A think thank has called for the Government to act immediately on housing reform, as families in private housing face being forced into poverty by 2026 due to rent shortfalls.
A report by the Institute of Public Policy Research (IPPR) has found that a combination of welfare reforms, rising numbers of children living in the private rented sector, and a lack of investment in building social housing has led to, and will continue to lead to, increasing child poverty. The Government confirmed the amount of housing benefit private renters can claim, such as Local Housing Allowance (LHA), has been frozen again this year, which means payments will not keep track of rent rises.
LHA determines the maximum amount that can be claimed by people renting from a private landlord, and is set by local rent officers in around 200 areas across the UK. Payments are calculated by the size of property that a household is entitled to based on the family’s size and characteristics, up to a maximum of four bedrooms.
They also count towards the overall benefits cap, first introduced in 2013, which is also being frozen in 2025. In December, Abi Conway, CEO of Citizens’ Advice Northumberland, warned that freezing LHA means a “significant cut” in the real-terms value of benefits for many claimants – the county has one of the highest percentages of families renting privately facing a shortfall, at 61.5%.
ONS figures show that across the UK, there are an estimated 440,000 households with children whose housing support no longer covers the cost of their rent. As the government has not committed to raising LHA rates in April 2025, the number of households affected is expected to rise by an additional 90,000 families by March 2026; leaving an estimated 925,000 children affected by housing support shortfalls.
This is is seen as a growing concern, particularly as the number of children in the private rental sector has grown from one in 12 to one in five over the last twenty years.
The report also identified a “postcode lottery” with LHA rates. More than half of families renting privately in four local authority areas in the North East; County Durham, Darlington, Northumberland and Sunderland; face a shortfall. The lowest percentage of families renting privately who will face a shortfall is our region is in South Tyneside, at 34.8%.
A key challenge is seen to be the lack of social housing since right-to-buy was introduced in 1979, with waiting lists now at a 10-year high of 1.33 million. In September 2024, Shelter said North East housing waiting lists were said to be at “critical levels” with more than 75,000 people on it – 14,000 of these in Northumberland.
Number of households on social housing waiting lists in the North East in 2023
- Newcastle – 12,072
- Gateshead – 10,001
- Northumberland – 12, 434
- South Tyneside – 9,749
- North Tyneside – 2,169
- Sunderland – 9,237
- County Durham – 10,831
- Middlesbrough – 1,930
- Redcar and Cleveland – 2,555
- Stockton-on-Tees – 1,921
- Darlington – 1,424
- Hartlepool – 1,662
(Source: Department for Levelling Up, Housing and Communities)
Social housing ensures that a family’s housing benefit, or housing support element of Universal Credit, will meet their entire housing costs, as well as guaranteeing a home for life.
The state currently spends £32 billion a year on housing support through the benefits system, much of which ends up with private landlords. IPPR modelling suggests that if the Government built and moved all families with children on means-tested benefits into social housing, this would save £3 billion per year in housing benefit expenditure and reduce relative poverty by 200,000.
The IPPR has recommended raising LHA rates to the 30th percentile of rents and removing the household benefit camp from April 2025, followed by a long-term ambition to raise them to the 50th percentile; establishing a new English housing tribunal to enforce new rights given to private renters by the Renters’ Rights Bill, and building 100,000 social homes every year over a 20-year-period.
Henry Parkes, principal economist at IPPR who authored the report, said: “A safe, secure, and affordable home should be the foundation for every child’s future. Instead, too many families are trapped in a cycle of poverty and instability caused by unaffordable rents and insecure tenancies. Housing reform isn’t just a moral imperative—it’s an economic necessity.”
Percentage of families on Universal Credit with housing support in the Private Rental Sector with Local Housing Allowance shortfalls
County Durham – 59.2%
Darlington – 62.8%
Gateshead – 37.9%
Newcastle upon Tyne – 40.4%
Northumberland – 61.5%
North Tyneside – 44.3%
South Tyneside – 34.8%
Sunderland – 60.9%
View news Source: https://www.chroniclelive.co.uk/news/cost-of-living/children-facing-poverty-private-housing-30920130
