On 15 December 2009 the Department for Work and Pensions launched its housing benefit consultation exercise: ‘Supporting people into work: the next stage of Housing Benefit reform’. The consultation concluded on 22 February 2010. The Department will consider the detailed policy design of any new measures, including any changes to the calculation of local housing allowance rates, once it has considered all responses.
The local housing allowance was rolled out from 7 April 2008 and is a more transparent way of calculating the rent element of housing benefit for people living in the deregulated private rented sector. The local authority uses the appropriate local housing allowance rate, based on the area where the person lives and the size of their household, to determine the maximum amount to be included in the housing benefit calculation. This rate is currently based on the median of rents within the local area. However, customers in some areas have benefited more than others from the local housing allowance, and high rents in some areas have driven up benefit rates. As part of its consultation exercise, the Department for Work and Pensions asked its stakeholders for input into how local housing allowance rates should be set in future to ensure customers can afford decent but not luxurious accommodation.