Local Housing Allowance freeze support for families

The Scottish Government recently announced an £8.7million Discretionary Housing Payment (DHP) funding package to support families in the private rented sector (PRS) with the Local Housing Allowance (LHA) rates freeze.

LHA rates determinate how much benefit claimants are paid for their housing costs. The UK government hasfrozen LHA rates for 2026-27 at 2024-25 levels. This will lead to an increasing gap between LHA rates and the 30th percentile of market rents which LHA rates are normally aligned with.

It is estimated that the £8.7million funding package could benefit up to 15,000 households with 26,000 children by the end of 2026-27, covering the cost of the freeze for families in Scotland.

This funding is intended to support households who meet all four of the following criteria:

1. they are families with children resident at the property
2. they live in the private rented sector
3. they receive Housing Benefit or Universal Credit (with a housing element)
4. they have a gap between the LHA rate they receive and either their actual rent or the 30th percentile of market rent.

Households do not need to prove hardship, and an income and expenditure assessment will not be required.  

All households meeting the eligibility criteria can be assisted using this funding. SAL members who think their tenants might be eligible are encouraged to signpost them to their local authority’s website where they can submit an application for DHP. A link to all the local authorities’ DHP application procedures can be found at https://www.mygov.scot/discretionary-housing-payment.

Level of support for households

This funding is intended to make up the shortfall between the actual level of LHA and the current 30th percentile of market rents (as published by Rent Service Scotland on 30 Jan 2026) or a household’s actual rent where that is less than the 30th percentile.

Examples:

1. if the weekly LHA rate is £100, the 30th percentile is £150, and a household’s rent is £125, this funding will cover the £25 gap between LHA and actual rent;
2. if the weekly LHA rate is £100, the 30th percentile is £150, and a household’s rent is £200, this funding will cover the £50 gap between LHA and the 30th percentile;
3. the weekly LHA rate for a four bedroom property in broad rental market area (BRMA) Aberdeen and Shire is £287.67, however, the 30th percentile of rents is £322.19. Therefore, a family in a four bedroom house (where the rent is at, or above, the 30th percentile) would be eligible for a DHP of £34.52.

Local authorities can use their discretion to make payments for rent amounts above the 30th percentile, but those payments would need to come from pre-existing DHP funding rather than the newly allocated £8.7million, provided that other requirements for an award of DHP continue to apply.

Local authorities can determine the length of the DHP award, up to the end of the 2026-27 financial year. Payments can be backdated to 1 April 2026 if the household was eligible during the period of backdating.