Local Housing Allowance

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Local Housing Allowance

• A new form of Housing Benefits

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Local Housing Allowance
Local Housing Allowance - Background

• On 17 October 2002 the government announced a
  programme of Housing Benefit Reform which
  included the trial of a Local Housing Allowance
  Scheme in 18 selected pathfinder areas
• Claimants would receive an LHA based on the
• area in which they lived
• size of the household

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Local Housing Allowance
Local Housing Allowance -Background
Pathfinders from November 2003 to February
2004 Blackpool, Lewisham, Coventry,
Teignbridge Brighton Hove, Conwy, Leeds,
Edinburgh North East Lincolnshire. Pathfinders
from April and July 2005 Wandsworth, East Riding
of Yorkshire, St Helens Argyll Bute, South
Norfolk, Norwich, Pembrokeshire Guildford, Salford
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Local Housing Allowance The Intentions Are
That the scheme will promote the
following Fairness The new scheme has been
designed to pay the same amount to tenants with
similar circumstances living in the same area.
This differs from the existing scheme, which ties
the level of benefit to the rent actually paid
(subject to a range of restrictions applied by a
rent officer).
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Local Housing Allowance Intentions cont-
Choice The intention is to allow tenants to
trade between the quality and price of their
accommodation. For example, tenants will be able
to choose between paying more to stay in a
property that is larger than they qualify for
under the size criteria or increasing their
after-housing-costs income by moving to a cheaper
house.
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Local Housing Allowance Intentions Cont-
Transparency The expectation is that the scheme
will make it easier for tenants and landlords to
find out in advance how much rent could be
covered by Housing Benefit. Although tenants can
ask for pre-tenancy determinations under the
current scheme, to see how much benefit they
might receive for a particular property, this
process is time consuming and rarely used. As a
result, private tenants often find that Housing
Benefit could not meet their rent only after they
have already signed a tenancy agreement. This
should happen less frequently under the new
scheme, as a major uncertainty will have been
removed.
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Local Housing Allowance Intentions Cont-
Simplicity There would no longer be a need for
the complex rent restrictions and individual
referral of rents to rent officers that currently
contributes to the delay in processing claims by
private tenants.
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Local Housing Allowance
The new way of working out Housing Benefit, is
based on the number of rooms people are allowed,
not how much the rent is. The number of rooms
allowed depends on who lives with the tenant.
The amount of LHA is set by The Rent
Service Each Authority is given at least one
Broad Rental Market Area BRMA is defined as 2 or
more distinct areas of residential Accommodation,
Health, Education, Recreation, Personal Banking,
Shopping, Travel distance, Public Private
Transport
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Local Housing Allowance size criteria

• The number of people they live with will be used
  to work out how many bedrooms and living rooms
  they are allowed. The kitchen and bathroom are
  not counted.
• The following guide can be used to work out how
  many rooms they are allowed.

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Local Housing Allowance size criteria

• One Bedroom for
• Every adult couple (married or unmarried)
• Any other adult age 16 or over
• Any two children under age 10
• Any two children of the same sex aged under 16
• Any other child

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Local Housing Allowance size criteria

• Living Rooms
• One living room if one to three people live in
  the property
• Two living rooms if four to six people live in
  the property
• Three living rooms if seven or more people live
  in the property

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Local Housing Allowance excess benefit and
capping
Excess benefit over and above the rent
charged Capping No more than 15.00 per week
above the rental liability e.g. LHA is 93.00 per
wk, Rent is 70.00 per wk Difference 23.00 per
wk. Excess payable 15.00 per wk
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Local Housing Allowance

• LHA affects any landlord who-
• Enters into a deregulated private tenancy
  agreement with a person awarded Housing Benefit.
• Mainstream private tenancies such as rents that
  are currently referred to the rent officer
• All new claims
• Existing claimants when they move address
• Existing claimants who have a break in their
  claim

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Local Housing Allowance does not affect

• Local authority landlords who let to council
  tenants
• Tenancies with registered social landlords
• Protected cases, such as supported housing
  provided by certain local authorities, social
  landlords, charities and voluntary organisations

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Local Housing allowance does not affect cont-

• Tenancies which are excluded from current rent
  restrictions
• Tenancies in caravans, houseboats and hostels
• Tenancies when the Rent Officer decides that a
  substantial part of the rent is for board and
  attendance such as hotel accommodation.

