‘Postcode lottery’ in rent subsidies

At least 100,000 households in the UK are being denied rent subsidies due to the government's formula for calculating housing benefit, a report has found.

The study, by the Housing Learning and Improvement Network (Housing LIN), found that the government's system for calculating housing benefit can leave some claimants with lower payments than others living in the same property just a few miles away.

The report's author, Rob Cumine, said: "We've identified a postcode lottery in the way that housing benefit is calculated."

He added: "The system is based on the assumption that housing costs vary little between areas, which is not the case in reality."

"We're not saying that people shouldn't pay their rent, but we are saying that the government should do more to ensure that those who need help get it."

Cumine said that the problem was particularly acute in urban areas, where housing costs can be much higher than in rural areas.

"In urban areas, housing costs are much higher, but the benefit is not being indexed to take account of that," he said.

"As a result, some claimants are being left with very little to live on, while others in the same property just a few miles away are receiving much higher payments."

What is the 'postcode lottery'?

The 'postcode lottery' refers to the way that housing benefit is calculated, which can leave some claimants with lower payments than others living in the same property just a few miles away.
The system is based on the assumption that housing costs vary little between areas, which is not the case in reality.

"It's not just a matter of people being left with less to live on, it's also a matter of fairness," Cumine said.

"If the government is going to help people with their rent, it should do so in a way that is fair and consistent across the country."

"We've identified a postcode lottery in the way that housing benefit is calculated."
— Rob Cumine

What does the government say?

The government has been criticized for its handling of housing benefit, with some arguing that the system is too complex and difficult to navigate.

The Department for Work and Pensions said in a statement that it was "committed to helping people who are struggling to pay their rent".

However, it did not address the specific issue of the 'postcode lottery' in its calculations.

"We will continue to work with stakeholders to make sure that our benefits system is fair and effective," the statement said.

However, Cumine said that the government needed to do more to address the issue.

"The government needs to take a more nuanced approach to housing benefit, one that takes into account the real costs of housing in different areas," he said.

"We're not asking for a complete overhaul of the system, but we are saying that it needs to be reformed to ensure that those who need help get it."

Cumine said that the government should consider indexing the benefit to take account of housing costs in different areas.

"This would ensure that those who need help get it, and that the system is fair and consistent across the country," he said.

Cumine also suggested that the government could consider introducing a "rent cap" to prevent landlords from charging excessive rents.

"This would help to ensure that housing costs are affordable for those who are struggling to pay their rent," he said.

Author's summary: The UK government's system for calculating housing benefit has been criticized for creating a 'postcode lottery', where some claimants receive lower payments than others living in the same property just a few miles away.

This is a major issue for those struggling to pay their rent, and the government needs to take action to ensure that the system is fair and effective.

LocalGov — 2025-11-22