Local Housing Allowance announcement: Does it go far enough?

14 January 2020

In a statement to the House of Commons on Monday, the minister for welfare delivery, Will Quince, announced that the government is submitting a bill to parliament legislating that after 1 April rates will be raised in line with the Consumer Price Index (CPI) inflation rate, which is around 1.5 per cent.

LHA rates are used to calculate the level of housing benefit tenants renting from private landlords should receive to help with housing costs.

The proposed increase from next April announced by Government today will do little to close the huge gap that now exists between maximum benefit levels (LHA rates) and most private rents in Southwark.  This gap has grown over the last decade as market rents have risen while benefit levels or LHA rates have been frozen, capped and cut.  Analysis carried out by London Councils last year found that rents for only about one in ten private rented properties in Southwark (which forms part of the Inner South East London rental market area) would be covered by LHA rates – and nearer one in twenty for one bedroom properties.

In both examples, the analysis shows that  the number of properties where rents would be covered by LHA had fallen significantly over the previous four years. The local private rented sector is, and will remain, inaccessible for most low income households in Southwark even after the proposed increases to be implemented  from next April - and the homelessness pressures faced by the council are unlikely to be significantly relieved.  Only substantial and sustained rises in LHA to bring it into line with rents, or a restoration of rates to the real levels of those of five to ten years ago, are likely to result in a change in that situation.

Councillor Kieron Williams, cabinet member for housing management and modernisation, said: “Any increase in the LHA rate is of course welcome but this rise falls well short of what’s needed. The previous cut and freeze mean the rate is now so low that in boroughs like Southwark, and a growing number of others, the current rate is not even close to covering the cost of a decent private rented home. Just increasing it by inflation won’t change that. We need to get back to a rate that is set based on the actual cost of renting locally. Until that happens we will continue to see families forced into poverty and homelessness, and out of their local community.”

Page last updated: 14 January 2020