They should get rid of the housing benefit cap!

[Diggydiggydumbdum]

I’ve been thinking a lot about the housing benefit cap (Local Housing Allowance cap), and the more I read, the more it feels like a scam. It was meant to save money by capping how much rent housing benefit would cover, but instead, councils are spending eye-watering amounts on temporary accommodation, and families are left stuck in the middle.

Before the cap, housing benefit covered private rents—even the inflated ones landlords charged. It wasn’t perfect, but at least people had more options: rent privately or wait for council housing. Now, with the cap, so many families can’t afford private rents and are being evicted, which means councils have to step in with temporary accommodation.

And here’s the kicker: councils spent £1.7 billion on temporary accommodation in 2023, almost double what they spent a decade ago. Individual households in temporary accommodation can cost councils £10,000–£20,000 a year, if not more. The money they’re “saving” on housing benefit? It’s being swallowed up by this anyway.

Plus, the conditions in temporary accommodation are often terrible—unsafe, overcrowded, and miles from people’s support networks. Kids are growing up in limbo, and families have no choice over where they live. Meanwhile, private agencies and middlemen are making a fortune out of the system.

Wouldn’t it make more sense to tackle the root of the problem? One option could be adjusting housing benefit to reflect real rents, so more people could afford private housing again. Another idea is rent caps, like they have in places like New York. If rent control works in one of the most expensive cities in the world, why can’t we try it here?

People always say, “Just move to a cheaper area,” but that ignores the fact that more expensive areas still need workers. Who’s going to do the jobs that keep those places running—childminders, cleaners, hairdressers, carers—if everyone has to move out?

It just feels like the current system isn’t working for anyone (except maybe the landlords and agencies profiting from temporary housing). Why aren’t we talking about this more?

I think more the problem is there isn't enough homes available

There has to be a cap somewhere. It can’t simply be that people on benefits are entitled to as much money as they need to pay rent for whatever they want. As previous poster says, the problem is that there’s a lot of pressure on housing driven by various factors which means higher rents and lower income people unable to afford them.

Rent control doesn’t work particularly well in NYC. People who managed to obtain rent controlled apartments decades ago and pass them down through various family members have done well out of it - much as social housing tenants who are able to obtain lifetime tenancies do well. A significant proportion of rent controlled NYC apartments are actually left vacant as it’s more cost effective for the landlord to have an empty property than a tenant paying a very low rent and the costs and responsibilities associated with having a tenanted property.

The root of the problem is too many people and too few houses of all types and tenures. I would be happy for the government to tackle that. But they won't. Gonna get so much worse if we're trying to accommodate pretty much one million per year net migration.

So I could choose to live in the beautiful new riverside 2 bed swish rooftop garden apartment @ £2500 a month here and the government would pay it?

Or the older still perfectly fine 2 bed in the older block down the road at £1200 and they’d pay it nearly all currently?

No that’s not what housing benefit is for.

Landlords have really been shafted by the government in recent years, especially in Scotland where I am although England following suit. It's resulted in them selling up in droves and an ever further shortage of housing.

Or what’s to stop me as a landlord going ah feck it, mortgage is up a bit, government can pay - so £750 is no longer the rent. It’s £1500. And get it.

More social housing needs to be built, rather than removing the cap. £1.7 billion would build a lot of social housing.

They might as well pay my mortgage for me too while they pay out uncapped rent for others.

Seriously though, no, there has to be a cap somewhere.

I completely agree that housing is a complex issue and that we need more homes of all types and tenures. However, a big part of the problem is how councils and developers approach housing. Many new developments are sold off at market rates or rented as luxury apartments, with only a small fraction set aside for social tenants. Councils often sell land or properties to generate short-term profit rather than using them to meet long-term housing needs.

On migration, it's worth noting that the UK birth rate has been steadily declining. In some areas, primary schools are seeing dramatically reduced attendance. For example, parts of West London are experiencing “primary school deserts,” where schools have closed or merged because there simply aren’t enough children to fill the classrooms. So while migration does add pressure, it’s not the only factor, and in some cases, local populations are actually shrinking.

It’s also important to point out that there was a cap on housing benefit before the Local Housing Allowance (LHA) cap we have now. The difference is that it was much higher and aligned more closely with market rents. Back then, homelessness levels were far lower because people could afford private rentals.

The current cap, which hasn’t been properly updated in years, has left many people unable to cover rent, forcing them into homelessness or temporary accommodation.
And this doesn’t just affect people who aren’t working. A significant number of people in temporary accommodation are working families. According to Shelter, over 55% of households in temporary accommodation in 2022 had at least one adult in work. Many of these families rely on housing benefit to top up their wages because even full-time jobs on minimum wage don’t pay enough to cover skyrocketing rents.

So while I understand the need for a cap, the current system is pushing costs elsewhere—to temporary accommodation, to struggling families, and to the taxpayer—without tackling the underlying issue. If councils built more genuinely affordable homes and adjusted housing benefit to reflect real rents, we’d see fewer families in crisis.

The LHA rate is a joke anyway.

When I lived in London 5 years ago, the LHA was 1,200pm for a two bed property. There wasn’t a single two bed up for rent in the borough for less than 1,500pm.

And it’s not easy renting when you claim housing benefit (or UC as it’s under now). Estate agents laugh you out the door and most landlords won’t accept it, even if you are working full time and it’s a top up benefit as it was with me.

The amount of times I was told on here to rent a one bedroom, sleep on the sofa and put the children in one room. No one will rent to you like that!

I would have a combination of much more social housing being built of all sizes and houses as well as flats but also rent caps in place on private rentals, appropriate to size and area and based on 'actual' rents rather than some fantasy figure they seem to allocate - however UC allowance could be up to the rent cap level -

I think there has to be a limit of some kind, the problem is that the cap is so low that it doesn't cover rent at all in a lot odd places.

