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This note covers Local Housing Allowance (LHA) which was introduced for new claimants living in the deregulated private sector from 7 April 2008. LHA is not a benefit in its own right – it is the way in which the rent element of Housing Benefit (HB) is calculated for tenants living in the deregulated private rented sector. Claimants who were already in receipt of HB when the LHA was introduced will not have experienced any changes unless they have changed address or had a break in their claims. This note explains the implementation of the LHA and reforms aimed at reducing expenditure on this benefit.

A separate note, SN/SP/3211, provides more detail on the specific issue of paying HB direct to private tenants rather than landlords while SN/SP/4887 considers issues around the impact of the HB size criteria rules on disabled people living in the private rented sector. A further note, SN/SP/5889, covers the extension of the Shared Accommodation Rate (SAR) to claimants under the age of 35 since January 2012.

The Government has introduced significant changes to the calculation of LHA entitlement which began to be phased in from April 2011. These changes are referred to in this note but a separate note, SN/SP/5638, deals with the subject in detail. Background on the introduction of Universal Credit, which will incorporate housing costs, can be found in Library Research Paper 11/24 Welfare Reform Bill: Universal Credit Provisions, Draft Universal Credit Regulations 2013 (SN/SP/6548) and Universal Credit: an introduction (SN/SP/6469).

The DWP published a Two Year Review of the Local Housing Allowance in February 2011 which considered how far the original policy objectives of the LHA had been achieved.

A further independent review of the changes announced in the June 2010 Budget is now underway; initial findings were published in June 2012: Monitoring the impact of changes to the Local Housing Allowance system of housing benefit: summary of early findings. An interim report, Monitoring the impact of changes to the Local Housing Allowance system of Housing Benefit followed in May 2013.

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