Benefits - Local Housing Allowance

LHA is a new way of calculating Rent Allowance for certain Claimants which came into effect on 7 April 2008. The reason for the change is that Housing Benefit has become a complex benefit that does little to promote personal responsibility and can act as a barrier to work - LHA pays a flat rate depending on the number of bedrooms required by each Claimant. The payments will, wherever possible, be made to the Claimant rather than the Landlord. This will result in a simpler, fairer system that allows the Claimant more responsibility and choice.

You can download a pdf version of the full Direct LHA Payment Policy here. It is summarised on this page.

Why has LHA been introduced?

The Department for Work and Pensions (DWP) have said "Housing Benefit has long been criticised as an extremely complex benefit that does little to promote personal responsibility and can act as a barrier to work". The objectives of LHA are to promote:

Fairness: LHA has been designed to pay the same amount to tenants with similar circumstances living in the same area. This differs from the original Housing Benefit scheme which ties the level of benefit to the rent actually charged for a property.

Choice: Tenants are able to take greater responsibility and choose how to spend their income in a similar way to tenants who are not in receipt of benefits. Tenants can choose whether to rent a larger property or spend less on rent and increase their income.

Transparency: The current link between Housing Benefit and individual rents is complex and does not set out clearly what level of support is available for people on low incomes. With LHA, tenants (and landlords) can find out in advance exactly how much benefit can be paid towards housing costs in different areas and for different size properties.

Personal responsibility: Empowering people to budget and pay their rent themselves, rather than having it paid for them, helps develop the skills that unemployed tenants will need as they move back into work.

Financial inclusion: Ideally, tenants will set up a bank account and have their benefit paid into this account via BACS. They can then set up a standing order to pay the rent to their landlord/agent directly. This has the advantage of being a safe and secure method of payment and provides certainty that rent will be paid.

Reduced barriers to work: Greater certainty about what in-work benefits tenants could receive is expected to encourage customers to take the step from welfare into work.

Improved administration: There will no longer be a need for the complex rent restrictions and individual referral of rents to rent officers that currently contribute to the delay in processing claims by private tenants. The LHA scheme is simpler for local authorities to operate and for tenants to understand.

Who does it affect?

LHA applies to:

- Claimants who claimed for the first time after 7 April 2008.

- Claimants who changed address after 7 April 2008 (this includes changing rooms within the same property).

- Claimants who are reclaiming after a gap in their claim of at least a week.

Who does it not affect?

LHA does not apply to:

- Existing Housing Benefit tenants who do not change address unless they have a gap in their claim.

- Tenants of Housing Associations and other Social / Charitable Landlords.

- Tenants who live in Hostels (NACRO) / Houseboats / Mobile Homes or Caravans.

- Tenants whose tenancy began before 1989.

- Tenants whose rent includes a substantial element of Board / Lodging.

These tenants will continue to come under the Housing Benefit scheme.

Who decides the LHA rates?

The LHA rates payable are decided by the Rent Officer. They look at the rates each month; though they do not necessarily change them every time. The figures are then passed to us to use in our calculations.

How are LHA rates worked out?

The amount of LHA that a Claimant receives depends on:

- The area they live in, known as the Broad Rental Market Area; and

- Who lives with them, known as the Size Criteria

What are Broad Rental Market Areas (BRMA)?

The Rent Service no longer value individual properties. Instead they set monthly LHA rates for different size properties within different areas based on the average (median) rent charged by private landlords. These areas are called Broad Rental Market Areas.

Tendring has just one Broad Market Rental Area.

How much Local Housing Allowance will a Claimant get?

Please see the table at the top of this page for the current LHA rates.

Are there different LHA rates in different parts of Tendring?

No, there is only one set of LHA rates for the whole of the district.

How often will Claimant's LHA rates be reviewed?

The LHA rates will normally be reviewed after a year, on the anniversary of the LHA start date. At this time it will be amended to use the current rate. However, if a Claimant has a change of circumstances that requires the LHA to be amended before that date, then the new review date will be a year from the date the LHA was changed.

What changes in circumstances would lead to an LHA rate review?

Any change that means a Claimant is entitled to more or less bedrooms. This could include:-

- A single Claimant turning 25.

- A Partner joining or leaving the household (if the Claimant is under 25).

- The birth of a new baby.

- A Child or Non Dependant Adult joining or leaving the household.

