A new form of Housing Benefit known as Local Housing Allowance (LHA) was introduced from 7th April 2008. The new scheme is for tenants within the private rental sector and only applies to:
- Tenants who do not currently receive Housing Benefit and make a new claim, or
- Tenants who do currently receive Housing Benefit and who have a break in their Housing Benefit entitlement or change address
Thus, tenants who currently receive Housing Benefit will remain on the old scheme as long as they do not move or have a break in their entitlement on or after 7th April 2008.
Why are you introducing LHA?
This scheme has been introduced by Central Government and has been designed to promote fairness, choice for tenants about where to live, transparency, personal responsibility, increased work incentives and simplicity.
How does LHA affect Landlords?
The main change for most landlords is that LHA is paid to the tenant. The tenant is therefore responsible for paying their rent to the landlord.
Why is Central Government removing a landlord’s right to receive payment of Housing Benefit direct from the local authority?
There has never been a right in legislation for a landlord to receive Housing Benefit payments direct. However there has always been a right for tenants to request their Housing Benefit be paid to their landlord and it is this that has been replaced.
It is believed that tenants in receipt of Housing Benefit should, where they are able to, take greater responsibility for managing their financial affairs in the same way that other tenants do. This should also help to equip people of working age with the skills they will need to move into work.
What safeguards do you have in place to ensure that landlords are paid?
There is recognition that some tenants may struggle with the responsibility of paying their rent. Safeguards will be put in place whereby local authorities can decide to make payment direct to landlords in a number of circumstances, including :
- If we consider that the tenant is likely to have difficulty managing his or her own affairs. (Examples could include tenants with a learning difficulty or a drug or alcohol problem.)
- If we consider that the tenant is unlikely to use their LHA to pay their rent. This could be based on the fact that the authority knows that the tenant has consistently failed to pay their rent in the past.
- As per the current Housing Benefit scheme, if the tenant has built up rent arrears of 8 weeks or more. The Local authority can then decide to continue making payments direct to the landlord after the arrears have fallen below 8 weeks.
- Where the tenant’s LHA exceeds the rent and the tenant has rent arrears, the Local authority can pay the landlord the excess until such time as the rent arrears are cleared.
- If the tenant is having deductions from their Income Support or Job Seekers Allowance to pay off rent arrears.
- If the tenant has left the property with rent outstanding and prior LHA payments remain due.
To implement any of these new and existing safeguards Epsom & Ewell Borough Council will need to have documentary evidence.
Any safeguard applied will be reviewed periodically and fresh documentary evidence may be required at such a time.
Will you consider making payments in advance?
There are no plans to make LHA payments in advance. Paying Housing Benefit in arrears aligns it with other social security benefits, and with most other forms of income such as earnings.
Can I ask for my tenant to be classified as someone who will have difficulty managing his or her own affairs?
Yes, if you consider your tenant to be vulnerable in this way. Epsom & Ewell Borough Council will want to investigate the tenant’s circumstances and may want to interview them and gather other evidence (for example from a GP or social workers) before making a decision.
Who is to judge that a claimant is unlikely to pay his rent?
It will ultimately be for Epsom & Ewell Borough Council to decide whether the claimant is unlikely to pay his or her rent. This decision can only be made once the evidence of past failure, and/or the likelihood of future failure, to pay rent has been received.
Who is to say whether a tenant is “vulnerable”?
Epsom & Ewell Borough Council will decide if a tenant is vulnerable. There must be evidence that the tenant cannot manage their money. Evidence must usually be in writing. Representatives for the tenant who can provide evidence include (this is not an exhaustive list);
- The tenant
- Friends and family of the tenant
- The landlord
- Welfare Groups (including money advisers)
- Social Services
- General Practitioners
- Probation Officers
- Job Centre Plus / The Pension Service
Epsom & Ewell Borough Council will work closely with all interested parties in making any decision.
How long will you take to decide who you will pay LHA to?
Once all the information has been collated Epsom & Ewell Borough Council will decide as quickly as possible. We will write to the tenant and yourself, the landlord, with our decision.
Epsom & Ewell Borough Council will ordinarily pay LHA to the landlord while a decision is being made.
Can I appeal a decision to pay the LHA to the tenant?
Yes. If the tenant or the landlord disagrees with the authority’s decision on who to pay LHA to they can appeal.
Initially a new officer will look at our decision again. If our decision is changed to the advantage of the appellant then the appeal ends (and a fresh appeal is required if this new decision is to be challenged). If our decision is not changed to the appellant’s favour then the appeal is forwarded to the Appeals Service. (See the separate section on our website regarding appeals).
What help is there for tenants to manage their finances?
