The Local Housing Allowance (LHA) is a way of deciding rent payments for people who receive housing benefit. It moves away from the existing system of rent service valuations (PTDs) and towards a flat rate tenant allowance.
This amount is not directly linked to the rent that you charge so the benefit your tenants receive may be the same or slightly higher than contractual rent.
LHA tenants are able to shop around with their LHA to find a suitable property. If the benefit received is higher than the contractual rent, then the claimant will be able to keep up to £15 per week.
The LHA is calculated monthly, by the rent service for large areas known as broad market rental areas (BRMAs). Hounslow is spread over 3 separate BRMAs. The allowance is calculated as the median figure for each property size on monthly rent data. Basing the LHA on median (middle-number) rent data should mean that exactly half the properties of any given size will be affordable to tenants who receive LHA. This number should also reflect the market as it rises or falls. For this reason it is important that landlords submit their data to the Rent Service.
Although new LHA figures are published every month, each claim is fixed for a 12 month period reflecting the usual length of an assured shorthold tenancy (AST).
Is the money be paid directly to the landlord or to the tenant?
In most cases the rent is paid direct to the tenant who is responsible for making their own payments of rent to their landlord.
In certain circumstances rent can be paid direct to the landlord:
As a safeguard - tenants with certain medical conditions or learning difficulties. This may potentially include tenants with drug or alcohol addiction or debt problems
People who have demonstrated, through past behaviour, that they are unlikely to pay there rent
If 8 weeks of rent arrears have built up - in this case the local authority can arrange for payments to be transferred direct to the landlord
Simplicity, transparency, responsibility
The LHA allows any landlord or eligble tenant to quickly find out what they can spend or charge in a particular area and complete the tenancy without waiting for an inspection.
Similarly the system is fairer as it enables the same allowance to be paid to any tenant within the same broad market rental area.