A coalition of London councils, housing associations and advisers has called on the government to restore Local Housing Allowance rates, warning that the freeze is pushing private landlords away from the benefit-tenant market.
The taskforce, convened by social housing consultancy Newbridge Advisors, found that more than 130,000 households in England are now living in temporary accommodation. Of these, 84,000 include children. Councils across England spent more than £2.84 billion on temporary accommodation support in the past year.
Only 1% of London rentals affordable at LHA
The report highlights an acute crisis in London, where just one percent of private rental homes are affordable under current LHA rates. The allowance, which determines how much housing benefit claimants can receive towards their rent, was frozen in April 2025 and will remain unchanged for 2026/27. The gap between what the LHA provides and actual market rents has widened significantly since the freeze began.
The taskforce recommends that the government restore LHA to at least the 30th percentile of local rents, where it was historically set before successive freezes eroded its value. Without action, the report warns that private landlords will continue to withdraw from the sector, reducing supply for tenants on benefits and pushing more households into temporary accommodation. This follows similar calls from Propertymark earlier this month.
Renters’ Rights Act may not solve affordability gap
The taskforce noted that while the Renters’ Rights Act may bring greater tenancy stability, it is unlikely to address the underlying affordability gap. Although bidding wars will be banned under the new legislation, there is nothing to prevent landlords from setting higher asking rents at the outset. This could leave benefit claimants competing for an even smaller pool of affordable homes.
Janani Paramsothy, associate director at Newbridge, said the rise in temporary accommodation represents one of the most pressing issues in the housing crisis. She said the expansion of social homes is sorely needed but added that more immediate actions are available to tackle the problem more urgently. The full report is available on the Newbridge Advisors website.
Tom Copley, deputy mayor of London for housing, said central government is playing a major role in addressing the crisis through its National Plan to End Homelessness and investment in social housing. He called on private sector partners to provide innovative solutions and stable pathways out of homelessness. For landlords, the message is clear: political pressure for change is building.
Editor’s view
The LHA freeze has become a structural problem, not just a budget line. Landlords willing to accept housing benefit tenants are becoming rarer – and councils are paying the price in temporary accommodation costs that now dwarf what restoring LHA would cost.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 10 February 2026
Sources: Newbridge Advisors, Greater London Authority
Related reading: Propertymark backs push to unfreeze housing benefit rates
