Propertymark urges Welsh government to raise LHA rates to address housing crisis

An industry body is urging the Welsh government to raise Local Housing Allowance (LHA) rates.

Propertymark is calling on the government to set the LHA at the 30th percentile of rents and to fully assess the case for raising it to the 50th percentile.

As of May 2024, the Department for Work and Pensions (DWP) reports that nearly 65,000 households in the Welsh private rental sector are receiving LHA as part of their Universal Credit, with 57% of these households facing a shortfall between their rent and the LHA payment.

Severe shortage of rental properties

The Bevan Foundation, a think tank, warns that Wales faces a housing crisis due to a severe shortage of rental properties within Local Housing Allowance (LHA) rates.

In February 2024, the foundation found just 32 properties listed across Wales where the rent was covered by the LHA, with 16 local authority areas having none available.

The Bevan Foundation adds, that around one in 215 of all households in Wales live in temporary accommodation, with just under half remaining there for six months, and one in five staying more than a year.

Propertymark is calling for better access to the private rented sector for tenants on benefits and suggests that the devolved governments take action by stopping insurance companies from limiting coverage for landlords who rent to tenants on benefits.

They also recommend working closely with agent and landlord groups to improve support for vulnerable tenants and offering Universal Credit claimants an easy way to have their rent paid directly to their landlord or agent.

Ensure stability for landlords

A spokesperson for Propertymark said: “LHA was frozen in 2020 and since then it has increasingly lagged behind rising rents, effectively pricing the most vulnerable tenants out of the market for private rented homes.

“We have consistently called on the government to set LHA levels at least the thirtieth percentile of local rents and for these rates to increase annually to keep up with market rates, and we were encouraged to see the rate unfrozen in April 2024.

“However, the cost-of-living crisis and continued economic uncertainty have driven many people into poverty and increased the risk of homelessness. Local authorities are inundated with homelessness requests and housing options are limited for many people.

“Setting the Local Housing Allowance to the fiftieth percentile will help reduce cases of rent arrears and ensure stability for landlords and tenants as well as help recipients secure better accommodation.”

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