Setting the Local Housing Allowance Rate

New regulations come into force on 1 September 2013 which will change how Local Housing Allowance (LHA) rates are set in future.

Since 2011, LHA rates have been set using the lowest 30% of rents (the 30th percentile) in selected geographical areas known as Broad Rental Market Areas.

Further changes were introduced in 2012 to allow the rate of LHA to be frozen for a year and to have it linked to the Consumer Price Index.

End of Linking to Consumer Price Index

However, linking to the Consumer Price Index is being abolished and, instead, from next year LHA rates will be set at the lower of:

• The 30th percentile of rents in the area; or
• The previous year’s LHA rate, increased by 1%

The new rates will be set on the 15 January each year and then take effect in April; starting in April 2014.

The Explanatory Memorandum (a note which explain the legislation) to the Housing Benefit (Executive Determinations) (Amendment) Regulations (NI) 2013 states, “The purpose of this change is to continue to exert a downward pressure on rents by reducing growth in Housing Benefit expenditure and to bring the uprating of LHA rates in line with other benefits by restricting increases to 1 per cent.”

The DSD is due to issue a Memo on this change in the near future.