Tuesday 18 March 2008

Local Housing Allowance

Do you rent a house from a private landlord if the answer is yes then the advice issued by Bath & North East Somerset Council that we have posted below may be of help to you.

Local Housing Allowance (LHA) is a scheme being introduced on 7th April 2008.

LHA only applies to tenants who rent from a private landlord and make a new claim for Housing Benefit from 7th April 2008. Existing claimants renting in the private sector will not be affected unless they change address or have a break in their housing benefit claim.

LHA will not affect those tenants who have one of the following tenancies:

Housing Associations
Accommodation where a substantial part of the rent is attributable to board i.e. Bed and Breakfast/hotel tenancies
Tenancies provided by a charity or voluntary organisation
Tenancies which began before 15 January 1989
Caravans, houseboats or mobile homes

From our current live caseload about 1,200 claimants could potentially be affected by LHA.

How is LHA worked out?

LHA is a flat rate rent allowance determined by The Rent Service based primarily on property location and size criteria.

England is broken up into a number of Broad Rental Market Areas (BRMA). Bath & North East Somerset has 2 BRMAs. The Rent Officer will set a tariff of rents in each BRMA and these will be published every month. These are known as the LHA rates.

LHA is a means of calculating the maximum rent for a Housing Benefit claim. The rate that a person is entitled to, will depend on the size of their household and the area in which they live. The size of a person’s household purely depends on how many bedrooms they require (not the number of bedrooms the property has). One bedroom is allocated for each of the following:
Any adult couple
Any adult over 16
Any two children aged 10+ of the same gender
Any two children up to the age of 10 of opposite gender
Any other child
So a couple with 2 children under 10 will be entitled to 2 bedrooms and the 2 bedroom LHA rate for the BRMA where their property is located will be used to calculate Housing Benefit

The Rent Service will provide the LHA rates for each BRMA on a monthly basis and these will be published on our website and at key council offices. The customer can therefore determine what the maximum amount of Housing Benefit would be. Armed with this information the customer should have more choice over the type of rented accommodation that they can choose from.

Whilst LHA is the new way of working out the maximum Housing Benefit a claimant could get, the amount of Housing Benefit awarded will still depend on the claimants’ income and savings and whether other people living in the household contribute to the rent.

What if the rent is more or less than the LHA rate?

One of the advantages of the LHA scheme is that if the claimant finds accommodation that is cheaper than the amount of LHA they are entitled to, then they can keep up to £15 of the excess. If the claimant finds accommodation that is more expensive than the LHA they are entitled to then it will be up to the claimant to pay the difference.

We will not know what the LHA rates will be for Bath & North East Somerset until the beginning of April but indicative rates received so far suggest they may be more generous than the equivalent rent levels currently approved by the Rent Service. This is good news for claimants.

How does LHA affect landlords?

The only change for most landlords is that LHA will normally be paid direct to the claimant. The tenant will be responsible for paying their rent to the landlord. However in certain circumstances it may be more appropriate to pay the LHA direct to the landlord. A safeguard policy has been written to help identify vulnerable people who could not reasonably be expected to manage their own affairs or would have difficulty paying their rent.

Why has the Government decided to make this change?

The Government wishes to streamline the process in order to promote:
Fairness – by paying similar rent to tenants in similar circumstances
Choice – pre-determined rates of payment allow claimants to choose accommodation to suit their budget

Transparency – by making it easier for tenants to find out in advance what their eligible rent will be Personal Responsibility – by making tenants take responsibility for budgeting for and paying their own rent

Financial Inclusion – to encourage tenants to have their Housing Benefit paid into a bank account and set up a standing order to pay rent to their landlord
Simplicity – the LHA scheme aims to streamline the present complicated system

What has the Revenues & Benefits section done to prepare for LHA?

We have given presentations to key stakeholders, landlords and agencies explaining how LHA will work. The landlord presentations were a joint enterprise with our colleagues at South Gloucestershire, North Somerset and Bristol City Councils.

We have compiled a Safeguard Policy in consultation with stakeholders and especially the CAB and NESCAB

We have written to current private sector claimants to advise them of the forthcoming change

We have worked with the banks and building societies to draw up a leaflet explaining how to open a bank or building society account and distributed to stakeholders and claimants
Information about LHA is on our website with specific pages for tenants, landlords and stakeholders/carers

We have provided LHA training for Revenues, Benefits and Customer Services staff

We are currently reviewing Housing Benefit Claim forms

We are shortly issuing further detailed information about LHA to our landlords

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