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Payments will not keep track of spiralling rent prices in many areas, meaning claimants whose rent goes up will see shortfalls and may face eviction if they are unable to pay.
Housing benefit has not automatically reflected rent rises since 2013, with the Conservatives freezing it for seven for the last 12 years.
Housing charities have said that many claimants will be unable to cover rising rent costs, with the Joseph Rowntree Foundation suggesting that private renters on housing benefits will be around £700 worse off per year, or £887 per year for a working-age couple with children.
It estimates that 50,000 renters will be pulled into poverty and that 81% of low-income private renting households in receipt of housing benefits are going without essentials like food, heating and warm clothing, and around 6 in 10 (59%) are in arrears with at least one household bill.
Housing benefit rates used to be linked to the cost of rents in different areas, , and went up annually, but this ended under the Tory-Lib Dem coalition in 2012.
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Rates have been frozen in seven different years since then, including the latest freeze period between 2020 and 2024.
The Conservatives did increase the rates for the current year, fixing rates to meet the cheapest 30% of properties in an area. These payments were also subject to a nationwide cap.
Charity Shelter has said rising rents, combined with a shortage of social housing, was putting families at risk of homelessness.
How does Housing Benefit work?
Housing benefits are paid to low-income households to cover all or part of their rent, either as a standalone payment or as part of Universal Credit.
Local Housing Allowance (LHA) sets the highest amount that can be claimed by those renting their homes from a private landlord, and is set by local rent officers in around 200 areas across the UK.
Private renters and new claimants now receive Local Housing Allowance (LHA) as part of Universal Credit, as the old style Housing Benefit is stopping for most people by the end of 2024, although that doesn’t include people who live in supported or temporary accommodation.
There are also different rules for people who are above state pension age, who may continue to get the older-style benefit.
They also count towards the overall benefits cap, first introduced in 2013, which is also being frozen next year.
Claimants are only entitled to an amount that’s set based on the family’s size and characteristics – children of the same sex or aged under 10 are expected to share a bedroom.
Single people aged under 35 with no dependants only get a rate that reflects a room in a shared house, rather than a one-bedroom property.
