20th September 2026
A new report from the Resolution Foundation has highlighted a problem facing some of Britain's lowest-income private renters housing. Support has stopped keeping pace with rents.
The report, Saving Private Renters, focuses on Local Housing Allowance, or LHA. This is the system used to calculate how much help people receiving Universal Credit or Housing Benefit can receive towards the cost of renting privately.
LHA was linked to the lower end of local market rents in April 2024, but the rates have subsequently been frozen. Rents have continued to rise.
The Resolution Foundation estimates that the gap between LHA and rents at the lower end of the market is now close to a record 23%. For a typical two-bedroom property in England, it estimates that rent at the 30th percentile of the market is now around £158 a month above the relevant LHA rate.
The Foundation argues that the Government should restore the link between LHA and local rents and then update it every year. It estimates that doing so would cost about £2 billion a year by the end of the Parliament.
One of the more interesting parts of the report concerns the argument that increasing housing benefit simply allows landlords to increase rents.
The Foundation examined what happened after LHA was increased in 2024. Its analysis suggests that only around 10p of every additional £1 of housing support eventually showed up in higher rents, with most of the benefit going to tenants instead.
It also found that the proportion of low-income private renters whose rent was above their LHA fell significantly after the 2024 increase.
That matters because many households receiving housing support are already struggling with basic living costs. The Foundation says 58% of working-age adults in private-renting families receiving housing support were materially deprived in 2024-25. Around one in five could not afford to keep their home warm.
What about Scotland?
The underlying issue applies to Scotland because LHA is a UK-wide system covering Scotland as well as England and Wales.
The current Scottish LHA rates for 2026-27 are still based on the rates introduced in April 2024. The Department for Work and Pensions lists, for example, a monthly two-bedroom allowance of £595 in the Highland and Islands Broad Rental Market Area, with £475 for one bedroom and £695 for three bedrooms.
Those figures are particularly relevant to Caithness because the Highland and Islands area is one of the Broad Rental Market Areas used for calculating LHA.
But we should be cautious about directly applying the Resolution Foundation's £158 figure to Highland. That figure is an average calculated across English rental areas, not a Caithness or Scottish figure.
The broader problem, however, is very similar. If rents rise while LHA remains frozen, the amount of rent that a low-income tenant must find from other income increases.
Scotland is also taking a different approach to the regulation of private renting. The Housing (Scotland) Act 2025 introduces a framework for rent control, with local authorities required to assess local rent conditions. Some of the new measures begin taking effect during 2026 and 2027.
That means Scotland is effectively trying to tackle the private-rented housing problem from two directions: controlling excessive rent increases where necessary while the UK benefits system determines how much help low-income tenants receive.
For tenants in Caithness and other rural parts of the Highlands, the problem can be particularly difficult because the supply of affordable rented homes is limited.
The Resolution Foundation's argument is therefore worth watching. Its research does not suggest that simply increasing housing benefit will solve Britain's housing shortage. Its narrower point is that freezing housing support while rents continue rising leaves an increasing share of the cost with some of the households least able to afford it.
The question for the UK Government is whether LHA should once again follow rents.
And in Scotland, there is a further question: can rent regulation and increased housing support work alongside each other without reducing the supply of private rented homes?
Those two issues are likely to become increasingly important as Scotland tackles its continuing shortage of affordable housing.
Read the full report HERE