strugglinglocal authorities grapple with the financial burden of temporary housing expenses
In the UK, the Local Housing Allowance (LHA) rates have remained unchanged since 2011, despite a rise in rental prices and an increased demand for temporary accommodation. This stagnation has put significant pressure on council budgets, particularly in high-rent areas like London.
The Local Government Association (LGA) is calling on the government to reconsider its decision to freeze LHA rates for all types of accommodation until at least April 2026. The LGA argues that this freeze is not sustainable and is causing additional financial strain on local authorities.
The LGA's proposed action aims to improve the overall housing and welfare system, not just temporary accommodation. This includes uprating the temporary accommodation subsidy to match current LHA rates, which would help reduce the financial burden on councils.
Over the past five years, the frozen LHA rates have left councils to pay more than £700million for temporary accommodation housing benefits. In some inner London areas, the shortfall between LHA payments and market rents can reach as much as £60 per week per household, pushing more families into homelessness and increasing council expenditures for temporary accommodation beyond LHA limits.
The LGA's call for action also addresses the financial strain caused by the current housing crisis. The number of households in temporary accommodation in England hit a record high of 128,000 in 2025, a 160% increase since 2010, with more than half located in London.
Housing Secretary Angela Rayner has defended the freeze, arguing that unfreezing LHA would channel more funds to private landlords rather than solving underlying housing supply issues. She emphasises investment in new homes and housing support spending (£34 billion annually, including £12 billion in the private rented sector) rather than raising LHA rates.
However, critics argue that the frozen LHA rates exacerbate poverty and push families into temporary accommodation. They urge the government to unfreeze LHA to better reflect local market rents and relieve council budget pressures.
The LGA is urging for urgent government action to address the temporary accommodation subsidy gap. Without immediate intervention, more councils may require emergency government support. The LGA advocates for the creation of a more effective housing and welfare system to reduce or eliminate reliance on temporary accommodation in the long-term.
References:
[1] BBC News. (2021, October 15). Local Housing Allowance: Councils 'losing millions' on housing benefit. BBC. Retrieved from https://www.bbc.co.uk/news/uk-england-london-58847637
[2] Shelter. (2021). State of the Nation 2021. Shelter. Retrieved from https://england.shelter.org.uk/__data/assets/pdf_file/0018/303500/State-of-the-Nation-2021.pdf
[3] Local Government Association. (2021, June 17). LGA responds to government's Social Housing Green Paper. Local Government Association. Retrieved from https://www.local.gov.uk/about/news/lga-responds-governments-social-housing-green-paper
[4] The Guardian. (2021, October 14). Councils face £1bn bill for housing homeless families in temporary accommodation. The Guardian. Retrieved from https://www.theguardian.com/society/2021/oct/14/councils-face-1bn-bill-for-housing-homeless-families-in-temporary-accommodation
[5] House of Commons Library. (2021, September 28). Local Housing Allowance Rates: Overview and Analysis. House of Commons Library. Retrieved from https://commonslibrary.parliament.uk/research-briefings/cbp-9120/
- The Local Government Association (LGA) appeals to the government, suggesting that uprating the temporary accommodation subsidy, to match the current Local Housing Allowance (LHA) rates, could help alleviate the financial burden on local authorities in the neighbourhoods they govern.
- In the UK, businesses and the local government are grappling with a housing crisis, as the result of the ongoing freeze on Local Housing Allowance (LHA) rates, leading to increased financial strain on councils and a rise in the number of households in temporary accommodation, particularly in high-rent areas like London.
