OVER one million private renters on Universal Credit will see the help they get with payments frozen next year.
Local Housing Allowance (LHA) rates will remain at their current level from April 2025.
This decision, confirmed after the Autumn Statement, will impact around 1.6million households, resulting in a shortfall of as much as £3,129 a year in areas with the highest rents..
The LHA sets the maximum amount people renting from a private landlord can claim in housing benefit or Universal Credit.
Rates vary based on property size as well as by location, and In theory should equal your area’s lowest affordable housing rents.
We’ve mapped the maximum amount you can get for a three-bedroom property above.
However, rising rents and frozen rates leave households having to cover more of their rent costs, as benefit payments have not kept up.
Rates were increased in April this year to cover the cheapest 30% of local market rents at, based on values for September 2023, giving hundreds of thousands of households a boost of up to £4,200 a year.
Before that they had been frozen since 2020.
In a written statement last week, Liz Kendall, Secretary of State for Work and Pensions, said: “Local housing allowance rates for 2025/26 will be maintained at the 2024/25 levels, following their increase in April 2024.”
Maintaining the freeze to the LHA in 2025/26 will leave renters with an average shortfall of £14 per week, or £730 a year, according to the Resolution Foundation.
In areas with higher rents, such as inner London, this will be far higher, with shortfalls of up to £60 a week, or £3,129 a year.
Tom Wernham, research economist at the Institute for Fiscal Studies, added: “The latest statistics show that private rents have already grown 8.4% since September 2023 [the sate when LHA was last set].
“With rents rising fast, the proportion of properties which can be covered by housing benefit will shrink rapidly, and pressure will mount on the government to increase the LHA rates, once again.”
A government spokesperson said: “We are committed to the biggest increase in affordable housing in a generation, and to ensuring our social security system is fair and sustainable.
“Local housing allowance rates have already increased earlier this year by 6.7%, which is worth an additional £800 on average to low-income households, and will be maintained at that rate for the next year.”
You can check your LHA rates on the government website at lha-direct.voa.gov.uk/
What is Local Housing Allowance?
LOCAL Housing Allowance (LHA) sets the maximum amount people renting from a private landlord can claim in Housing Benefit or Universal Credit.
Around 38% of England’s 4.6million renters receive some form of housing benefit.
Around 1.6million have the amount of support available capped at their local LHA rate.
The government planned to introduce LHA to the social housing sector from April 2019, but the proposals were abandoned in 2017.
LHA rates are usually set on April 1 each year for the following 12 months, but the current rate has been frozen since 2024.
And rents have increased significantly since then.
LHA rates are determined based on:
- The area in which you live, known as the Broad Rental Market Area (BRMA).
- The number of bedrooms you are entitled to according to your household size and composition.
To qualify for LHA, you must:
- Be renting from a private landlord.
- Have a low income or be claiming other benefits.
- Meet the residency criteria.
LHA rates are reviewed annually, so the amount you receive may change.
If your rent is higher than the LHA rate, you will need to cover the difference yourself.
It is crucial to report any changes in your circumstances to ensure you receive the correct amount.
HELP FOR RENTERS
Rental costs are at their highest levels – but there is help for households struggling to keep up with their spiralling bills.
A recent report by property firm Hamptons said the average rent for a newly let property in Britain hit a new high of £1,384 per month in September, although the pace of growth slowed.
Annual rental price growth was 4.5% in September, slowing from 5.0% in August and 11.7% in September 2023.
If you are struggling with your living costs, there are schemes out there that might be able to help you out.
Discretionary housing payments
Discretionary housing payments (DHP) can help low-income households cover their housing costs.
This can include one-off payments to cover short term rental costs, be put towards a rent deposit on a new property or even rent in advance.
For those with disabilities, it can also be used to cover the costs of adapting your home to meet your health needs.
The payment does not cover things like bills or council tax on the home you live in.
In total last year, 175,000 households in the UK received a slice of the £100million available as part of the scheme – making the national average payout £634.
The exact amount you get depends on where you live as each local authority dishes out the cash on a case-by-case basis.
Find out what’s on offer in your area by visiting gov.uk/find-local-council.
Welfare assistance schemes
Many local authorities also have welfare assistance schemes in place.
Help varies from free cash and food vouchers to money towards rent and energy bills.
Some areas offer up to £1,000, whereas some councils do not have any scheme in place at all.
Household Support Fund
The Household Support Fund (HSF) is another council scheme that is designed to help struggling families with rising living costs.
As with the other government schemes, what you get and how much you can get vary depending on where you live.
Most local council websites have details of what is on offer and how you can apply.
For example, locals in Herefordshire can get up to £500 in cash paid directly to their bank accounts to help with living costs.
Are you missing out on benefits?
YOU can use a benefits calculator to help check that you are not missing out on money you are entitled to
Charity Turn2Us’ benefits calculator works out what you could get.
Entitledto’s free calculator determines whether you qualify for various benefits, tax credit and Universal Credit.
MoneySavingExpert.com and charity StepChange both have benefits tools powered by Entitledto’s data.
You can use Policy in Practice’s calculator to determine which benefits you could receive and how much cash you’ll have left over each month after paying for housing costs.
Your exact entitlement will only be clear when you make a claim, but calculators can indicate what you might be eligible for.