【Savills】Local Housing Allowance: increased due to Covid-19

Local Housing Allowance (LHA) has recently experienced what is probably its biggest ever increase.  LHA is the cap on the amount of housing benefit tenants in the private rented sector can receive.  As part of the Social Security (Coronavirus) (Further Measures) Regulations 2020, the link between LHA levels and market rents was restored from 1st April 2020.

Until 2014 LHA was set at a percentile of local market rents within an area.  In 2014 and 2015 it was increased by 1%, regardless of what had happened to rents.  And since 2016 it had been frozen until 2020, unless an area has received ‘targeted affordability funding’.

In January the Government announced that LHA would increase from 1st April in line with CPI, but this was changed by the regulations released following the outbreak of coronavirus.

The return of LHA to the 30th percentile rent in each Broad Rental Market Area (BRMA) means that, in theory, 30% of rented homes in most areas are affordable to a housing benefit reliant household.  There are nationwide caps which vary by number of bedrooms, which means that in some locations LHA is lower than the 30th percentile.

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