DWP allows £45 million LHA increase

The move, which includes a 4 per cent rise in certain parts of London, will see previous savings recycled to increase local housing allowance rates.

LHA, housing benefit paid to tenants renting from private landlords, was capped in 2011 at the lowest 30 per cent of market rents.

Between 2014 and 2016, it was only due to be uplifted by 1 per cent annually, regardless of increases in market rent.

But after consulting with local authorities the DWP has agreed to inject £45 million to lift 126 LHA rates across 83 areas.

A total of 35 of these areas are in London, and will receive the full 4 per cent rise. There are 70 LHA areas in London overall.

Mayor Jules Pipe, chair of London Councils, which represents London’s local authorities, said: ‘Housing costs in the capital are spiralling at a rate well above any other region, so it is very welcome that the share of the money given to London reflects this crisis and the fact housing is now the top concern for Londoners.

‘Unfortunately the overall local housing allowance cap leaves a real gap between what is actually ‘affordable’ and what help is offered. Many Londoners will still face an uncertain Christmas as they struggle to afford a roof above their head.’

A spokesperson for the DWP said: ‘We have been very clear that we help certain areas with affordability following our necessary housing benefit reforms. But in the majority of areas, housing benefit will remain uprated by 1 per cent to continue the downward pressure on rents and housing benefit expenditure.

‘If unreformed, expenditure on housing benefit would be over £26 billion by 2014/15.’