Local Housing Allowance: Help with rent for private tenants

Local Housing Allowance (LHA) is not a benefit. In areas across the UK it sets the maximum amounts of housing support claimants of Universal Credit and Housing Benefit can usually get for private rented homes of different sizes. It is determined by:

• The size of property a household is entitled to, with bedroom entitlement based on family size and characteristics.
• 30th percentile rents for properties of different sizes within each local ‘Broad Rental Market Area’ (BRMA).

LHA was last set at the 30th percentile of local rents in April 2024, with rates based on rents surveyed in the year to September 2023, up to national maximum amounts. A freeze since 2024 means that rates have not kept up with rising rental prices since.

If a claimant’s rent is higher than the relevant LHA rate, support is capped. If rent is lower, support can cover up to the rent (and some service charges) the claimant pays.

Support for tenants in social housing does not use LHA. Instead, it is based is on actual rental costs with deductions made in some cases, such as where the under-occupancy deduction applies.

LHA rates and maps of BRMAs in Great Britain can be found on Directgov. LHA rates in Northern Ireland can be found on the Northern Ireland Housing executive website.

Why was Local Housing Allowance introduced?

Before the deregulation of private rents in 1989, Housing Benefit was calculated in the same basic way for renters in the social and private rented sectors. Reforms in the 1990s had sought to control rising government expenditure on housing support and discourage benefit claimants from living in more expensive properties than they need. LHA built on these policies, aiming to make the system fairer and more transparent – ensuring claimants in similar circumstances in each area would receive similar benefit levels and could know in advance what they could expect to get. It was also intended to encourage personal responsibility and choice.

Following evaluation in ‘pathfinder’ areas from November 2003, LHA was rolled out nationally for new claimants from 7 April 2008.

Reforms to Local Housing Allowance since 2008

LHA has been reformed significantly since it was introduced, particularly during the 2010 to 2015 coalition government. The cumulative effect has been to make LHA significantly less generous than it was at the point of introduction. 

Changes to the level of Local Housing Allowance

Before April 2011, LHA was based on median rents of properties of the same size in each local area, determined by government rent officers. The median (or 50th percentile) rent is the value at which half of rents are higher, and half of rents are lower. In April 2011, the level of LHA was reduced to the 30th percentile, so LHA would cover the lower 30% of rents in each area.

Since April 2012, there has been no automatic link between LHA levels and changing local rental prices. Instead, different uprating decisions have been made periodically, with no statutory or customary default.

The chart below shows the average cash changes to LHA rates in each year since 2013/14 resulting from this irregular uprating process.

LHA was increased by the Consumer Price Index (CPI) in April 2013 and by 1% in the two following years. In the four years from April 2016 LHA was frozen in cash terms along with most working-age benefits, with “targeted affordability funding (PDF)” in some high rent growth areas.

As a response to the covid-19 pandemic, LHA was returned to the 30th percentile of local rents in April 2020, a 13% increase in average rates. It was then frozen in cash terms until April 2024, when it was again returned to the 30th percentile, an 18% increase. It has been frozen in the years since.

Other key reforms

Other changes since 2008 have included:

• The removal of ‘keeping the difference’ in April 2011. Initially claimants could keep an up to £15 a week of housing support if their rent was below the relevant LHA. It was hoped this would encourage people to choose less expensive accommodation.
• Reducing the maximum size of property a household would be eligible to claim support for, to five bedrooms from April 2009, and four bedrooms from April 2011.

Current issues and debate

The Department for Work and Pensions estimated that 1.6 million households would gain from returning LHA to the 30th percentile in April 2024, and on average these households would benefit by £785 in 2024/25. The annual cost of the increase (as opposed to remaining at the 2020/21 levels) was forecast to be around £1.3 billion in 2024/25, gradually increasing to £1.7 billion by 2028/29.

Growing shortfalls since April 2024

However, since April 2024 the average gap between frozen LHA rates and 30^th percentile rents has grown to match or exceed that seen in previous years before rates were restored to the 30^th percentile.

The interactive map below shows the gap between current LHA rates and 30^th percentile rents surveyed in the year to September 2025 – the rates which would apply had LHA been reset at the 30^th percentile in April 2026 – in each BRMA in Great Britain.

Calls to change Local Housing Allowance rates

Many charities and campaigning organisations are calling for LHA rates to be reset in the upcoming budget, citing hardship faced by claimants who have to make up shortfalls in rent support. They argue frozen rates have increased homelessness and the number of families living in temporary accommodation, as well as the costs borne by local authorities.

The Conservative Party has announced that LHA would be lowered for working-age claimants to the 10^th percentile of local rents, as part of a wider plan to reduce welfare spending and increase spending on defence.

The Institute for Fiscal Studies (IFS) argues that resetting LHA rates every few years then freezing them indefinitely is an ‘incoherent policy design’ which creates uncertainty for both tenants and the public finances, and for creating “arbitrary inconsistency in the level of support available across local areas”. They instead call for rates to be uprated regularly and suggest that if the government wants to retain savings, they could do this by basing rates on a lower percentile rent or level relative to the median rent.

The IFS estimates that resetting LHA at the 30^th percentile in 2026/27 would have cost around £1.5 billion. The Resolution Foundation estimates that restoring an annual link to the 30^th percentile would cost £2 billion a year (in current prices) by 2029/30.

The size of Broad Rental Market Areas

The size of BRMAs means they can incorporate multiple areas with a wide range of rental prices. This has led to concern over the degree to which wealthy areas with high private sector rents can inflate LHA rates within a BRMA. In other BRMAs, concern focuses on the impact of less wealthy areas which decrease LHA rates, making the private rented sector less accessible for those who rely on benefits to help with rent payments.

Rent officers are required to review BRMA boundaries as often as it is thought appropriate with suggested changes subject to the agreement of the Secretary of State for Work and Pensions.