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How does Local Housing Allowance affect Landlords
The only change for most landlords is that Local
Housing Allowance will be paid to the tenant. The
tenant will be responsible for paying their rent
to the landlord. Luton Borough Council uses the
secure payment method of BACS. Of all payments
made, 36.6 is made by BACS to Landlords and
63.4 is made by BACS to claimants. Claimants
will need to have a bank A/c to receive Local
Housing Allowance.
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How does Local Housing Allowance affect Landlords
In recognition of the risk that some tenants may
struggle with the responsibility of paying their
rent, safeguards will be put in place. Rather
than introduce a precise list of circumstances
when payment could be made to the landlord, Local
Authorities will have the discretion in
identifying such cases.
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How does Local Housing allowance affect Landlords
Local Authorities can decide to make payment
direct to a landlord in a number of circumstances
including - if they consider that the tenant is
likely to have difficulty managing their own
affairs. This is called this vulnerability.
Examples of this could include tenants with a
learning disorder or a drug or alcohol problem
that would mean they may have problems managing a
budget. The DWP have prepared detailed advice for
councils on what counts as vulnerable for LHA.
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Local Housing Allowance - Vulnerable Tenants
Local Housing Allowance is usually paid to the
tenant. The tenant cannot decide to have their
Local Housing Allowance paid to their landlord.
But we can pay Local Housing Allowance to the
landlord if we decide a tenant is vulnerable.
What do we mean by vulnerable? By vulnerable we
mean someone who may have difficulty managing
their money. We do not mean someone who does not
want to pay their rent.
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Local Housing Allowance - Vulnerable tenants

• Who decides who is vulnerable?
• The local council decides if a tenant is
  vulnerable. We must have evidence that the tenant
  cannot manage their money. Evidence must usually
  be in writing. People who can give evidence
  include
• The tenant
• Friends and Family of the tenant
• The landlord
• Welfare Groups (including Money advisors)

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Local Housing Allowance - Vulnerable tenants

• Who decides who is vulnerable?
• Social Services
• GP
• Probation Officers
• Job Centre Plus
• The Pension Service
• We will work with the tenant in making our
  decision.

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Local Housing Allowance Latest News
While implementation of LHA, where payments are
generally made to tenants, will extend the
principle of tenant responsibility and bank
account usage, this will only apply to those in
the private rented sector.  The DWP have decided
not to introduce LHA in the social sector but
they are still keen to explore ways in which they
can extend the principle of tenant responsibility
to this sector too.
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Local Housing Allowance- Latest News
DWP are very aware of the difficulties that the
reform of HB in the social sector will present
and they are adopting a cautious approach to
change. Currently, they are gathering evidence
and working with those in the sector to inform a
reasonable approach. The plans in this area are
in the very early stages, and LAs have an
opportunity to contribute and help to develop an
approach that takes account of the needs of the
whole sector.
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Local Housing Allowance Latest News
The Welfare Reform Bill has successfully
negotiated the House of Commons. It is now going
through the House Of Lords. Second reading in the
Lords took place on 29 January and the committee
stage (where the Bill will be debated in depth)
is due to commence on 20 February. DWP is still
working towards an April 2008 date for national
rollout though this will depend on the Bill
progressing successfully through the House of
Lords.
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Local Housing Allowance Summary

• Go Live April 2008
• LHA affects Private Tenant claims only if
• new claims, break in claim, change of address
• Payments to be made direct to the claimant
• Payments can be made to Landlords under certain
  circumstances
• Capping of excess to 15.00