New LHA rates for 2024 – 2025 announced

DWP has announced ‘Indicative’ rates for Local Housing Allowance rates for 2024 to 2025.

It can be seen here.

Note that it is not the confirmed rates, but is highly likely to be so.  We are advised the confirmed rates will be published later.

A useful guide to LHA rates can be seen here, which in summary says:

Local Housing Allowance (LHA) is a mechanism used in the United Kingdom to set the maximum amounts of housing support that individuals can receive through Universal Credit and Housing Benefit for private rented homes of different sizes. It does not represent a benefit in itself but establishes the limits on the housing support that can be claimed in specific regions.

As of the 2023 Autumn Statement, the government announced the end of a four-year cash freeze in LHA rates. Starting from April 2024, LHA rates are determined by the size of the property a household is entitled to, with bedroom entitlement based on family size and characteristics. The rates are set at the 30th percentile rent for properties of different sizes within each local “Broad Rental Market Area” (BRMA), based on rents surveyed in the year to September 2023, up to national maximum amounts.

The introduction of LHA in 2008 was part of broader reforms to control public spending on housing support, prevent unregulated rent increases from being fully covered by Housing Benefit, and discourage benefit claimants from residing in more expensive properties than necessary. LHA replaced the previous method of calculating Housing Benefit, which was the same for both social and private rented sectors.

Key reforms and changes to LHA since its introduction include:

  1. Setting LHA Levels: Initially based on median rents, LHA was reduced to the 30th percentile in April 2011 to cover the lower 30% of rents in each area.
  2. Link to Local Rental Prices: Since April 2012, there has been no automatic link between LHA levels and changing local rental prices. Uprating decisions have been made periodically, with no statutory or customary default.
  3. Freezes and Changes: LHA was frozen in cash terms for four years from April 2016. As a response to the COVID-19 pandemic, LHA was returned to the 30th percentile of local rents in April 2020 and then frozen until 2024.
  4. Other Reforms: Other changes include the removal of “keeping the difference” in April 2011, where claimants could keep an amount of housing support if their rent was below the relevant LHA. There were also reductions in the maximum size of eligible properties, with the maximum size reduced to five bedrooms from April 2009 and four bedrooms from April 2011.

The Department for Work and Pensions estimated that returning LHA to the 30th percentile in April 2024 would benefit 1.6 million households, with an average benefit of £785 in 2024/25. However, concerns persist about the potential impact of benefit caps and the freezing of LHA rates on certain claimants, particularly families with children. Additionally, the size of Broad Rental Market Areas (BRMAs) has raised concerns about the potential inflation of LHA rates in wealthy areas and decreased accessibility in less affluent areas. Rent Officers are tasked with reviewing BRMA boundaries as needed, with any suggested changes subject to the agreement of the Secretary of State.

 

SEARCH

YOU MAY ALSO LIKE

Nationwide’s latest report

Figures from Nationwide showed house prices were largely unchanged in June following a bumper performance in May....

Off-Plan Buyers Drop

Higher interest rates have caused off-plan home sales to tumble in the UK, prompting the nation’s housebuilders to...

CATEGORIES
SOCIAL
Twitter feed is not available at the moment.

0 Comments

Submit a Comment