The Resolution Foundation has raised concerns about housing affordability for low-income families in the private rental sector, stating that more than 1.1 million households require immediate policy intervention. The organization released a report examining the impact of frozen local housing allowance rates, which have remained unchanged in cash terms since autumn 2024.
According to the thinktank’s analysis, the gap between what low-income families can afford through housing support and actual rental costs has widened significantly. A family renting a typical two-bedroom flat now experiences an average weekly shortfall of £158, with some areas experiencing considerably larger gaps. In parts of London, the weekly shortfall exceeds £300, reflecting regional variations in housing costs.
The Resolution Foundation projects that without policy changes, the gap between average rents and housing allowance levels will reach a record high this October. The organization argues that failure to relink housing allowance to actual rents in the upcoming budget could extend the freeze for an additional year, potentially widening the gap to 30% by March 2028. The thinktank’s analysis of previous policy changes suggests that most benefit from relinking would accrue to tenants rather than landlords, with approximately 90 pence of every pound benefiting renters.
To address the issue, the Resolution Foundation recommends restoring automatic annual adjustments of housing allowance in line with local rent levels. The thinktank estimates this measure would cost £2 billion annually by the end of the current parliament in 2029-30. The organization proposes funding this through adjustments to universal credit withdrawal rates, framing the change as a redistribution toward households with the greatest need.
Survey data cited in the report indicates widespread hardship among affected households, with one in five unable to maintain adequate home heating and one in eight unable to afford sufficient meals daily. The government will present its budget on 28 October, amid broader pressure to provide cost-of-living relief while managing fiscal constraints.
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