Landlords and Managing AgentsWhat is Local Housing Allowance (LHA)?
From 07 April 2008 housing benefit for those who live in privately rented accommodation will change. The new way of calculating housing benefit will be called Local Housing Allowance, or LHA.
LHA is being introduced by the government, not Southwark Council the changes are being introduced right across the country from this April but housing benefit will continue to be administered by local councils, as it is now. Southwark Council will be responsible for administering housing benefit – including LHA – for residents of Southwark who need help paying their rent.
The changes will only affect those living in privately rented accommodation and claiming housing benefit on, or after, 07 April 2008. Those who are already claiming housing benefit, or who claim it before 07 April 2008, will continue to have their HB paid under the existing rules for so long as they continue to claim at their current address.
What are the main changes compared with the existing HB scheme for private sector claimants?
Unlike the current HB scheme, Local Housing Allowance is based on a flat rate for a particular 'area' the technical name for which is the Broad Rental Market Area, or BRMA, but which will be referred to in this booklet as the 'area'. The London Borough of Southwark as whole will form part of a single 'area' that will also include parts of some other south London boroughs. This means that the same LHA flat rate will apply irrespective of where in Southwark a property is located.
LHA flat rates are based on a combination of current market rent levels within the 'area' and the actual housing needs of the claimant. This means that LHA rates should be high enough to meet the cost of exactly half of all rented properties in Southwark. The LHA scheme was piloted in a number of areas around the UK, including London Borough of Lewisham which borders Southwark to the east. In those areas the greater generosity of the scheme has been broadly welcomed as reducing tenants and landlords problems with benefit shortfalls, i.e. where the maximum HB payable was not sufficient to meet the actual rent. The overall impact of LHA in the pilot areas was to make tenancies more sustainable and to widen housing choice for the least well off residents.
Under the new LHA scheme, housing benefit will, in the majority of cases, be paid to the tenant rather than the landlord. This marks a major change as, under the current rules, housing benefit is usually paid direct to the landlord. However in the areas where LHA was piloted there was no evidence that this change resulted in higher, overall levels of rent arrears among those claiming HB. In addition there will be exceptions to the new rule on paying housing benefit to the claimant. Southwark Council has drawn up an LHA Safeguards Policy that is designed to ensure that vulnerable tenants and those judged unlikely to pay their rent for other reasons continue to have their housing benefit paid direct to their landlord. That policy is set out in full on the Safeguards Policy page. It explains how any landlord or tenant may ask for housing benefit to be paid direct to the landlord. The policy also includes information on how landlords and tenants can appeal where they disagree with the Council’s decision to make payments to the tenant.
Why is Local Housing Allowance being introduced?
The government is making these changes because it has decided that the existing Housing Benefit scheme for those renting in the private rented sector has not served the interests of tenants, landlords, or the wider community, well. Some of the reasons the government has given for the change are set out over.
Fairness: Under the previous HB scheme landlords and tenants frequently complained that there was a shortfall between the amount of HB paid and the actual rent charged. The new scheme will link housing benefit levels for those living in privately rented accommodation more closely to market rent levels in that “area”. Under LHA rules, the same amount of housing benefit will usually be paid to tenants with similar circumstances living in the same area. For example in Lewisham where LHA has been piloted for the last three years, the number of shortfalls fell by more than half following the introduction of the LHA scheme.
Transparency: Under the previous HB scheme landlords and tenants often found it difficult to know in advance how much housing benefit a tenant would be entitled to. Landlords were understandably reluctant to enter into a tenancy unless they were confident that the benefit would be sufficient to allow the tenant to meet the cost of the rent.
Under the new scheme, LHA flat rates for Southwark will be freely available to both tenants and landlords, allowing both to form a much clearer view of how much housing benefit would be payable in the event of a tenancy being entered into.
Simplicity: Under the previous HB scheme tenants and landlords frequently complained about delays in having housing benefit paid. Delays were partly due to the fact that all housing benefit claims from those living in private rented accommodation had to be referred for valuation to the Rent Service, an independent agency that was not part of the Council. Valuation entailed a number of complex rent determinations and restrictions which contributed to delays in actually paying housing benefit. Under LHA all those determinations and restrictions will be abolished and it will no longer be necessary to refer individual cases to the Rent Service. This means that benefit should be paid much more quickly.
