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

The Scottish Government has announced a £9 million funding package to mitigate the effects of the UK Government’s freeze on Local Housing Allowance (LHA) rates for the 2026/27 financial year. This freeze, confirmed during the Autumn Budget in England, marks the second consecutive year that LHA rates will remain unchanged. The funding aims to support more than 18,000 families across Scotland who rely on housing support to afford private rented accommodation.

Context and Impact of the LHA Freeze

Local Housing Allowance sets a cap on the amount of housing benefit a household can receive when renting privately. The freeze means that these caps will not increase in line with rising rents, which can make it harder for low-income households to access and maintain tenancies. Scottish Housing Secretary Màiri McAllan has previously urged the UK Government to reconsider this freeze, advocating for LHA rates to be raised to cover the 30th percentile of local rents. She highlighted that many households receiving housing support already live below the poverty line, making the freeze particularly concerning.

Addressing Child Poverty and Homelessness

The £9 million funding is part of a wider package of measures announced by the Scottish Government to tackle child poverty. Homelessness remains a critical issue linked to poverty, and the funding is intended to provide early intervention support for families at risk. Maeve McGoldrick, head of policy and communications at 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 also emphasised the importance of the Scottish Government’s investment to “plug the gap left by the Department for Work and Pensions in housing benefit levels for families renting privately.” However, she called for continued efforts to expand support to all those at risk of or experiencing homelessness.

Industry Response from Landlords

John Blackwood, chief executive of the Scottish Association of Landlords (SAL), expressed support for the funding, saying:
“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.”

He also urged both the Scottish and UK governments to collaborate with the private rented sector to increase the supply of housing, ensuring that everyone has access to suitable homes.

What This Means for Landlords and Letting Agents

For landlords and letting agents operating in Scotland’s private rented sector, the Scottish Government’s funding offers some relief to tenants struggling with housing costs due to the LHA freeze. While the freeze may limit the upward adjustment of housing benefit, this additional funding is intended to help vulnerable families maintain their tenancies. Landlords should remain aware of the evolving support measures and continue to engage with tenants who may be at risk of housing insecurity.

Looking Ahead

The Scottish Government’s intervention highlights the ongoing challenges faced by low-income households in the private rented sector, particularly amid rising living costs and limited affordable housing supply. Continued dialogue between government bodies, housing charities, and the private rented sector will be essential to address these issues effectively.

Suggested internal link anchors

• Local Housing Allowance freeze
• Scottish Government housing funding
• private rented sector support
• child poverty measures
• homelessness prevention
• Scottish Association of Landlords
• housing benefit levels
• tenancy sustainment
• affordable housing supply
• housing policy 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/