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 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. (* See LHA Changes April 2011)
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 was LHA introduced?
LHA came 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 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. (** See LHA Changes April 2011)
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.
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 ***
*** See LHA Changes April 2011 regarding 5 Bedroom rate changes
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.
- 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
- Write to us at Housing Benefit Section, 2nd Floor, Ty Elwyn, Llanelli,
Changes to Housing and Council Tax Benefit - April 2011
As part of its benefit reform programme, the Government has announced important changes to the Housing Benefit Scheme that will come into effect from April 2011. A summary of the changes is given below.
Changes that could affect all Housing Benefit and Council Tax Benefit claimants.
Other people living with you (not your partner or dependant child) - If you have a non-dependant living with you, for example, an adult son or daughter, usually over the age of 18 a charge is applied to your Housing Benefit and Council Tax Benefit called a non dependant
deduction which reduces the amount you are allowed.
From April 2011, the Government has announced substantial increases in the amount that will be deducted for non-dependants. Details of the deductions for 2010 and 2011 can be found by clicking on the link below -
Housing and Council Tax Benefit non-dependant deductions 2010/11 and 2011/12
Please Note – A non-dependant deduction will not be taken if you/your partner are registered blind, receive Attendance Allowance or the ‘Care’ component of Disability Living Allowance.
Changes affecting people who claim Housing Benefit under the Local Housing Allowance (LHA).
New claims made from 1st April 2011 the Government plans to:
• End the (up to) £15.00 weekly Housing Benefit top up paid to people whose rent is less than the Local Housing Allowance rate for the size of accommodation they need.
• Reduce LHA rates to the 30th percentile of rents in the area rather than at the median so that about 3 in 10 properties for rent in the area should be affordable to people on HB rather than every 5 in 10 properties as now.
• Remove the LHA rate for a five bedroom property, the maximum LHA rate will be for a four bedroom property instead.
• Reduce the amount of Housing Benefit you can receive by introducing maximum caps so that LHA weekly rates in any area cannot be more than:
- £250.00 for anyone needing a one bedroom property
- £290.00 for anyone needing a two bedroom property
- £340.00 for anyone needing a three bedroom property
- £400.00 for anyone needing a four bedroom or larger property.
Please note: Residents in Carmarthenshire will not be affected by these caps as our 'normal' Local Housing Allowance rates are substantially below these amounts.
• Allow an additional bedroom within the size criteria used to assess HB claims in the private rented sector when a disabled person, or someone with a long term health condition, has a proven need for overnight care and this is provided by a non-resident carer.
This means that if your family would normally be able to claim Housing Benefit for a two bedroom property but you need an overnight carer to stay in the property, you will be able to claim for a three bedroom property.
• Customers receiving the baby element in Housing and/or Council Tax Benefit but who for whatever reason are not receiving Child Tax Credit will lose entitlement to the baby element from 1st April 2011.
Existing claims will need to be reassessed when the corresponding baby element is removed from payment of Child Tax Credit on or after 7 April 2011.
Will I be affected by these changes?
Anyone making a ‘New claim’ for benefit from April 2011 will have their Housing Benefit assessed under the new rules. A new claim is made when:
• A person makes a brand new claim for the first time.
• A person moves into the Carmarthenshire area and claims Housing Benefit.
• A person has a change of address within Carmarthenshire and claims Housing Benefit at their new address.
• A person has a break in an existing Housing Benefit claim. Housing Benefit paid after the break will be assessed under the new rules.
Customers who are already receiving Housing Benefit under the LHA scheme before April 2011 will not be affected by these changes straight away, providing their circumstances do not change.
The LHA rate is normally reviewed once a year on the 'anniversary' of the claim. (However this can be sooner if a change in household size occurs).
For existing customers a period of up to nine months' transitional protection will be available after the review date providing this date is on or after the 1st April 2011.
A Housing Benefit claim is made in December 2010 and, because of the size of the family, benefit is based on the 2 bedroom LHA rate.
Rent = £80.00 per week
LHA = £100.00 per week
Maximum rent (LHA) = £95.00 (£80.00 plus £15.00 top-up)
The anniversary date of the claim will be in December 2011. The rate set for 2 bedroom properties would be based on the cheapest 30 per cent of the housing market for example - £75.00 per week
However the claim would continue to be based on £80.00 per week (being the weekly rent charged) for another 9 months until September 2012.
In September 2012, the transitional protection ends and the rent would be restricted to £75.00 per week.
Everyone claiming Housing Benefit under the Local Housing Allowance scheme will be on the lower rates of benefit by January 2013.
Please note: the protection will not apply to the removal of the £15.00 weekly Housing Benefit top up paid to people whose rent is less than the Local Housing Allowance rate for the size of accommodation they need. This will be removed on the anniversary date.
If you are concerned about the likely effect of any of these changes on your benefit claim, please contact us on housing.benefit@Carmarthenshire.gov.uk for further advice.
Alternatively independent financial advice can also be obtained from one of the following:-
• Citizens Advice Bureau – 01554 759626 / 01267 234488 / 01269 591091
• Shelter Cymru (01267 229206)
• CATCHUP (01554 776850)
• Age Concern (01554 784080)
• National Debt Helpline (0808 8084000) or www.nationaldebtline.co.uk