Personal Responsibility: Under the old HB scheme landlords frequently complained that they were liable to repay housing benefit overpayments even where the overpayment was the fault of the tenant. Under LHA benefit will simply be paid to the tenant in most cases, usually by means of BACS. The government is worried that the practice of paying HB direct to the landlord has undermined personal responsibility and fostered dependency among benefit claimants. The government wants to hand responsibility for budgeting and paying rent back to the tenant in the great majority of cases. However the government also recognises that there need to be safeguards in place for those who are vulnerable, or who are unlikely to pay their rent for other reasons.
Local Housing Allowance is based on a flat rate. How is that flat rate worked out?
The LHA flat rate for Southwark will be calculated by regularly reviewing market rents for different sized properties across the “area”.
The LHA flat rate will be based on the midpoint between the highest rent (£) and the lowest rent (£) for a property of a particular size in that “area” (see map on page 10 of this leaflet for the “area” that includes Southwark).
You can find a list of the current LHA rates for all types of properties in Southwark on our LHA Rates page. From April 2008 all LHA rates will be reviewed and where necessary changed each month to take account of any changes to market rents in the “area”.
It is not expected that LHA rates will change significantly from month to month but any changes that do occur will be published monthly on the Council’s web-site. Please note that this does not mean that HB payments to your tenants will change from month to month. Once we’ve awarded LHA based on a flat rate, that rate will be fixed for at least one year The flat rate LHA allowance payable to any housing benefit claimant will be based on the “bedroom need” of our customer - your tenant.
“Bedroom need” will be worked out based on the following
- Adult Couple = 1 bedroom
- Other Adult = 1 bedroom
- Young Person 16-18 = 1 bedroom
- Two Children of the same sex e.g. two boys = 1 bedroom
- Two Children aged 9 or under = 1 bedroom
- Any other child = 1 bedroom
Example 1 – a couple will be deemed to have a one bedroom need and the “one bedroom” LHA flat rate will apply.
Example 2 – a couple with two teenage children – one boy and one girl – will be deemed to have a three bedroom need and the “three bedroom” LHA rate will apply.
Example 3 – a female single parent with two children aged under 10 and one child aged 14 will be deemed to have a three bedroom need and the “three bedroom” LHA rate will apply.
Example 4 – a couple with three children all aged 9 or under will be deemed to have a three bedroom need and the “three bedroom” LHA rate will apply. In this example two of the children would be expected to share a room while the third would require his or her own room. Under LHA rules there are no circumstances in which three or more people of any age would be expected to share one bedroom.
Example 5 – a lone parent with four children - a girl aged 5, a boy aged 7, a boy aged 12 and a girl aged 14 will be deemed to have a three bedroom need and the “three bedroom” LHA rate would apply. In this example the two girls and the two boys would be required to share a room.
Example 6 – a couple with three children: two girls aged 17 and 14 and a boy aged 12 would be deemed to have a four bedroom need and the “four bedroom” LHA rate would apply. In this example each child would require his or her own room. This is because the eldest child is over 16 and classed as young person and because the other children are different sex and aged 10 or over.
Who decides Local Housing Allowance rates?
Local Housing Allowance rates will be decided by the Rent Service, an independent agency specialising in valuation of rented property. Rates will be reviewed and where necessary updated each month.
Contact us
By telephone
020 7525 1880 - housing and council tax benefit
020 7525 1850 - council tax
By post
Council Tax Section
London Borough Of Southwark
P.O. Box 782
Bromley
BR1 3YE
Please indicate which department your query is for.
In person
Bermondsey One Stop Shop
Spa Road
Bermondsey
SE16 3QN
Peckham One Stop Shop
Ground Floor
Peckham Library
122 Peckham Hill Street
SE15 5JR
Walworth One Stop Shop
151 Walworth Road
London
SE17 1RY
Dulwich Area Housing Office
41-43 East Dulwich Road
Dulwich
SE22 9BY
All one stop shops are open from Monday to Friday, 9am to 5pm. In addition, Peckham one stop shop is open on Saturday, 9am to 1pm.
By email
Housing/council tax benefit: souhousingbenefitsuk@liberata.com
Council tax: Soucounciltaxuk@Liberata.com |