Healey Urged to End Housing Benefit Freeze as 1.1 Million Families Face Record Rent Shortfall
The Resolution Foundation warns that over 1.1 million low-income households in rented homes will face a record gap between local rents and housing benefit this autumn unless Chancellor John Healey ends the freeze on local housing allowance in next month's Budget.
More than 1.1 million low-income families in rented homes across Britain will face a «cost-of-housing crunch» unless Chancellor John Healey ends the freeze on housing benefit in next month's Budget, the Resolution Foundation has warned.
The thinktank said the gap between local rents and the support people can claim is set to reach a record high this autumn, with a typical two-bedroom household facing a shortfall of £158 a week. The warning places housing benefit at the centre of the Budget debate as ministers weigh pressure on household finances against the public purse.
Local housing allowance (LHA), which sets the maximum amount of housing benefit that private renters can claim, has been frozen in cash terms since autumn 2024. Because rents have continued to rise while the allowance has stayed flat, the shortfall between what tenants owe and what they receive has widened steadily. The Resolution Foundation argues that without action from the Chancellor, that gap will grow further in the coming months.
The thinktank has called on Healey to use the Budget to end the freeze, warning that the current trajectory leaves low-income renters increasingly exposed to rent rises. The £158 weekly shortfall for a typical two-bedroom household represents the difference between the local housing allowance rate and the actual market rent, a gap that tenants must cover from other income or savings.
The findings add to the pressure on the Chancellor as he prepares to set out the government's tax and spending plans. Housing benefit spending has been a long-standing concern for the Treasury, with successive governments seeking to control costs while trying to protect vulnerable households from rising rents. The Resolution Foundation's intervention highlights the tension between fiscal restraint and the immediate needs of low-income families.
For the households affected, the shortfall can mean difficult choices about food, heating and other essentials, or the risk of falling into arrears. The thinktank's warning suggests that the freeze, if maintained, will intensify financial strain for renters who are already among the most exposed to cost-of-living pressures.
The Budget is expected to be a pivotal moment for housing policy. If the Chancellor chooses to unfreeze local housing allowance, the decision would increase housing benefit spending but reduce the immediate shortfall for tenants. If the freeze continues, the Resolution Foundation's analysis indicates that the gap between rents and support will reach its highest level on record.
The debate over housing benefit also intersects with broader questions about the rental market, where demand has outstripped supply in many areas, pushing rents higher. For low-income families, the interaction between frozen support and rising rents creates a squeeze that the thinktank describes as a «cost-of-housing crunch».
The Resolution Foundation's call is the latest in a series of warnings about the adequacy of housing support. With the Budget approaching, the Chancellor faces a choice that will directly affect more than a million households and shape the wider conversation about affordability in the private rented sector.
