THE affordability gap between Local Housing Allowance (LHA) and rents are set to reach record levels next year, new research has suggested.

The government’s freeze on LHA means the housing benefit already falls 14 per cent short of the cost of a typical lower-priced rental, research by Resolution Foundation found.

The think tank calculated this works out at about £104 a month on average for a two-bedroom property.

Hackney in London faces the biggest shortfall, with local rents on a two-bedroom property outpacing LHA by £350 per month.

The gap has grown to £170 a month in Salford in north-west England and £144 a month in Hinckley and Bosworth in the East Midlands.

Current LHA rates have been frozen since last year and are based on September 2023 rents.

The Resolution Foundation warns that if the freeze continues, the gap could climb to 17 per cent next year and as much as 25 per cent by 2029-2030, while rents rise.

It notes that the “savings” from the freeze could prove a false economy, with it contributing to rising numbers in temporary accommodation, which cost councils a collective £2.8 billion last year.

Hannah Aldridge, senior research and policy analyst at the Resolution Foundation, said rapid rent rises “have created an alarming affordability gap for almost two million low-income families.

“Without government intervention in the Budget, this freeze in support will become a major drag on families’ living standards.”

The government was contacted for comment.