Thousands of private renters in Wales are struggling to cover their housing costs despite receiving housing benefit, with new research from Citizens Advice highlighting the growing gap between government support and actual rents.
In Blaenau Gwent, 79% of private-renting households receiving housing benefit do not receive enough support to cover their rent. The proportion stands at 77% in both Pembrokeshire and Caerphilly, making these the three areas with the highest rates of rental shortfalls across England, Wales and Scotland.
Citizens Advice estimates that approximately 50,000 households in Wales cannot cover their private rental costs through housing benefit alone.
Frozen Housing Allowances Fail to Keep Pace With Rising Rents
The shortfalls are linked to Local Housing Allowance (LHA), which determines the maximum housing support available to eligible private renters, including people receiving Universal Credit.
LHA rates have remained frozen since April 2024 and are based on rental data from September 2023.
However, private rents in Wales increased by 20% between September 2023 and July 2026, according to Citizens Advice analysis of Office for National Statistics figures.
The difference between frozen benefit rates and rising housing costs has left many households having to find additional money to cover their rent.
Average Rents Continue to Increase Across Britain
Figures from Hamptons show that the average monthly rent for a newly agreed tenancy in Wales has reached £888, representing a 2.5% increase over the past year.
Across Britain, average rents for newly agreed tenancies rose by 2.7% to £1,433 a month in September.
The increase marked the tenth consecutive month in which rental growth accelerated, adding to the financial pressure facing private tenants.
Universal Credit Recipients Report Monthly Budget Deficits
The gap between housing support and rental costs is affecting the wider finances of households seeking assistance.
Private renters receiving Universal Credit who obtained debt advice from Citizens Advice reported an average monthly budget deficit of £69.97.
The organisation said this was 20 times the average deficit reported by people living in social housing.
The figures indicate the financial pressure facing private tenants who must meet housing costs alongside other essential household expenses.
Rental Costs Affect Work and Childcare Decisions
A UK-wide survey found that one in five private renters receiving Universal Credit said difficulties paying for essential items had affected their ability to find employment or increase their working hours.
Childcare costs were also identified as a factor affecting employment.
Among respondents who had reduced or stopped paying for childcare, 53% said they had cut their working hours or stopped working altogether.
The findings highlight how difficulties covering basic living costs can affect people’s ability to remain in employment or increase their earnings.
Citizens Advice Calls for Housing Allowance Changes
Citizens Advice is urging the UK Government to use the Autumn Budget to unfreeze Local Housing Allowance rates and restore the link between support levels and the cheapest 30% of rents in each local area.
Luke Young, head of policy at Citizens Advice, said the freeze had affected Wales particularly severely by widening the gap between official housing support and the cost of the cheapest available rental properties.
The organisation is calling for changes to ensure housing support reflects local rental costs more closely.
Nearly One Million UK Households Face Rental Shortfalls
The problem extends beyond Wales, with nearly one million households across the UK now facing a gap between their housing support and rent payments.
The figure represents an increase of almost 300,000 households since May 2024.
Although the number of households receiving housing support has increased, Citizens Advice said the proportion experiencing a rental shortfall has grown at a faster rate.
The research places renewed focus on the relationship between housing benefit levels, rising rents and the financial difficulties experienced by private renters across the UK.
