Local Housing Allowance freeze to be lifted

Local Housing Allowance (LHA) maximum amounts were increased to the 30th percentile of local market rents from April 2024, ending a freeze that had been in place since 2020¹. The change was announced by Chancellor Jeremy Hunt in the Autumn Statement on 22 November 2023². LHA sets the maximum housing support that private renters claiming Universal Credit or Housing Benefit can receive, and varies by area and household size¹.

The 30th percentile means the rate in each category is set to cover the bottom 30 per cent of market rents, so LHA will cover the rents of up to three in every 10 homes in an area¹. The level had been frozen since 2020 while private rents rose, and the amount was much less than the 50th percentile last seen in 2011¹. In the 12 months to October 2023, private rents rose by 6.1 per cent on average in the UK to an all-time high².

The Resolution Foundation has since reported that the relinking was short-lived. It said the Office for Budget Responsibility confirmed rates would be frozen again from April 2025², and that the government's spending forecast assumes LHA will remain frozen in cash terms until at least 2029-30³. It estimated that by April 2024 the gap between LHA rates and the 30th percentile had reached 17 per cent³, and that LHA rates are now 14 per cent below the 30th percentile, a shortfall of £104 a month for a household renting a two-bedroom property at the median LHA rate³.

Trust for London found that in July to September 2024, only 5 per cent of London listings were affordable on LHA, because rates are set from April using rental data from the previous September⁴. It said 2.7 million Londoners now live in private rented accommodation, and 34 per cent are living in poverty⁴.

Working age benefits were increased by 6.7 per cent from April 2024, in line with September's Consumer Prices Index inflation, including Universal Credit and means-tested legacy benefits¹. Pension age benefits rose by 8.5 per cent under the triple lock¹. The table below shows Universal Credit monthly standard allowances, excluding the housing and childcare elements².

Why it matters for households

The change affected private renters in Great Britain claiming Universal Credit or Housing Benefit towards their rent, from April 2024¹. Because the rate covers only the cheapest 30 per cent of homes in an area, many people still have to top up their rent from other income¹. The increase applied for one year only at the time it was announced¹, and the Resolution Foundation said rates have been frozen in cash terms since³. It estimated that a low-income family renting a typical two-bedroom home faces a shortfall of £158 a month, and that the gap between lower-end rents and housing support is set to reach a record high of 23 per cent in October 2026⁵. It also estimated that a working single parent in a typical area would see real disposable income fall by £129 a month by 2029-30 if LHA stays frozen³.

What happens next

The Resolution Foundation said the government's spending forecast assumes LHA remains frozen until at least April 2030³, and that relinking LHA to market rents in April 2026 would cost an estimated £1.7 billion³. It estimated that relinking LHA would cost £2.5 billion by the end of the Parliament³. Under the Universal Credit Act 2025, the standard allowance will increase above inflation over four financial years from 2026-27³. The Resolution Foundation said its forthcoming Child Poverty Strategy was due to be published in Spring 2025⁶.