Scottish housing secretary urges UK government to unfreeze local housing allowance

The housing secretary for Scotland has called on the UK government to reverse its decision to extend the freeze on local housing allowance (LHA) rates announced in the latest budget.

In a letter to UK housing secretary Steve Reed, Màiri McAllan said she was “deeply disappointed” by the news that LHA rates will remain frozen into 2026-27, the second consecutive year of no uplift.

She warned that it will be harder for low-income households to access and sustain tenancies in the private rented sector, which will have a “detrimental impact” on homelessness and child poverty.

According to McAllan, freezing rates of support in Scotland will cause 87 of the 90 LHA rates to fall below the 30^th percentile of local market rents in 2026-27. She has urged the government to boost LHA so the rates permanently meet at least the 30^th percentile of local rents. 

LHA rates are set by the Department for Work and Pensions, not Reed’s department, and are used to calculate the maximum amount of housing support a private sector tenant can receive if they claim universal credit (housing element) or housing benefit.

The Scottish government has estimated that around 45,000 Scottish households, including approximately 31,000 children will be adversely impacted by the end of 2026-27. McAllan cited analysis by the Joseph Rowntree Foundation, which shows that around half of those receiving housing support are already living below the poverty line.

She has also raised concern over the housing benefit subsidy arrangements for the provision of temporary accommodation, which is “placing an unfair burden on local authorities”.

Councils currently receive subsidy equivalent to 90% of the 2011 LHA rate to cover temporary accommodation costs. This rate has been frozen for almost 15 years despite “substantial increases” in the cost of providing temporary accommodation over that period.

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McAllan has urged the UK government to review the funding arrangements to “ensure that subsidy levels reflect the true costs to councils”.

She has also requested further detail on the new earned-income disregards in housing benefit for people in supported housing and temporary accommodation, which were announced in the Autumn budget.