A new form of Housing Benefit, known as Local Housing Allowance (LHA), was introduced from 7 April 2008. The scheme is for tenants within the private rental sector.
Tenants who have continually received Housing Benefit from before 7 April 2008 will remain on the old scheme as long as they do not move or have a break in their entitlement.
What are the aims of 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 ordinarily 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?
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. For instance:
- Where the landlord has reduced the rent to an amount affordable under LHA so that the tenant may secure or maintain the tenancy
- 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/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 eight weeks or more, the local authority can then decide to continue making payments direct to the landlord after the arrears have fallen below eight weeks
- 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 these safeguards, Epsom & Ewell Borough Council (EEBC) will need to have documentary evidence.
Any safeguard applied will be reviewed periodically and fresh documentary evidence may be required at such a time.
Can payments be made in advance?
No. 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. EEBC 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 their rent?
It will ultimately be for EEBC 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”?
EEBC 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.
EEBC 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, EEBC will decide as quickly as possible. We will write to the tenant, yourself and the landlord, with our decision.
EEBC 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 tribunal service (see the separate section on our website regarding appeals).
What help is there for tenants to manage their finances?
EEBC 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 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, 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 the tenant; on the ground that it is outside their scope or ability to deliver.
Will you pay any arrears directly to me?
Where eight weeks or more of arrears have built up, EEBC can make a direct payment to you. Where EEBC 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.
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 Department of Work and Pensions (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 tenant's 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 two children regardless of gender aged under 10
- Any two children of the same gender aged up to 15
- Any other child.
For most single tenants under 35 years old, LHA is restricted to that of the Shared Accommodation Rate - see the following link. Housing Benefit for those under 35 years old leaflet (pdf - 708KB).
A maximum of four bedrooms can be considered in your tenant's application, even if the size of your tenant's family would normally require them to need more than four bedrooms.
The flat-rate is not dependent upon the actual rental amount of the property but is set at the 30 percentile 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.
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 Valuation Office Agency uses areas known as Broad Rental Market Areas (BRMA) to set the level of LHA. 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 Valuation Office Agency 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 Valuation Office Agency sets the LHA rates for the financial year.
The property’s postcode is used to confirm which BRMA it falls under.
Local Housing Allowance rates
What appeal rights do I have against the BRMAs?
There are no appeal rights against the BRMAs set by the Valuation Office Agency.
What appeal rights do I have against the LHA Rates?
There are no appeal rights against the LHA rates set by the Valuation Office Agency.
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: firstname.lastname@example.org