In a move set to benefit around 1.6 million low-income private renters, the government has revealed plans to increase the Local Housing Allowance (LHA) by an average of £800 per year starting in April. The LHA serves as the maximum housing benefit or Universal Credit that renters can claim, dependent on the size and location of their residence.
The recently announced LHA rates for 2024/25 promise a more substantial increase, particularly favouring those residing in high-cost areas. Mel Stride, the Secretary of State for Work and Pensions, emphasized the significance of addressing housing costs, stating, “Housing costs are the number one expense for families.” He added that the £1.2 billion boost to LHA, coupled with the Back to Work reforms, underscores the government’s commitment to a fair welfare approach, assisting individuals in securing employment while safeguarding the most vulnerable through unprecedented cost-of-living support.
The LHA hike forms part of the government’s comprehensive £104 billion package aimed at alleviating the impact of the rising cost of living. This initiative encompasses a 6.7% increase in benefits, an 8.5% rise in the state pension, and two £300 payments to low-income families. The Household Support Fund has also distributed over 26 million payments, totalling more than £2 billion, since October 2021 to aid families with essential bills.
Housing and homelessness charities have lauded the LHA increase, asserting that it will serve as a deterrent against evictions and help alleviate poverty. However, it’s essential to note that the LHA remains subject to the benefits cap, which places a ceiling on the total benefits a household can receive. Consequently, some renters may not experience the full benefits of the LHA increase, depending on their specific circumstances.
The new LHA rates highlight potential monthly allowances for renters not affected by the benefits cap, including £1,850 for a four-bedroom property in Bristol, £850 for a two-bedroom property in Greater Glasgow, and £675 for a one-bedroom property in Leeds.
This housing support investment complements the £30 billion already allocated by the government for 2023/24, emphasizing its commitment to addressing housing challenges.
Matt Downie, Chief Executive of Crisis, emphasized the crucial role this investment plays in preventing and ending homelessness, particularly as housing benefit recipients have faced challenges meeting rising rent costs in recent years.
The announcement has garnered positive responses from Propertymark, an organization advocating for a rise in LHA since its freeze in 2020. Propertymark emphasizes the need for annual adjustments to LHA levels to match market rates, opposing the UK Government’s plan to freeze it again in 2025. According to Propertymark, LHA has fallen behind rising rents since 2020, making it difficult for the most disadvantaged tenants to afford privately rented homes. The organization continues to urge the UK Government to further increase the LHA level to the 50th percentile, ensuring tenants have broader access to secure and affordable housing options.