Chancellor raises Local Housing Allowance rates in autumn statement

Jeremy Hunt has announced that the local housing allowance (LHA) rate will be increased for the first time in three years, and will now cover the cheapest third (30^th percentile) of local market rents. 

Hunt said that the increase will give approximately 1.6 million people an extra £800 from April 2024.

In April 2020, the government invested £1 billion to raise LHA rates to the 30th percentile. However, figures from the Institute of Fiscal Studies (IFS) estimated that due to the LHA freeze since April 2020 and rent increases, only 5% of private-rented properties on the market can be paid for through housing benefit. 

Local Housing Allowance (LHA) is determined based on a survey of private market rents within a broad rental market area.

The survey of local rents is then used to set the LHA, the maximum amount that people who rent from a private landlord can claim under the Housing Benefit element of Universal Credit.

Hunt said the Government would be raising the LHA “because rent can constitute more than half the living costs of private renters on the lowest incomes”.

Introduced in 2008, the LHA originally covered 50% of private market rents, and in 2011, was reduced to cover the 30th percentile of market rents. 

Hunt also announced that Universal Credit and other benefits will be uprated by 6.7% from next April, in line with September’s inflation figure, rather than the lower October figure.

Carol Matthews, chief executive of Riverside,  said: “We welcome the Government’s move to unfreeze housing benefit. Maintaining the freeze on the housing allowance was driving more people into homelessness at a time when we have a record-high of 104,510 households living in temporary accommodation in England and councils collectively spending £1.7bn on temporary accommodation in the past financial year to keep families off the streets”.

On benefit eligibility, Hunt announced that the Government will introduce a series of measures aiming to get people off benefits and into work. The Back to Work plan will invest £1.3bn in funding to help get 300,000 people who have been unemployed for over a year, back into work.

Hunt said that if after 18 months jobseekers have not found a job, they will be required to take part in a mandatory work placement to increase their skills.

He added: “And if they choose not to engage with the work search process for six months, we will close their case and stop their benefits”.