Local housing allowance is supposed to cover the lowest 30% of market rents, but research by Shelter found that that is not possible in 97% of England. For example, in south-east London, local housing allowance will cover only the bottom 10% of rents. We have a housing crisis across the country and local housing allowance is not fit for purpose. Does the Minister agree that it must be raised to reflect the true cost of renting?
I thank the hon. Lady for her question. As I said, LHA rates are not intended to meet all rents in all areas. Housing benefit claimants have to make the same decisions about where to live as people who do not receive benefit. In 2019-20, targeted affordability funding has been used to increase over 80% of rates in London. Nevertheless, we recognise that this is an issue. The Secretary of State and I are alive to it and we are looking at several options ahead of a spending review bid.
Does the Minister recognise that recent changes to the tax treatment of the private rented sector, particularly the buy-to-let sector, will mean an increase in rents across the board? That will have a very real read-across to the local housing allowance. Will he give some assessment of what allowance he will make for that increase?
That is, of course, a question for the Treasury. Any rise or potential rise in LHA rates has to go hand in hand with addressing supply. I urge my hon. Friend to address that issue with my counterparts in the Ministry of Housing, Communities and Local Government, and, indeed, the Chancellor and Chief Secretary to the Treasury.
I welcome what the Minister said the other day about reviewing how local housing allowance areas need to be redefined. Does he accept that, because Stroud is in the same area as Gloucester, we are now losing a significant number of people from the private sector because they cannot afford to top up? Will he therefore look at this as a matter of urgency?
I thank the hon. Gentleman for his question. He is right that the broad market rental areas have some anomalies. I have officials looking into this. It is a huge and complex piece of work, given that there are approximately 900 of those areas. It is therefore not something that can be done quickly, but I recognise the issue and I am working on it.