Local Housing Allowance's Rise
Local Housing Allowance (LHA) rates will rise in April as the chancellor makes good on his promise to unfreeze rates in a reaction to rising rent levels.
Renters on benefits will get a major payment boost from April to help with record-high housing costs as the Local Housing Allowance (LHA) rates will rise for the first time since April 2020.
The allowance sets the maximum amount people renting from a private landlord can claim in Housing Benefit or Universal Credit.
From April, rates will be increased to cover the cheapest 30% of local market rents in the 12 months before September 2023 after being frozen since 2020.
The allowance aims to ensure anyone renting a home among the cheapest 30% of private rental properties in their area should be able to cover their entire rent with just their benefit payments.
Rates are set differently for shared, one bed, two bed, three bed and four bed accommodation.
In summary for Stockport, under “Southern Greater Manchester”, the Local Housing Allowance’s are as follows:
1 – bed: £143.84 per week, or £625.02 per month
2 – bed: £172.60 per week, or £749.99 per month
3 – bed: £207.12 per week, or £899.99 per month
This increase will certainly help those tenants on Universal Credit, during the cost of living and energy crisis, and make renting more affordable for thousands who claim.
Bear in mind though, that although they are unlikely to change, these rates are indicative, and will be confirmed in accordance with legislation on 31 January 2024.
What is Local Housing Allowance?
Local Housing Allowance (LHA) determines the maximum financial support available for renters in the private rented sector. Each year Rent Officers at the Valuation Office Agency (VOA) determine LHA rates for the coming financial year. On 22 November 2023 the Chancellor announced in the Autumn Statement that the government will raise LHA rates in Great Britain to the 30th percentile of local market rates in April 2024.
The Department for Work and Pensions (DWP) uses LHA rates to calculate the maximum housing support for claimants of either the housing element of Universal Credit or Housing Benefit. LHA rates are set within Broad Rental Market Areas. A BRMA is an area within which a person could reasonably be expected to live, taking into account access to certain facilities and services, for example with regards to health and education. Within each BRMA there are 5 LHA rates:
Shared Accommodation Rate (SAR)
1 bedroom rate
2 bedroom rate
3 bedroom rate
4 bedroom rate
The indicative LHA rates for the financial year 2024 to 2025 have been calculated in-line with the Rent Officers Orders, including a national cap for each LHA category and ensuring that no revised LHA rates will be reduced compared to the last time they were set on 31 March 2020. There are a total of 960 rates across all BRMA and bedroom types that apply to claimants receiving Housing Benefit or Universal Credit Housing Element.
