Local housing allowance landlord information

Questions and answers for landlords

From 7 April 2008 Housing Benefit in the private rented sector is changing, and is being replaced by the new Local Housing Allowance (LHA). The changes will affect how Housing Benefit is calculated and how it is paid.

What is the Local Housing Allowance?

The LHA is a new way of deciding rent payments for people receiving Housing Benefit. It does not replace Housing Benefit.

It is based on the rent levels for the area a person wants to live in and on the number of people that live with them. There is no change to entitlement rules, these will still be based on a person's income, savings and proof of rent.

Why are the changes being made?

The LHA is part of the Government's agenda to modernise public services and will help to give everyone access to decent housing. The fundamental objectives of the LHA are to promote:

  • fairness

  • choice

  • transparency

  • personal responsibility

  • financial inclusion

  • increased work incentives

  • simplicity.

What are the rates based on?

Different LHA rates will apply in different areas. Within those areas, the rate will be based on the average rent charged by private landlords for properties of various sizes.

LHA rates will be further broken down into 'room rates' that will apply depending on the size of the household, including any non-dependants.

The size of the household will be based on allowing one bedroom for:

  • every adult couple

  • every other adult who is not part of a couple

  • any other adult aged 16 or over

  • any two children of the same sex

  • any two children regardless of sex under the age of ten

  • any other child.

The number of living rooms, kitchens and bathrooms is ignored for the purpose of the size criteria.

How is the Local Housing Allowance calculated?

It is calculated by the Rent Service for individual areas, known as Broad Market Rental Areas, each month. It is based on the average rental figure for that particular area depending on the size of the property.

Once the Rent Service has determined the rate for an area, an individual claimant's benefit will depend on their age and the size of their household. For example a person under the age of 25 will receive the shared room rate, whilst a couple with one child will receive the two room rate.

Can I appeal against the calculation?

No. Because the Broad Rental Market Area covers other tenants, any appeal could ultimately change the LHA rate for tenants who have not appealed and are content with their allowance.

Who doesn't the Local Housing Allowance cover?

If you are a landlord providing accommodation in one of the following types of tenancy, your tenants will be exempt from receiving the LHA:

  • registered social landlord tenancies
  • protected cases, such as supported housing, provided by certain councils, social landlords, charities and voluntary organisations
  • tenancies which are excluded from current rent restrictions (such as pre- 1989 tenancies)
  • exceptional cases such as caravans, houseboats and hostels
  • cases where the rent officer judges that a substantial part of the rent is attributable to board and attendance (e.g. hotel accommodation which already exists in the private sector).

Tenants renting within these sectors will continue to receive Housing Benefit calculated under existing rules.

When are the changes being introduced?

The new scheme is being rolled out nationally from 7 April 2008.

When will Local Housing Allowance rates be published?

Details of the rates will be available from our website or by telephoning the Benefit Service on 01483 755855.

Will benefit claims be transferred to Local Housing Allowance rates right away?

No. Tenants will continue to receive benefit under existing rules until a change occurs, for example if they have a break in their claim of one week or more or they move to a different address.

If there is a death in the household, and the change would result in a reduced LHA, the Council will protect the tenant for 52 weeks from the date of death at their current rate

What if the customer's benefit is higher than their rent?

They may keep any of the excess that they are paid up to a maximum of £15 per week. This excess will not normally be taken into account when deciding other benefits.

What if the customer's benefit is lower than their rent?

You may ask them to make up any shortfall out of their other income. If the tenant previously paid their rent without any support from Housing Benefit in the past year, they will be entitled to an initial 13 weeks of benefit to cover the full rent without any restrictions.

What if there is a contractual rent increase in the middle of the year?

The rate of benefit that your tenant receives is a flat rate allowance based on the rate for the area, rather than the rent you charge. This means that your tenant's LHA rate will not change, even if the rent you charge does.

Who will benefit be paid to?

In the vast majority of cases benefit will be paid to the tenant. They will be responsible for making their own payments of rent to you. In certain circumstances benefit can be paid directly to you.

What are these exceptions?

The Council will have the discretion to pay rent directly to you, where there is evidence the tenant would be unlikely to pay their rent or where making direct payments would be in the interest of the tenant. The following factors may be considered when deciding whether direct payments should be made.

  • The tenant may have learning difficulties, a medical condition or educational needs that suggest that they may have difficulty in handling their own financial affairs.

  • They may not be able to read or have language difficulties.

  • They may suffer from drug or alcohol addiction, or have debt problems.

It should be noted that the existence of any of these factors does not necessarily mean that rent should be paid directly to you. Tenants may have demonstrated, through their past behaviour, that it is improbable that they will pay their rent. In these cases the Council may make payments direct to you.

If eight weeks rent arrears are owed, the Council will arrange to make payments direct to you, unless it is not in the tenant's overriding interests to do so. However, you are encouraged not to wait for the eight week period before contacting the Council.

What if I prefer to have the rent paid direct to me?

The choice of having the payment made directly to the landlord will not exist under the LHA.

If I receive the payment of rent direct to me, will I be paid any of the customer's excess as well?

Not normally. Where a payment is made direct to you it must not include any amount above which the tenant is liable to pay in rent. If there are rent arrears, any excess may be paid to you, but only until the arrears are paid off.

Will appeals against direct payment decisions be allowed?

Yes. Both you and your tenant, as persons affected by the decision, may appeal against any decision about whether or not to pay rent direct. Appeals can also be made against decisions on vulnerability.

If I receive payment directly, would the Council pay me any amount already received by the tenant?

No. Even if you win an appeal, the Council will not make duplicate payments of benefit. Direct payments would be made from an acceptable date in order to ensure that no overpayment occurs.

If I ask for eight weeks rent in advance, is the Council obliged to pay me directly?

A tenant cannot be in rent arrears in respect of a period that has not yet been served. Direct payments should only be made to a landlord where 'the person is in arrears of an amount equivalent to eight weeks or more of the amount he is liable to pay his landlord as rent'.

Additionally, the requirement to pay directly is intended as a safeguard to protect vulnerable tenants, as well as legitimate landlords. Remedial action may be taken if there is evidence that this safeguard is being abused.

How will overpayments be recovered?

The rules on the recovery of overpayments are not being changed. Currently:

  • benefit overpaid to a landlord can be recovered from either the landlord or the tenant, as the Council chooses

  • benefit overpaid to a customer can be recovered only from the tenant.

Most customers will receive benefit directly. Therefore, most overpayments will be recovered from the customer and not the landlord.

If you require any further information on the Local Housing Allowance Scheme or Housing Benefit, please contact Benefit Services on 01483 755855.