When delivering the Autumn Statement to parliament on 22 November 2023, Jeremy Hunt said that as part of measures to help with the cost-of-living crisis, he will restore Local Housing Allowance (LHA) rates* to the 30th percentile*, this will come into effect from April 2024.
This means that the Local Housing Allowance rate, which affects how much help tenants get when renting from a private landlord, will be increased, having been frozen since 2020.
Many of our properties are rented to households which claim some housing benefit, either on its own, or as part of Universal Credit, so rents in this area have pretty much stayed constant even though the property prices have been increasing. The LHA rent increase in April 2024 should mean higher rental income for our current landlords and buyers across many of our properties. But you don’t need to wait until next year to buy, as the rent increase will happen automatically and the property prices are likely to increase further as the rental incomes increase, so buying at today’s prices should mean reaping even higher yields in the new year.
More information can be read on the article below from Inside Housing.
Inside Housing - News - Autumn Statement: chancellor to unfreeze LHA rates
*What is Local Housing Allowance?
The LHA ‘rate’ is the maximum amount of housing benefit that a private renter can claim to help pay their rent. In theory, LHA is designed so that tenants will get enough housing benefit to cover the cost of renting a typical home in their area, that is large enough for their needs.
When a claim for housing benefit is submitted, they receive either:
This is why it is so important that local housing allowance rates are set appropriately and in a way that matches local rents, so that renters are not put at risk of homelessness.
This is the technical way of describing the cost of renting one of the cheaper homes in an area. Imagine randomly selecting 100 homes in an area, and lining them up from cheapest to most expensive… The cost of renting the home that is 30th from the bottom would be the 30th percentile rent.
It means that LHA will cover the rents of up to three in every 10 homes in an area.