Local Housing Allowance

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Local Housing Allowance
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Local Housing Allowance

• Building choice and responsibility a radical
  agenda for Housing Benefit published in October
  2002
• Introduced Local Housing Allowance to the
  pathfinder councils
• Flat rate of Housing Benefit and direct payments
  to tenants

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Local Housing Allowance

• There are 6 fundamental aims of the Local Housing
  Allowance scheme
• fairness
• choice
• transparency
• personal responsibility
• increased work incentives
• simplicity

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Fairness

• Tenants living with similar circumstances living
  in the same area will get the same amount of
  Housing Benefit
• At the moment the amount of benefit is set
  according to the actual rent paid

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Fairness issues/concerns

• Many tenants in the pathfinder authorities are
  enjoying excess benefit above their contractual
  rent
• Reduction in the percentage of tenants with a
  shortfall in their rent
• Legislation enabling national roll-out of LHA on
  hold until late 2006 due to concerns over fiscal
  constraints and the generosity of the
  pathfinder scheme

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Choice

• Tenants will be able to choose the quality and
  price of their accommodation
• Tenants could choose to pay more than the
  allowance they receive for accommodation that is
  larger than they qualify for, or move to a less
  expensive house and keep the difference

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Transparency

• The scheme makes it easier to find out how much
  rent could be covered by Housing Benefit

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Choice/transparency issues/concerns

• Does the scheme really provide greater choice for
  tenants?
• Little evidence of tenants upgrading to better
  properties trading quality for price
• Substandard accommodation may have an impact on
  health
• No incentive for landlords to improve condition
  of property taken out of the assessment of rent
• Introduction of LHA restrict the properties
  available to tenants on benefit?

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Personal responsibility

• Paying the allowance to the tenants encourages
  them to take responsibility for budgeting and
  paying the rent themselves rather than having it
  paid for them

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Personal responsibility issues/concerns

• More tenants falling into arrears
• Less landlords willing to rent properties to
  people on benefit
• Increased harassment for tenants landlords will
  not know if they have applied for Housing Benefit
  or not
• Between 76 and 94 of tenants in the pathfinders
  are being paid direct with no significant
  problems
• Pathfinders have received additional funding for
  financial advisors

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Personal responsibility issues/concerns

• Issues regarding vulnerability
• DWP guidance states that councils dont have to
  be proactive in establishing if a tenant is
  vulnerable
• Having to declare vulnerability may be a
  disincentive
• Obtaining evidence of vulnerability
• Consistency of decisions
• Time limits / review of decisions

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Increased work incentives

• Greater certainty about what in-work benefit they
  could receive is expected to help tenants bridge
  the gap between being out of work and taking a job

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Work incentives issues/concerns

• Little evidence that LHA has helped tenants back
  into work
• Generous excesses in benefit over the contractual
  rent could act as a disincentive into work

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Simplicity

• Removes the complex rent restrictions and need
  for individual claims to be referred to a rent
  officer before a decision is made
• This will speed up the administration and payment
  of Housing Benefit

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Simplicity issues/concerns

• Removal of Rent Officer referrals welcomed
• Improved processing times and accuracy
• Additional work in managing tenants payments
• deciding vulnerability
• dealing with landlords requests for direct
  payments
• helping tenants without bank accounts
• more work in issuing payments
• overpayment recovery

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Feedback from landlords in the pathfinders

• Awareness of LHA high amongst landlords
• 56 said the introduction of LHA made them less
  likely to want to let to HB tenants
• 23 not renewed an existing tenancy due to LHA
• 28 declined to let a new tenancy due to LHA
• The reasons given were
• experience of rent arrears (40)
• fear of rent arrears (38)
• tenants receive the benefit (43)

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Feedback from landlords in the pathfinders

• 40 of landlords had changed the way they
  collected rents due to LHA
• personal collection (49)
• direct debit or standing order (31)
• Biggest problems with direct debits / standing
  orders were the timing of LHA payments with rent
  payments (45)
• Biggest problems with personal collections
• rent not being paid / LHA spent on other things
  (68)
• difficulty in getting hold of people (22)
• tenants not coming forward to pay rent (19)

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Feedback from landlords in the pathfinders

• About as many landlords thought processing times
  were as quicker as they were slower under the
  previous system
• quicker (20)
• no difference (62)
• slower (18)
• 77 of landlords had experience of rent arrears
  under LHA
• 74 of these had contacted the council to request
  direct payments
• 68 of these had reported difficulties with
  requests, taking an average of 8 weeks to resolve

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Proposed changes to the scheme

• Capping the amount of LHA a tenant can receive
  over their contractual rent to 15 per week
• Adjusting the size criteria so that it is only
  based on the number of bedrooms
• Change in the way LHA rates are set based on
  the median of local rents rather than the
  mid-point
• Roll out the LHA to new claims only to prevent
  complex transitional protection arrangements

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Issues regarding the proposals

• Implications of cap on excess
• return for the need for the council to hold
  contractual rents
• could be even more complex than the current
  system
• collusion between landlord and tenant to maximise
  LHA by minimising the cap?
• Implications of less generous LHA
• will invalidate evaluation of pathfinders
• will reduce the capacity for tenants to shop
  around for better accommodation
• LHA may not reflect actual rents being charged
• may see worsening of rent payments (higher rent
  arrears)
• Question over whether April 2008 national roll
  out achievable