Concerns are being raised about the temporary nature of the increase, with the LHA set to be frozen again in 2025. Here are the key points from an article in the Big Issue:

• LHA Rate Increase:
  • Chancellor Jeremy Hunt raised local housing allowance (LHA) rates in November, marking the first increase since 2020.
  • The increase is aimed at addressing the challenges faced by tenants struggling to cover rising monthly rents.
• Linking LHA to Market Rents:
  • LHA rates will be linked back to the bottom 30% of market rents in April, providing support to around 1.6 million households with an average increase of £800.
• Concerns About Future Freeze:
  • Campaigners from Generation Rent warn that record-high rent inflation may outstrip the benefit rise, as the LHA is set to be frozen again in 2025.
  • Forecasted rent inflation of 8.5% by the end of 2025 could create an affordability gap for tenants.
• Impact of Previous Freeze:
  • Since the last LHA increase in 2020, average rents have risen by 18.3%, leading to an affordability gap for renters.
  • Shelter and the Chartered Institute of Housing found that renters receiving LHA had limited affordable options in some parts of England.
• Impact on Homelessness:
  • The affordability gap has contributed to homelessness, with an increase in households seeking support after the end of a private tenancy.
• Benefit Cap Challenges:
  • The benefit cap was not uprated at the Autumn Statement, potentially impacting out-of-work households, especially two-child families receiving full universal credit.
• Future Affordability Gap:
  • With the LHA set to be frozen again, renters could face an average annual shortfall of £1,370 for a two-bedroom house in England by the end of 2025.
• Calls for Annual Adjustment:
  • Both Generation Rent and the Resolution Foundation have called for LHA rates to be set annually, linked to changing rents.
• Response from Housing Secretary:
  • Housing Secretary Michael Gove acknowledged the welcome increase in LHA and expressed a commitment to evaluating the impact on the ground.
• Regional Impact:
  • The LHA rise is expected to have a significant impact in London and the southeast of England, where rents have risen sharply in recent years.
• Continued Gaps in Housing Support:
  • Despite the LHA increase, concerns remain about the benefit cap affecting out-of-work households and the potential return of the freeze in 2024.