More than one million people in the UK are in line for an £800 boost next year thanks to a major change to housing benefit.
Chancellor Jeremy Hunt has today announced in his Autumn Statement that the government will increase Local Housing Allowance (LHA) for the first time in three years.
LHA rates are decided by the Department for Work and Pensions (DWP) and are used to calculate how much you can claim in financial support from the government if you rent from a private landlord.
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The rates are based on private market rents being paid by tenants in a Broad Rental Market Area (BRMA) – an area within which a person might reasonably be expected to live – and these rents are being paid by people with the same number of bedrooms as the property where you live, or the number of rooms you and your household needs.
The amount you can claim is dependent on when you live and the size of the property you rent, with the rates usually set on April 1 every year for the following 12 months.
But LHA has been frozen since 2020 so is currently based on rents from three years ago, despite private rents rising to their highest recorded levels.
Hunt has now confirmed that he will take action to support families with the cost of living by increasing the LHA rate to cover the lowest 30% of rents from April.
The move will benefit around 1.6 million households by giving them an average of £800 of support in 2024/25.
Noting that rent often makes up more than half of living costs for private tenants on the lowest incomes, the Chancellor said he had heard calls from campaigners, including the Institute for Fiscal Studies, the Joseph Rowntree Foundation and Citizens Advice, on the need to unfreeze the LHA as an “urgent priority” and insisted he was part of a “compassionate Conservative government”.
He said: “I will therefore increase the local housing allowance rate to the 30th percentile of local market rents. This will give 1.6 million households an average of £800 of support next year.”
LHA is used to calculate the housing benefit element of Universal Credit, which Hunt announced will increase by 6.7%.
The government has chosen to hike Universal Credit in line with September’s inflation figure, despite speculation it could have been based on October’s lower rate of 4.6% to save money.
In a statement about the increase to LHA, The Treasury said: “This government is supporting people on low incomes with housing.
“We’re raising the Local Housing Allowance across the UK and providing £120m to prevent homelessness. This is in addition to £1bn+ already provided through the Homelessness Prevention Grant between 2022-25.”
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