Families in Wales face an increased risk of homelessness following the UK Government decision to freeze housing benefit levels for private renters.
That’s the warning from Shelter Cymru as the government admits that the freeze will mean low-income households in Wales facing average shortfalls of £604 between the estimated cost of renting a home and the amount of support they receive each year through Local Housing Allowance (LHA).
In some areas the gap between rents and LHA rents is set to be even more severe, with a family in need of a four-bed home in Newport facing an annual shortfall of more than £3,000. Meanwhile a family looking for a three-bed in Wrexham will need to find almost £900 to meet the shortfall.
Separate research by the Institute for Public Policy Research (IPPR) think tank showed that Wales is the big loser in a postcode lottery created by the LHA freeze, with 62 per cent of families with children renting privately facing a shortfall. That figure rises to 73 per cent in Neath Port Talbot, compared to just 9 per cent in East Lothian in Scotland.
Private rents have risen by 8.5 per cent in the last year in Wales and Shelter Cymru says the decision by the Westminster government will come as a blow to the tens of thousands of households renting privately. They include many who are in work but who still rely on housing benefit to help keep a roof over their heads. Ultimately, the freeze will significantly limit the financial assistance available to those grappling with high rental costs, pushing many into a position where they may be unable to pay their rent, resulting in increased risk of homelessness.
This decision also comes at a time when Wales faces record levels of homelessness with 1 in every 215 households in Wales already trapped in temporary accommodation. Shelter Cymru research from 2024 revealed that the cost of providing temporary accommodation to homeless families has more than doubled in the past three years and now stands at almost £100 million. A number that will only rise if more people are pushed into homelessness by an inadequate welfare system.
Responding to the publication of the new LHA rates, Ruth Power, CEO of Shelter Cymru, said: ‘Housing benefit is meant to be an integral part of preventing homelessness, providing a vital safety net for those who are struggling. However, the decision to once again freeze the amount of support available undermines its ability to do this and puts many households at risk of homelessness.
‘At Shelter Cymru we see the realities of a broken private rented sector every day, and 45 per cent of households coming to us for support are private renters. We know this decision will only make things worse and most likely add to the pressure on local authority homelessness services. It is vital that we prioritise the needs of our most vulnerable citizens in Wales, ensuring they have access to the support necessary to secure and maintain a safe home. Every action counts in the fight against homelessness.”
‘This is why we are urging Welsh ministers, Senedd members and MPs to lobby the government in Westminster to change its mind and uplift rates to provide people across Wales with the support they need. At the same time the Welsh Government must set out a vision for the future of the private rented sector to address the issues of security, quality and affordability we see on a daily basis, as well as further increasing investment in building new social homes to provide the long-term solution to the housing emergency we desperately need.’