Scottish Government’s £9 Million Funding to Offset LHA Freeze

The Scottish Government has announced an additional £9 million in funding to mitigate the impact of the UK Government’s decision to freeze Local Housing Allowance (LHA) rates for a second consecutive year in 2026/27. The freeze, confirmed during the Autumn Budget in England, caps the housing support available to low-income households, making it more difficult for many to afford private rented accommodation.

This funding is part of a broader package of measures aimed at tackling child poverty across Scotland, reflecting the government’s commitment to supporting vulnerable families during a period of rising living costs and housing pressures.

Supporting Families Facing Housing Cost Challenges

The £9 million fund is expected to assist more than 18,000 families across Scotland who rely on housing benefit to cover their rent in the private sector. By offsetting the shortfall caused by the LHA freeze, the Scottish Government aims to reduce the risk of families losing their homes due to unaffordable rents.

Maeve McGoldrick, head of policy and communications at housing charity Crisis Scotland, welcomed the announcement, stating: “Homelessness remains one of the most extreme forms of poverty, and so we strongly welcome the announcement on funding holistic, early action support for family households.”

She added: “We especially welcome the investment from Scottish government to plug the gap left by the Department for Work and Pensions in housing benefit levels for families renting privately. Rising living costs, a shortage of genuinely affordable homes and gaps in early intervention support are continually pushing more people into inhumane living situations.”

While the funding offers hope to those at risk of homelessness, Ms McGoldrick emphasised the need for continued government efforts to expand support for all individuals facing housing insecurity.

Industry Response from Landlords

John Blackwood, chief executive of the Scottish Association of Landlords (SAL), expressed support for the Scottish Government’s intervention. He told Property118: “SAL welcomes any government action that will mitigate child poverty in Scotland and across the United Kingdom. In particular, we support measures that focus on the hardest pushed parents and families receiving the support they need with their housing costs.”

Mr Blackwood also urged collaboration between governments and the private rented sector to increase the supply of homes, ensuring that everyone has access to suitable accommodation.

Calls for Reconsideration of LHA Rates

Scottish Housing Secretary Màiri McAllan has previously written to UK Housing Secretary Steve Reed, urging a reconsideration of the LHA freeze. In her letter, she highlighted the difficulty low-income households face in accessing and sustaining tenancies due to the freeze, particularly given high rent levels.

She noted: “UK-wide analysis by the Joseph Rowntree Foundation shows that around half of those receiving housing support are already living below the poverty line. This is deeply worrying for private rented sector tenants who rely on housing support to keep a roof over their heads.”

What This Means for Landlords and Agents

For landlords and letting agents operating in Scotland’s private rented sector, the Scottish Government’s funding pledge offers some reassurance that tenants dependent on housing benefits will receive additional support to meet rent payments despite the LHA freeze. This may help reduce the risk of rent arrears and tenancy breakdowns linked to affordability issues.

However, the ongoing freeze on LHA rates remains a challenge, particularly in areas with high rental costs. Landlords and agents should remain aware of the evolving policy landscape and consider how these funding measures might affect tenant demand and affordability in their local markets.

Suggested internal link anchors

• Local Housing Allowance rates
• private rented sector
• housing benefit levels
• child poverty measures
• Scottish Association of Landlords
• homelessness support
• housing costs for families
• Scottish Housing Secretary
• tenancy sustainment
• rental affordability
• housing supply in Scotland

TLA update

TLA is launching a new Trusted Partners Hub in Q1 2026, featuring verified and approved service providers selected to support landlords, tenants, and property management businesses. We are inviting legal, trades, insurance, financial, mortgage, tenant screening, and other service providers to register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/