Epsom & Ewell Borough Council wishes to encourage tenants to be responsible for their own financial affairs, including paying their own rent. LHA will be paid to a bank or building society account so that they can arrange a direct debit or standing order to pay their rent. Information on basic bank accounts is readily available from the Benefit Section.
Will many tenants spend their Housing Benefit on other things and abscond?
Many tenants in the private rented sector already receive their Housing Benefit direct and regularly pay their rent on time. Indications from the pathfinder sites who have been operating the LHA for some time show that tenants are largely paying the rent to their landlords without problems.
Can I make a direct payment a condition of the tenancy?
The tenant does not have the power to implement this condition. The local authority is not party to the tenancy agreement between a landlord and tenant and thus the Local authority is not bound by any conditions in the tenancy agreement.
Any action taken by a landlord against a tenant who failed to secure direct payments would almost certainly be open to legal challenge by tenants on the ground that it is outside their scope or ability to deliver.
Will you pay any arrears directly to me?
Where 8 weeks or more of arrears have built up Epsom & Ewell Borough Council can make a direct payment to you. Where Epsom & Ewell Borough Council then consider that the tenant is unlikely to pay their rent, a decision can be made to pay future LHA to you even when arrears have been reduced or cleared.
Also, if a tenant’s LHA exceeds their rent and the tenant has rent arrears, the Local authority can pay the landlord the excess until such time as the rent arrears are cleared.
Will landlords be reimbursed by the council for any loss of rent due to non-payment by the tenant?
No. The aim of paying direct to the tenant is to encourage personal responsibility and to enable them to exercise the same choice as anyone else about where to live and how much of their total income to spend on housing costs. Any compensation fund for landlords would actively discourage tenants from acting responsibly. Moreover the DWP believes they have built appropriate safeguards for landlords and tenants alike.
Working out Entitlement – the size Criteria
The LHA is a flat rate maximum entitlement to Housing Benefit. The amount depends on the number of people living in the tenants household and the number of bedrooms that they need – referred to as size criteria;
One bedroom for;
- Every adult couple
- Any other adult aged 16 or over
- Any 2 children regardless of gender aged under 10
- Any 2 children of the same gender aged up to 15
- Any other child
For single tenants under 25 years old, there is a “shared rate” of LHA that replaces the single room rent. This rate applies to single people over 25 and couples with no other occupiers who chose to live in shared accommodation.
However - the maximum number of bedrooms that can be allowed will shortly be changing. Even if your tenant has enough people living in the property with them, that they would normally be allowed more than five bedrooms, benefit will be restricted to the Local Housing Allowance rate for a five bedroom property. This change is likely to be effective from April 2009.
The flat-rate is not dependent upon the actual rental amount of the property but is set at the median of market rents for that area. If the rent is higher than their LHA award the tenant will be responsible for making up the difference. If the rent is lower than their LHA award the tenant will be able to keep up to £15.00 a week of the difference. In the opinion of the EEBC Housing Department it is thought that this latter situation will occur in very few cases as the LHA is set at the median of market rents rather than on average rents. As a result prospective tenants will, as they are now, be hard pressed to find good, affordable accommodation in the private sector.
There are no changes to the Housing Benefits entitlement rules; this is still based on the person’s individual circumstances. The LHA is only the starting point of the calculation.
How are LHA Levels Calculated?
The Rent Officer Service uses areas known as Broad Rental Market Areas (BRMA) to set the level of Local Housing Allowance. Each Local Housing Allowance is the midpoint of the range of rents for all types of property with that number of rooms in the BRMA. A BRMA area will cover a number of neighbourhoods. In this broad area there will be a mix of property types and other places to live within a reasonable travelling distance of similar public amenities.
The Rent Service continually monitors the local rental market and collects details about properties available to rent and the rents that have been agreed for properties let recently. This information comes from different sources including letting agents, landlords and tenants, and a range of advertisements.
How do I find the LHA rates for my property ?
The Rent Service sets the Local Housing Allowance rates appropriate to Epsom & Ewell Borough Council towards the end of the month before they become applicable. They are reviewed monthly. The Rent Service passes the rates to Epsom & Ewell Borough Council just before the start of the month to which they apply. Epsom & Ewell Borough Council publicises them on their website, within the Town Hall, and at Epsom Citizens Advice Bureau and other sites.
The property’s postcode is used to confirm which BRMA it falls under.
What appeal rights do I have against the BRMAs?
There are no appeal rights against the BRMAs set by the Rent Service.
What appeal rights do I have against the LHA Rates?
There are no appeal rights against the Local Housing Allowance rates set by the Rent Service.
How can I get more information?
If you require more information do not hesitate to contact the Housing Benefit Section on 01372 732269 or via email : benefits@epsom-ewell.gov.uk.
Related Links
Link to Local Housing Allowance
Local Housing Allowance rates
Information for Landlords