The Department for Work and Pensions changed the rules for calculating housing benefit for new claims from private tenants made after 7 April 2008. The new scheme is called Local Housing Allowance.
What is Local Housing Allowance?
Local Housing Allowance (LHA) is a new way of working out housing benefit for tenants who pay rent to a private landlord. LHA is a flat rate allowance towards rent costs based on the area where the tenant lives and the size of their family. This avoids the need for The Rent Service to examine every property and decide on the level of rent that is eligible for housing benefit in each case. Payment of benefit under the LHA rules will normally be to the tenant, who will then pay the landlord.
Who is affected by the Local Housing Allowance?
LHA is used to work out housing benefit for all new claims received on or after 7 April 2008, except for the cases listed below. LHA also applies to claimants already in receipt of housing benefit if they move home and claim benefit at their new address or they have a break in claim.
LHA does not apply to tenants who:
pay rent to the council
pay rent to a registered social landlord (eg, housing associations)
pay a rent that has been registered as a ‘fair rent’
have a tenancy that is excluded from the current housing benefit rent restrictions (such as pre-1989 tenancies)
live in a hostel, caravan, mobile home or houseboat
How are the LHA rates worked out?
Each local authority is divided into areas called Broad Rental Market Areas (BRMAs). The Rent Service sets monthly LHA rates for different size properties in each of these areas.
These are published by the Rent Service and ourselves so that landlords and prospective LHA customers can find out the maximum amount of rent that will be used to calculate housing benefit.
People looking for accommodation will be able to see the LHA rate that will apply to them, before deciding whether to rent a property.
The amount of LHA that a tenant may receive for depends on:
the area they live in – this will establish the BRMA they fall under
who lives with them – this will determine the size of property they are allowed
Property size
When deciding the correct property size, the claimant is allowed one bedroom for:
A single claimant
every adult couple (married or unmarried)
any other adult aged 16 or over
any two children under age 10
any two children of the same sex under the age of 16
any other child.
Claimants aged under 25 years who live alone
Single claimants aged under 25 years are entitled to the standard rate for a room in shared accommodation. This is based on properties where the tenant has a room of their own but shares all or some of the facilities (for example, a living room, kitchen or bathroom).
This is known as the shared Local Housing Allowance rate.
How much Local Housing Allowance will I get?
The claim is based on the LHA rate applicable for the month the benefit claim is made. The amount of benefit you get will depend on your income, savings and circumstances. There is no change to the benefit entitlement rules. In some cases the LHA rate may be higher than the actual rent the customer pays. The maximum excess amount has been limited to no more than £15 a week above the actual rent. If you decide to move into a property with a rent that exceeds your LHA, you will need, as you do now, to make up the difference yourself. But if your rent is below your allowance and you are entitled to maximum housing benefit, you will be able to keep any difference of up to £15 a week more than your actual rent.
How does the Local Housing Allowance affect landlords?
As well as the amount of housing benefit that can be paid, the main change for landlords is that LHA will usually be paid to you, the tenant. You will then be responsible for paying your rent to the landlord. It will no longer be possible to make direct payments to the landlord just for your convenience.
Safeguards
Safeguards will be put in place to protect tenants that may struggle with the responsibility of paying their rent. We have the authority to make payment direct to a landlord where evidence is provided to support this course of action.
Some circumstances where we may decide to pay housing benefit direct to a landlord:
If we consider that the tenant is likely to have difficulty managing their own affairs. Examples of this could include vulnerable tenants, such as those with disabilities.
If we think the tenant is unlikely to use their housing benefit to pay their rent. This could be if we know the tenant has consistently failed to pay their rent in the past.
If the tenant has built up rent arrears of more than eight weeks, we will decide to make payments direct to the landlord.
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