through tenants to private landlords, effectively subsidising the private rental sector without improving housing supply or affordability.

The Government is under pressure from the Treasury to reduce total welfare expenditure, which has grown significantly since the pandemic. Housing benefit and LHA account for approximately £30 billion of annual welfare spending. Ministers have indicated they want to reduce this through a combination of welfare reform and housing supply increases, but critics argue that neither approach addresses the immediate cost of renting for the 1.1 million private renter households currently receiving housing benefit.

Local Housing Allowance: how it works

Local Housing Allowance sets the maximum housing benefit payable to private renters in each Broad Rental Market Area (BRMA). LHA rates are set by reference to the 30th percentile of local market rents -- meaning LHA covers the cheapest 30 percent of available properties in the area. During the pandemic, LHA rates were increased to the 30th percentile. They were then frozen in cash terms from April 2020 to April 2024, during which time private rents rose significantly. From April 2024, LHA rates were partially restored to the 30th percentile, but rents continued to rise and many claimants face a gap between LHA and actual market rents.

Where LHA does not cover the full rent, claimants must fund the difference from other income or benefits. For households on Universal Credit, the housing element is capped at the LHA rate. Private renters facing a shortfall between LHA and market rent can apply for a Discretionary Housing Payment (DHP) from their local council, though DHP funding is limited and not guaranteed.

The landlord side of the argument

Landlord groups argue that the framing of housing benefit as a landlord subsidy misrepresents the market. The National Residential Landlords Association (NRLA) contends that private landlords provide accommodation that local authorities and housing associations cannot supply in sufficient volume, and that the real problem is planning restrictions and insufficient housebuilding rather than landlord behaviour. The NRLA also notes that many landlords have exited the market following increased regulation and tax changes since 2015, reducing supply and contributing to rent increases.

The government's own data shows private rental supply has tightened since the removal of mortgage interest tax relief for individual landlords (Section 24, phased in from 2017), the increased stamp duty surcharge on additional properties, and the energy efficiency requirements under the Renters Rights Act 2024. Fewer landlords competing for the same tenant pool means higher rents -- which feeds directly into higher housing benefit costs.

What renters need to know

Private renters on Universal Credit or housing benefit should check their LHA rate against current local market rents using the Valuation Office Agency's LHA rate finder. Where there is a shortfall, a Discretionary Housing Payment application to the local council is the primary route to additional support. The Renters Rights Act 2024 abolished Section 21 no-fault evictions and introduced stronger tenant protections, but has not directly addressed rent affordability for those on housing benefit.

Frequently asked questions

What is Local Housing Allowance?

Local Housing Allowance (LHA) is the maximum housing benefit or Universal Credit housing element payable to private renters. It is set at the 30th percentile of local market rents in each Broad Rental Market Area, meaning it is designed to cover the cheapest 30 percent of available properties. Where actual rents exceed the LHA rate, the claimant must fund the difference.

How much does housing benefit cost the UK government?

Housing benefit and Local Housing Allowance payments cost approximately £30 billion per year. The majority goes to private renters via LHA, with the remainder covering social housing tenants. The cost has grown as private rents have risen faster than LHA rates over the past decade.

Can I get extra help if my rent is above the LHA rate?

Yes. You can apply for a Discretionary Housing Payment (DHP) from your local council if there is a shortfall between your LHA rate and your actual rent. DHP is not guaranteed and councils have limited budgets. You can also apply if you need help with a rent deposit or removal costs. Contact your local council's benefits team to apply.

Has the Renters Rights Act 2024 changed housing benefit?

No. The Renters Rights Act 2024 abolished Section 21 no-fault evictions and strengthened tenant protections but did not change LHA rates or housing benefit eligibility rules. LHA rates are set separately by the DWP and Valuation Office Agency. The Act improves security of tenure but does not address the affordability gap between LHA and market rents.

What does the government plan to do about housing benefit costs?

The Government has indicated it wants to reduce welfare spending including housing benefit through a combination of increased housebuilding, planning reform, and welfare reform. No specific announcements on LHA rates beyond the April 2024 restoration to the 30th percentile have been made. The Spending Review and autumn fiscal events are the likely points for any further LHA policy changes.