Local Housing Allowance (LHA) - A Guide for Tenants

Local Housing Allowance is a new way of working out Housing Benefit for people on low incomes who rent from private landlords. LHA is based on the number of rooms people are allowed, not how much the rent is. The number of rooms allowed depends on who lives with you.

When is the LHA being introduced?
Local Housing Allowance is due to be rolled out nationally on 7th April 2008. If you already claim Housing Benefit you will continue to receive benefit under the existing rules unless you change address or have a break in your claim.
LHA will affect all new claims (made from 8 April 2008) for Housing Benefit unless your tenancy is exempt - see below

Will I be affected by LHA?
LHA will affect you and your landlord if you entered into a deregulated tenancy after 1989 (unless your tenancy falls into a specified category below). A deregulated tenancy is one that commenced after January 1989.

LHA will not affect you if:-

• Your tenancy started before 1989
• You rent from a Housing Associatio
• Your tenancy is protected. For example, you live in supported housing provided by certain social landlords or charities
• You live in a caravan, houseboat or a hostel
• Your tenancy includes a substantial amount of board e.g. Bed and Breakfast

If you feel that you fall into one of these categories your Housing Benefit will be worked out using the existing rules.

Why is LHA being introduced?
The Government states that "Housing Benefit has long been criticised as an extremely complex benefit that does little to promote personal responsibility and can act as a barrier to work".
The objectives of LHA are to promote:-

• Fairness: LHA has been designed to pay the same amount to tenants with similar circumstances living in the same area. This differs from the current Housing Benefit scheme, which ties the level of benefit to rent actually charged for a property.
• Choice: Tenants are able to take greater responsibility and choose how to spend their income in a similar way to tenants who are not in receipt of benefits. Tenants can choose whether to rent a larger property or spend less on rent and increase their income.
• Transparency: The current link between Housing Benefit and individual rents is complex and does not set out clearly what level of support is available for people on low incomes. With LHA tenants (and landlords) can find out in advance exactly how much benefit can be paid towards housing costs in different areas and for different sized properties.
• Personal responsibility: Empowering people to budget for and to pay their rent themselves, rather than having it paid for them, helps develop the skills unemployed tenants will need as they move back into work.
• Financial Inclusion: Ideally, we want people to have their housing payments paid into a bank account and to set up a standing order to pay the rent to their landlord. This has the advantage of being a safe and secure method of payment and provides certainty for landlords that rent will be paid.
• Reduced barriers to work: Greater certainty about what in-work benefit tenants could receive is expected to encourage customers to take the step from welfare into work.
• Improved administration: There will no longer be a need for the complex rent restrictions and individual referral of rents to rent officers that currently contribute to the delay in processing claims by private tenants. The LHA scheme is simpler for local authorities to operate and for tenants to understand.

What's different about Local Housing Allowance?
Local Housing Allowance gives you more choice
You will be able to choose the quality and price of your accommodation and shop around with you LHA. It is up to you how much of your LHA you want to spend on renting a property.

Usually LHA is paid directly to you and not your landlord. You are responsible for paying your rent to the landlord. If your LHA is more than your rent, you can keep the difference (up to £15 per week). Any extra money you get will not be taken into account for benefit purposes.

If you are looking for somewhere to rent you can choose to:-

• Pay more than the LHA to rent a more expensive property
• Rent a property where the rent is lower than the LHA and you can use the difference for other things (you can keep up to £15 per week) or
• Look for somewhere suitable where the rent is the same as the LHA

Local Housing Allowance is clearer - if you move within the same area you will usually get the same amount of LHA. By knowing how much LHA you are entitled to before you look for a new property will help you decide what property you can afford.

How is LHA paid?
LHA is usually paid directly to you. You are then responsible for paying the rent to your landlord. Only in exceptional circumstances can we pay LHA directly to your landlord.

You must agree with your landlord about how and when you will pay your rent. Being responsible for paying rent to your landlord gives you greater opportunity to negotiate with your landlord about how much rent you pay.

We will pay your benefit straight into your bank account. If you do not have a bank account then you will need to open one. As well as receiving your Housing Benefit faster and more securely, a bank account will give you a route to many other banking services. Even if you cannot open a current account you may be able to open a basic bank account with one of the high street banks.

For more information about basic bank accounts, please visit the Financial Services Authority website www.fsa.gov.uk

If you have a bank account there are a number of ways in which you can pay your rent to your landlord.

• Set up a Standing Order or Direct Debit. This is the easiest was to ensure that your rent is paid on time
• Pay by cheque if you have a cheque book or
• Pay your landlord with cash that you have withdrawn from the bank

You should talk to your landlord about how he or she would prefer you to pay the rent.

Will all payments be made to tenants?
No. We appreciate that there will be occasions when it is more appropriate to make the payment direct to the landlord and safeguards have been put in place to ensure that this happens. Payments will be made to landlords where:-

• The tenant is vulnerable and unable to manage their affairs
• The tenant is unlikely to pay their rent
• The tenant is in arrears by 8 weeks or more
• The tenant is having deductions made from Income Support or Jobseekers Allowance to pay off rent arrears
• If we need to issue a large one off payment on a new claim

In all cases, except for issuing one off payments, we will need to see evidence of these circumstances.

What do you mean by a vulnerable tenant?
The Department for Work and Pensions (DWP) define a vulnerable person as someone who is unable to manage their own affairs. Some examples include:

• Learning difficulties
• Medical conditions
• Illiteracy
• Drug / Alcohol / Gambling dependencies
• People leaving prison
• Care leavers
• Fleeing domestic violence

We will work with tenants, landlords and welfare / voluntary groups to:
Identify vulnerable tenants

• Seek written representation from approved sources
• Seek evidence of vulnerability from accepted sources
• Pay landlords directly where vulnerability is proven

We will make a decision on vulnerability on a case by case basis.

What do you mean by 'unlikely to pay their rent'?
Some examples include

• Previous history of rent arrears
• History of fraud
• On remand
• Severe Debt Problems / recent County Court Judgements
• Undischarged bankruptcy

In all cases we will:

• Identify and investigate unlikely payers
• Seek evidence of arrears and reasons why the tenant is unlikely to pay
• Make a decision to whom payment should be made
• Provide direct payment advice to the tenant
• Where payment is made to the landlord, review the decision within an appropriate time scale

What happens if I don't pay my rent?
If you do not pay your rent, your landlord can ask the courts to evict you from your home.

Eviction means that:

• You will lose your home
• You may have difficulty finding new accommodation as your landlord is unlikely to give you a reference
• You will still have to pay the landlord the money you owe and possibly extra money to cover any court costs.

How are LHA rates worked out?
The amount of LHA that you may receive depends on:

• Who lives with you
• The area you live in
• What money you have coming in
• What savings you have

How many rooms am I allowed?
LHA rates will be broken down into 'Room Rates' that will apply depending on the size of the household occupying the property, including any non-dependants. To calculate the size criteria you need to count one bedroom for the following people:

• Every adult couple (married or unmarried)
• Any other adult aged 16 or over
• Any two children aged under 10
• Any two children of the same sex aged up to 15
• Any other child

Single customers aged under 35 years will be entitled to the standard rate for a room in shared accommodation. This will be 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.