- Children turning 10 or 16.

If the Claimant is over 25, a Partner moving in or out will not affect the LHA rates payable as one bedroom is allowed for both a single Claimant and a couple.

If the LHA rate is reviewed then the next annual review will be due 1 year after the date the LHA was changed.

What happens if the rent increases before the LHA is due to be reviewed?

LHA does not take into account the actual rent paid so a rent increase will not lead to a review of the LHA rate used.

How do people find out how much the LHA is?

From late March 2008 onwards the LHA rates for the current month are publicised in Council receptions / cash offices and here on our website.

The published LHA rates only cover properties with up to 5 bedrooms, what if a Claimant needs more?

The Rent Officer will provide rates for larger properties on request.

Size Criteria - How many rooms is a Claimant entitled to?

LHA is based on bedrooms only. A Claimant is entitled to 1 bedroom each for:-

- The Claimant (and Partner if applicable),

- Any other adult aged 16 or over,

- Any two Children under 16 of the same sex,

- Any two Children regardless of sex under age 10,

- Any other Child.

How much can a single person under 25 get?

Single Claimants under 25 can only be paid the lowest LHA rate, the 'Shared Accommodation' rate, regardless of the type of accommodation they actually live in.

Single Claimants over 25 and couples with no children can also be paid the lowest 'Shared Accommodation' rate, but only if they actually live in shared accommodation.

'Shared Accommodation' is when a Claimant has the exclusive use of only one bedroom, and shares the use of one or more of a: kitchen; bathroom; toilet.

What happens if the LHA is higher than the rent?

If the LHA rate is higher than the rent a Claimant is paying, then they can keep the difference up to a maximum of £15.00 a week. This 'excess' is the Claimant's money to spend as they choose, and will not be taken into account when assessing any means-tested benefits.

Even if the payments go to the Landlord or Agent, any excess the Claimant is entitled to will still be paid to the Claimant.

What about any services that are included in the rent?

LHA takes no account of any services or charges included in the rent. No deductions are made from the LHA for these.

Who will LHA be Paid to?

LHA will, wherever possible, be paid to the Claimant.

Can LHA be paid into a Post Office Card Account?

No, the Claimant will need to have a Bank or Building Society Current Account.

What happens if a Claimant doesn't have a bank account?

They will need to open one. If they are unable to open a Current Account then they may still be able to get a Basic Bank Account. Further details on what accounts are available, and money advice, can be found at the Money Made Clear website. The Financial Services Authority have produced a leaflet about Basic Bank Accounts. General financial advice is also available from the Citizen's Advice Bureau.

Can payment still be made to Landlords / Agents?

Yes, but only in exceptional circumstances. The reasons why LHA can be paid to the Landlord / Agent are:

- The Claimant is considered unable to deal with their financial affairs, due to medical / dependency reasons etc.

- The Claimant is considered unlikely to pay their rent based on past problems with arrears etc.

These reasons are discretionary, and proof will be needed in most cases. Requests for Landlord / Agent payments under these criteria can be made by the Claimant, Landlord / Agent, or a third party such as a relative, carer, support worker, or welfare organisation. Each case will be decided on its own merits and reviewed regularly - how often will depend on the reasons given.

- The Claimant is in arrears of 8 weeks rent or more.

This reason is not discretionary, it is part of the regulations just as it is for Housing Benefit. The Landlord or Agent would request this change in payments. Usually proof of the arrears would be required and payments would revert back to the Claimant once the arrears were cleared.

Even if the payments go to the Landlord / Agent, any excess the Claimant is entitled to will still be paid to the Claimant.

Please click here for our Direct Payments Policy.

Click here to download a Landlord Payments form for completion by Landlords

Click here to download a Landlord Payments form for completion by Tenants

What happens if the Claimant receives an excess?

If the LHA rate is higher than the rent a Claimant is paying, then they can keep the excess up to a maximum if £15.00 a week. This is the Claimant's money to spend as they choose, and will not be taken into account when assessing any means-tested benefits.

Even if the payments go to the Landlord or Agent, any excess the Claimant is entitled to would still be paid to the Claimant.

What happens if the size of a household changes?

If the change means that a claimant is entitled to more or less bedrooms, then the LHA rate will be amended to the correct rate for the number of rooms now required. The next annual review will then be due 1 year after the date the LHA was changed.