There's also an issue with the actual benefit cap as well. I'm very "lucky" in that my rent is under the LHA, so it's all covered. But if my landlord were to put my rent up, I wouldn't actually get the increase because of the benefits cap. (Before anyone asks why I don't work, I'm assessed as LCW, which means I'm too ill to work, but not ill enough to get any extra money/remove the cap)

I'm trying to remember how the old housing benefit system worked when I left home 20 years ago and we needed top ups as a young family. I'm sure there were rules about how many bedrooms we could claim for, so we couldn't have rented a 5 bedroom place when we only needed 2.

They need to assess people who currently live in council/ social housing and force the ones that can afford it into private rent. I know a few people with household incomes of over 100k a year but they still live in the council house they have had for years.

You could have rented any size house you liked as long as you could top up the rent.

The LHA is assesed on family size and need and you are given HB in a sliding scale to that in proportion to your wage. They don’t give a shit about how many bedrooms. I had to get in debt in the end paying for a 3 bed place as I couldn’t find a landlord of a two bed property to rent to a scumbag like me claiming top up housing benefit.

It is a complex issue.

There used to be a cap system with registered rents, it was got rid of ages ago, I think under the Thatcher govt., under the belief that the market would set the level.
One of the problems, that resulted in the current benefits cap, was that landlords started to take advantage of Housing Benefit system and rents soared, pricing out those not on HB.

The system is flawed but any changes need to be made with an understanding of unintended effects.

Everyone should be able to have a decent and safe home.

Oh yes, sorry I worded that badly. I know we could have rented whatever size house we wanted. But we couldn't have claimed HB to cover that huge house.

At one time there was some weird rule that if your actually rent was £x less than the HB rate then you could keep that extra £x.

Under LHA rules I'm technically 'entitled' to 3 bedrooms, but the 3 bedroom rate won't cover a 3 bedroom house here. And the benefit cap means I wouldn't actually get the extra LHA anyway.

It’s also important to point out that there was a cap on housing benefit before the Local Housing Allowance (LHA) cap we have now. The difference is that it was much higher and aligned more closely with market rents.

This was a real problem with the rental market until the LHA criteria were changed to be as they are now. Landlords knew the maximum the council would pay, which was fixed around market levels, and simply set their rents to fit that cap. As market rents increased, so did LHA, as it was calculated around them - but salaries didn’t. It resulted in the opposite situation to what we have now: people on benefits found it easier to find homes as they didn’t have to worry about the cost, whilst people on average incomes who had to pay their own rent couldn’t afford the same rents as people receiving LHA and struggled. That’s largely why LHA quartiles were changed.

It’s a horrible system.

And you can’t rent anywhere smaller so the LHA covers the rent, no landlord or agent can rent to you when they find out you’d be over crowded.

People also don’t realise how hard it is to get anyone to rent to you when you claim benefits.

Too much demand on rentals to ever lower prices.
But seriously lower prices would benefit the whole country.. imagine having another five hundred quid a month to fritter away or save. The economy would boom.

I think the rates should be raised so a 2 bed rate covers the average 2 bed house and a 3 bed rate covers the average 3 bed house.
I don’t think the cap should be removed - I also think home owners should think about whether the really need the size house they are occupying. Our house has three bedrooms and four of us live here - we could afford to buy a five bedroom house but we don’t need one. Maybe if people stopped buying 4 and 5 bed new builds for three or four people to live in then the house builders would build more smaller houses or maisonette on the same plots and go some way to solving the supply issue.

There has to be a cap otherwise rents will soar.
What we need is more social housing, scrap right to buy, more house building and encourage more mobility in the property market.

I’m probably selling my two rental properties this year. Our tenants cannot afford the rent rises we need to cover the post-Truss mortgage rates and the skyrocketing service charges.

It’s currently costing me and DH £1200 per month to let them live there on rents they can afford. Out of our own PAYE income. We tried because they are good tenants and one family is a single mum. But we can’t carry on subsiding them anymore. we will also have to pay 50% tax on the rental income so when the tax bill comes in being a landlord will probably end up costing us upwards of £20-25k this year (because there’s no money in the rental income to actually set aside for tax).

I would be delighted to sell to the government for them to use as social housing.

Landlords are not ogres but if there is no money in being a landlord then more of us will sell up and the housing shortage will become more severe.

Rents are not set in isolation from mortgages. When mortgages go up rents will follow.

The issue with that is it acts as a massive disincentive to do anything to increase earnings - I spent a long time earning just £20 a week more than the Housing Benefit level, for example.

If I knew that the day I was offered a new job paying £30 a week more, I'd be given notice of eviction despite not having any job security for at least two years, it would have been madness to take it and then have to move (possibly too far away to be able to continue in the job), pay hundreds in moving costs and furnishing, pay out increased travel costs and then potentially have the job end with a week's notice shortly afterwards, rendering us all homeless. In addition, I need accessible housing - you don't get that from a standard rental.

Plenty of countries manage public housing so that tenants aren’t required to move out when they reach a certain income level, but the rent formula is always set at a particular proportion - often a third - of household income, whatever that income happens to be. It means that tenants on low incomes can afford the rent, and that if their incomes increase slightly they pay slightly more rent but still see the benefit of having increased their incomes; it also means that tenants who hugely increase their incomes find themselves paying a rent equal to or more than that of the private market - which can act as an incentive to move and give up public housing for somebody who needs it more.

I think that’s a feasible alternative to a fixed point at which somebody is forced to move out of social housing.

So taxpayers are subsidising landlords mortgages? Err no