RENTERS are set to receive a major boost to their housing benefits.
Chancellor Jeremy Hunt confirmed in his Autumn Statement today that the government will increase Local Housing Allowance for the first time since April 2020.
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The Autumn Statement provides an update on the government’s plans for the economy.
Mr Hunt is presenting his latest plans, which include tax and spending changes, during a speech in the House of Commons today.
In his Autumn Statement Jeremy Hunt announced:
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In his speech, he confirmed Local Housing Allowance will be increased to cover the cheapest 30% of local market rents.
This means anyone renting a home that is among the cheapest 30% of private rental properties in their area should be able to cover their entire rent with housing benefit.
The Chancellor has been under pressure to up the allowance by charities such as Crisis and Shelter, as well as private landlords and MPs.
In his statement today, Mr Hunt said: “I have listened closely to many colleagues as well as the Institute for Fiscal Studies, the Resolution Foundation, Citizens Advice UK and the Joseph Rowntree Foundation (JRF) who said unfreezing the Local Housing Allowance was an ‘urgent priority.’
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“I will therefore increase the Local Housing Allowance rate to the 30th percentile of local market rents. This will give 1.6million households an average of £800 of support next year.”
But the increase will be expensive for the government, which invested around £1billion when it last up-rated the allowance in 2020.
Rachelle Earwaker, senior economist at JRF, posted on X, formerly known as Twitter: “Breathing a sigh of relief that LHA will finally be unfrozen and will cover the 30th % of rents again.
“While this doesn’t make up for the 3.5 years of being frozen as rents have soared and renters have struggled to pay bills, it will help renters keep their homes going forward.”
What is Local Housing Allowance?
Local Housing Allowance (LHA) sets the maximum amount people renting from a private landlord can claim in Housing Benefit or Universal Credit.
Around 38% of England’s 4.6million private renters receive housing benefit.
The amount you can claim depends on the area you live in and the size of the property you rent.
LHA rates are usually set on April 1 each year for the following 12 months, but the current rate has been frozen since 2020.
However, rents have increased significantly since then.
In the 12 months to January 2023, private rents rose by an average of 4.4% across the UK, according to the Index of Private Housing Rental Prices.
It’s estimated that 844,000 households now have rents higher than the maximum level that LHA will cover.
New analysis by Zoopla for ITV found the typical rental cost for a two-bedroom home in England is around 22% higher than the average LHA rate.
You can check your LHA rates on the government website at: https://lha-direct.voa.gov.uk/search.aspx
Other perks of LHA have gradually been clawed back since it was introduced in 2008.
The allowance originally let claimants “keep the difference” of up to £15 per week, so those who chose to rent a cheaper property could increase their available income instead. However, this was scrapped in 2011.
The government also planned to introduce LHA to the social housing sector from April 2019, but the proposals were abandoned in 2017.
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