Finding affordable housing is already difficult for many young people but for those on low incomes or receiving benefits, it can feel impossible.
The benefit system is meant to help here – but the support currently available is based on out-dated rent costs.
In fact, Centrepoint research in 2022/2023, found that this support only covered the full cost of renting the cheapest 25 per cent of private sector rooms in 7 out of 211 local authorities. On average, young people were experiencing shortfalls between rent and LHA entitlements of nearly £100 a month.
What is the Local Housing Allowance (LHA)?
The housing element of Universal Credit is supposed to help cover the rent – and it is determined by something called the Local Housing Allowance (LHA).
The LHA sets the maximum amount of housing benefit or Universal Credit housing support that private renters can receive. It’s calculated based on average rents in each area, with different rates depending on the size of property the government believes a person or family needs.
For most people under the age of 35, the rules limit them to what’s known as the Shared Accommodation Rate (SAR). This rate assumes that younger single adults will live in shared housing, such as renting a room in a house with others, rather than having their own self-contained flat.
The Problem
Because the Shared Accommodation Rate is often far lower than the actual cost of renting even a single room in many parts of the England, many young people simply cannot afford stable housing. The gap between real-world rents and benefit limits forces young people into unsafe, overcrowded, or insecure living situations or leaves them with nowhere to go at all.
Our report ‘Move On 2023/2024’ found that people under the age of 35 receive the lowest rate of LHA, the SAR, unless they are care-experienced or have lived in homelessness accommodation for three months – amongst other exemptions. Recipients of the SAR often struggle to access housing in the Private Rented Sector due to the growing scarcity of shared accommodation, often categorised as House in Multiple Occupation (HMOs).
The solution
In the past, LHA rates were reviewed annually. This meant that support for housing costs was based on real rents, not historic ones.
That link has been broken, and, for young people under 35 and receiving the Shared Accommodation Rate, the situation is even tougher because SAR is even lower than the Local Housing Allowance.
This is completely illogical: rent isn’t cheaper when you’re younger.
The freezing of LHA rates, and SAR, has detached benefits from reality and left young people and other claimants struggling to afford essentials and put some at risk of homelessness.
That’s why we want the government to scrap SAR and commit to reviewing LHA rates annually, so they reflect real-time changes in the rental market.
After years of freezing, Local Housing Allowance (LHA) rates were finally raised in April 2024. For many renters, this offered only a brief moment of relief because they have been frozen since, and there are no further adjustments planned until at least 2026.
Without action to bring LHA back in line with real rent levels, or to abolish SAR and end penalising young people, thousands will continue to face impossible choices between paying for housing and meeting other essential costs.