The Budget freeze on housing benefits means payments will fall further behind private rents leaving tenants at risk, both landlord groups and welfare charities have warned.

Private renters on housing benefits will be on average £243 per year worse off following the freeze on payment amounts, according to anti-poverty charity the Joseph Rowntree Foundation.

And if the freeze continues over the whole of this Parliament, it could leave renters who rely on the benefit £700 a year worse off, the charity warns.

In a report released before the Budget, the Foundation highlighted that, according to government figures, more than half of all those in private rented homes who receive housing benefits are in poverty after paying their rent and other housing costs.

This is compared to 21% of the wider UK population.

The report says: “Private renters in receipt of housing benefits are disproportionately likely to be in poverty, making it all the more important that the benefit system works as it was originally designed to – by aligning housing support with housing costs.”

Yet housing benefit has been frozen for seven out of the past 12 years.

The charity Shelter has also warned that increasing rents and a lack of social housing is putting more families at risk of homelessness.

The National Residential Landlords’ Association says the benefit freeze will make it increasingly difficult for those in receipt of benefits to find tenancies in the private rented sector.

It argues the decision will worsen the financial strain on renters who are already struggling.

NRLA policy director Chris Norris says: “While the Budget spoke about protecting vulnerable people, it failed to confirm what we now know – that housing benefit rates will be frozen as of next year. 

“It makes no sense whatsoever to provide support for housing costs that bear no resemblance to rents as they actually are. 

“Coupled with tax hikes on the supply of homes to rent, [the freeze] will make it hardest of all for those claiming benefits to access and sustain tenancies in the rented sector.”