Inside the battle to make ends meet as benefits fail to keep up with soaring rents
When Phoebe Cross lost her job at a charity providing support for single parents at the beginning of January, she found herself in the same position as many of the women she had been helping.
The 40-year-old mother-of-two is paying £1,500 a month in rent for her home in Manchester – a cost that suddenly became unaffordable on the £950 a month housing benefit she was receiving. Without work, she was left in limbo until her Universal Credit entitlement increased at the beginning of March.
'I am going to be very short. Luckily I am in a position where my parents can help me out in the short term, but I can't rely on them for ongoing support,' she explained.
'I was working for Gingerbread, the single parent charity, and as part of my job I was supporting single parents in financial hardship. A lot of them were in rent arrears, so I've heard this story day-in-day-out from people. I've gone from having over £3,000 a month in income to benefits of around £1,960 a month.'
With two children, aged 10 and 12, this doesn't stretch very far, and efforts to find a cheaper place to rent that will accommodate her family haven't been successful, she explained. The average private rent in Manchester in January 2025 was £1,300, an annual increase of 11.1 per cent from £1,171 in January 2024. She's managed to get some discretionary housing payments of £46 a week, but that still doesn't cover her rental costs.
Local housing allowance rates, which are used to calculate how much housing benefit a family qualifies for, were frozen for four years from 2020 and then uprated for 2024 in a one-off move. The government has not committed to raising LHA rates in April 2025, meaning that people on housing support will see their income stay the same as rents rise.
Think tank the Institute for Public Policy Research (IPPR) estimated that 440,000 households with children receive housing support that no longer covers the cost of their rent.
This number is expected to rise by an additional 90,000 families by March 2026, leaving an estimated 925,000 children affected by housing support shortfalls.
New analysis from the National Residential Landlords Association (NRLA), published on Tuesday, found that 48 per cent of all private renters in receipt of housing benefit experience a shortfall between the government support and monthly rents. The average shortfall was £157 per month in 2023/24, data from those seeking help from Citizens Advice showed.
Charities have warned that many benefit claimants are at risk of homelessness because they are unable to find affordable housing options, with dwindling social housing stock contributing to this.
According to latest DWP data, government spending on housing benefits was £32 billion in 2023/24, up from £20.7 billion in 2018/19. This is forecast to rise further to £39.3 billion by 2029/30.
Steve Mikellides, 45, from Ilford, East London, explained how he's struggling to make ends meet on disability and housing benefits.
In 2007, he was in a severe car crash that left him with life-changing injuries. He moved to a private rental in Croydon in September 2021 after a short time living in emergency accommodation.
Because he was claiming disability-related benefits, Steve thought he would be able to get around £1,160 to help towards the £1,200 rent. Instead it was £875, which he only found out from the council after living there for around a month.
Shortly afterwards, he was reassessed by the DWP and found able to work, which made him ineligible for his current benefit entitlement. Around the same time, his mother was rediagnosed with cancer.
'I had to lie to my mum,' he explains, 'that I was OK, that I didn't need money, and that I was eating more than twice a week.'
It wouldn't be until two days after her death that a tribunal decision reinstated Steve's disability benefit entitlement indefinitely. Almost all of this went to covering his rental shortfall, he explains.
Four years later, he is now able to claim parts of the Personal Independence Payment (PIP). His disability-related benefits combined mean he's not forced into debt to cover this rent, but he is still struggling to afford the basics, and feels sometimes things have gotten worse.
After being paid around two weeks into January, Steve says that by the 15th, he had just £112 left to live on.
He explains: 'Three years ago when I moved in, although things were bad then, I could manage better.'
'To be looking at 28 days with 112 quid, that's quite terrifying actually.'
In 2022, Steve reached out to anti-poverty charity Z2K, who were able to offer him financial advice and emotional support.
'I'm a tough nut, it's part of my demeanour,' says Steve, 'I'm clearly a cockney.
'But we all have our breaking point, and I was a good few miles past mine.
'I think had I not found Z2K, I probably would've needed significantly more within a couple of weeks. Because I was down, I was very, very down.'
The disparity between housing benefit and rental costs is also particularly stark for young people, who get a lower rate of benefit than adults despite being very vulnerable. Homelessness rates among young people are soaring, with some 118,134 16-to-24-year-olds approaching their council for homelessness help in 2023-24. This was up ten per cent on the year before, and every region of England bar the East of England has seen an increase.
Phil Kerry, from New Horizon Youth Centre, a London youth homelessness charity, explained the impossible situation young people find themselves in: 'Universal credit if you are under the age of 25 is about 26 per cent less [than the rate for adults], and housing benefit is also less.
'The housing benefit that the young people we help would be eligible for on the shared accommodation rate is about half of what I would be eligible for. They have this triple discrimination, and are stuck between a rock and a hard place because they don't have the financial means to exit their homelessness.'
He explained that in a recent search he did on Spareroom there were around 220 options available on the adult level of housing benefit, and only one available at the young person's rate. 'The private market effectively might as well not exist for young people. Homelessness is growing but the number of options for housing is going down all the time.'
Ben Beadle, chief executive of the NRLA, called for ministers to unfreeze housing benefit rates, adding: 'It beggars belief that ministers are making it harder for those reliant on housing benefits to sustain their tenancies, especially in an already fiercely competitive rental market.'
The NRLA, along with the Joseph Rowntree Foundation, Shelter and the Resolution Foundation, have called for the government to peg LHA rates to at least the lowest 30 per cent of rents, and keep them there for the duration of this parliament.
Polly Neate, chief executive of Shelter, said the 'dire shortage' of affordable social homes was forcing families into private renting. 'Housing benefit is meant to be a safety net, but it remains frozen while private rents continue to soar.
'Thousands of families are desperately trying to magic up money they don't have just to keep a roof over their heads. Local Housing Allowance should be a lifeline, covering the bottom third of local rents—but right now, it simply doesn't. The government must unfreeze it immediately so struggling families can avoid homelessness.'
A government spokesperson said: 'No person should be in poverty – that's why we've extended the Household Support Fund again and are maintaining Discretionary Housing Payments to ensure families are supported.
'Alongside this, we are uprating benefits and the State Pension, increasing the National Living Wage and helping over one million households by introducing a Fair Repayment Rate on Universal Credit deductions, while our Child Poverty Taskforce develops an ambitious strategy to give all children the best start in life.'
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