Local Housing Allowance (LHA) is the biggest change to the Housing Benefit scheme in the last 20 years.
What is Local Housing Allowance?
Local Housing Allowance (LHA) is a new type of Housing Benefit (HB) for tenants who live in privately rented accommodation.
It does not replace HB. It uses a flat rate allowance based on the size of the tenant’s household and the area in which they rent property to decide the amount of benefit they will receive.
This amount is not directly related to the rent that is charged so the benefit that the tenants receive may be higher or lower than the contractual rent.
The rate of LHA that customers receive will be reviewed on an annual basis.
Other circumstances, such as the money that the tenant has coming in or other people living in the household, will still affect the amount of benefit paid so the tenant may not always receive the full rate of LHA.
When is LHA being introduced?
LHA will come into effect on 7th April 2008.
What does the LHA scheme cover?
The new scheme will apply to Housing Benefit customers in the deregulated
private sector and mainstream private tenancies only.
The new LHA rules will not apply to:
Local Authority tenants
Registered social landlord tenancies (Housing Associations)
Protected cases, such as supported housing provided by certain local
authorities, 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).
Customers renting within these sectors will continue to receive Housing
Benefit calculated under existing rules.
Will all benefit claims be transferred to LHA rates right away?
Not straight away. Current tenants will continue to receive benefit under existing rules until
a change occurs ie if they have a break in their claim of one week or
more or
- they move to a different address.
Benefit will then be transferred to the new LHA scheme.
However, if there is a death in the household, and the change would result in a reduced LHA, the authority will protect the tenant for 52 weeks from the date of death at their current rate.
How is the LHA calculated?
The LHA is calculated by the Rent Service for individual areas, known as
Broad Rental Market Areas (BRMAs), each month. It is based on the median
rental figure for that particular area depending on the size of the property.
There will be 2 BRMAs within Carmarthenshire.
Who decides LHA rates?
Having set the BRMAs, Rent Officers are responsible for calculating the LHAs
for different sizes of property in that area. Once the Rent Service has
determined the LHA rates for an area, an individual customer’s benefit will
depend on their age and the size of their household. For example a person
aged under 25 will receive the shared room rate whilst a couple with one child
will receive the two-room rate.
LHA rates
There will be 6 LHA rates for each BRMA.
Shared room rate
1 Bedroom rate
2 Bedroom rate
3 Bedroom rate
4 Bedroom rate
5 Bedroom rate
Who will benefit be paid to?
Personal responsibility and financial inclusion are two key aims of the LHA. In
the vast majority of cases, benefit will be paid to the customer who will be
responsible for making their own payments of rent to their landlord. In certain
circumstances, benefit can be paid directly to the landlord.
What are these exceptions?
Local authorities will have discretion to pay rent direct to the landlord where
there is evidence that the customer would be unlikely to pay their rent and
making direct payments would be in the interests of the customer. The
following factors, which are not exhaustive, may be considered when deciding
on whether direct payments should be made:
As a safeguard. The customer 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 the landlord.
People who are unlikely to pay their rent. Customers may have
demonstrated, through their past behaviour, that it is improbable that they will
pay their rent. In these cases, a local authority may make payments direct to
the landlord.
If 8 weeks rent arrears have built up. If rent arrears are owed, the local
authority will arrange to make payments direct to the landlord unless it is not
in the customer’s overriding interests to do so. However landlords are
encourage not to wait for the 8 week period to be reached before contacting
the local authority.
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: The new scheme will generally pay the same amount to tenants with similar circumstances living in the same area.
Choice: Tenants will be able to choose between paying more to stay in a property that is larger or keeping the difference if they move to a cheaper property (to a maximum of £15 per week).
Transparency: It will be easier for tenants and landlords to know in advance how much rent could be covered by HB.
Personal responsibility: Paying the allowance to customers hands back
responsibility to them for budgeting and paying their rent themselves.
Accepting this responsibility while on benefit will make it easier to manage the move into work.
Financial inclusion: Most people will have their housing payments paid into a bank account and set up a standing order to pay the rent to their landlord.
Increased work incentives: Greater certainty about what in-work benefit you could receive will remove barriers to take the step from welfare into work.
- Simplicity: There will no longer be a need for complex rent determinations and restrictions that contribute to the delay in processing claims.
How long does an award of LHA last?
Your award will last for a year from your Housing Benefit start date unless a relevant change of circumstance happens.
For example:
- a change in the number of occupiers
- a change of address within the period of the LHA award
- there is a death in the household
Where to get more information
If you want to know more about the changes and how they affect you:
phone your Housing Benefit department on 08002889002
email us housing.benefit@Carmarthenshire.gov.uk
visit your nearest customer service centre at:
3 Spilman Street, Carmarthen
Ty Elwyn, Llanelli
Town Hall, Iscennen Road, Ammanford
visit www.direct.gov.uk
- Write to us at Housing Benefit Section, 2nd Floor, Ty Elwyn, Llanelli,
SA15 3AP