DWP benefit claimants who are renting get £800 boost - but many will lose out
Millions of benefit claimants will be £800 better off on average as Local Housing Allowance (LHA) is to rise in April.
In its proposed housing allowance rates for 2024-25, the Department for Work and Pensions (DWP) says it will invest £7billion over the next five years with people living in the most expensive areas set to see the biggest boost. Local Housing Allowance rates are used to calculate Universal Credit and Housing Benefit payments for tenants renting from private landlords. The level of support is based on the area where the person lives and the size of their household.
The Local Housing Allowance rates have been frozen since April 2020, but in April this year, they will be reset to cover the cheapest 30% of rents in an area. This means rents should be affordable to people claiming Universal Credit or Housing Benefit.
The DWP says the plans will impact around 1.6 million private renters on Universal Credit or Housing Benefit and will see them be £800 better off a year. The plans to increase Local Housing Allowance were confirmed in the Chancellor's Autumn Statement in November last year.
However, the Resolution Foundation previously warned that the move was a "temporary thaw" and thousands more households will run up against the benefit cap which will not rise along with benefits this April. In a statement, the Resolution Foundation said: "We estimate that a couple with two children in receipt of the full Universal Credit award will hit the benefit cap in more than four-in-five (83%) local areas come April, up from just over half (53%) today."
London flat for rent for £1,400 a month with bed tucked away in kitchen cupboard
Over the last two years, private rental costs have skyrocketed and according to recent data from the Office of National Statistics (ONS) renting costs from private landlords are rising at the fastest rate since records began in 2006. In the year to November 2023, on average rental costs rose by 6.2%. A breakdown of the data showed renters in Wales had seen the sharpest increase of 7.3%, followed by Scotland at 6.2%, and then England at 6.1%.
Due to the Local Housing Allowance freeze, people claiming housing support were being completely priced out of the market as their housing support was not enough to cover even the cheapest rents in some areas of the country. At the time of the announcement, housing charity Shelter said it would “provide a huge sigh of relief for the 1.6 million private renters in England relying on Housing Benefit to help pay their rent”.
Work and pensions secretary Mel Stride said: “Housing costs are the number one expense for families. This £7 billion boost to Local Housing Allowance over the next five years, along with our landmark Back to Work reforms, reflects our fair approach to welfare – helping people into employment while protecting the most vulnerable with unprecedented cost of living support.”
Crisis chief executive Matt Downie commented: “It cannot be understated just how vital this investment in housing benefit will be in helping to both prevent and end homelessness. In recent years, people receiving Housing Benefit have found it increasingly difficult to afford the soaring cost of rents. Giving Housing Benefit this crucial boost will make a real difference to people across Great Britain and will relieve some of the pressure facing people on the lowest incomes.
“We hope this investment will be maintained for the long term, so we can continue with our collective mission to end homelessness for good.”
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