Hundreds of thousands of landlords will receive a cash injection worth £1.3bn next year in a move that will protect property owners from tenants who are at most risk of falling into arrears.
A freeze on the cap on local housing allowance (LHA) rates will be lifted from April next year, the Treasury announced.
This means the Government’s contribution to the rent of 1.6m social tenants living in the private rental sector will increase by an average of £800 per year, Jeremy Hunt said.
It will be equivalent to £7.8bn in housing benefits payments over five years and is a boost for 1.6m rental properties, according to the Office for Budget Responsibility (OBR).
LHA rates determine the amount of housing benefits that social tenants receive and are based on a level of market rents in a local area. Previously, they were capped at the 30th percentile of rents in a local area. This meant a tenant could get all of their rent covered if they lived in the cheapest 30pc of properties in an area.
But the rates have been frozen since April 2020, meaning they are based on September 2019 rents. Record rent growth over the last few years means that now only one in 20 homes newly listed for rent are fully covered by LHA, according to Zoopla.
Mr Hunt’s announcement means that the rates will be raised next year to cover the cheapest 30pc of properties. The increase will reduce the squeeze on tenants and provide relief for landlords who are grappling with high mortgage bills.
William Turner is a seasoned U.K. correspondent with a deep understanding of domestic affairs. With a passion for British politics and culture, he provides insightful analysis and comprehensive coverage of events within the United Kingdom.
