Local Housing Allowance questions and answers:
Background to the Local Housing Allowance .....................................
1. What is the Local Housing Allowance? .........................................
2. When are the changes being introduced? ....................................
3. What does the LHA scheme cover? .............................................
4. What do you define as the mainstream private sector? ................
5. Will benefit claims be transferred to LHA rates right away? .........
6. What are the rates based on? ......................................................
7. Why are the changes being made? ..............................................
8. Will you be introducing LHA into the social sector? ......................
LHA Rates ...............................................................................................
9. How is the LHA calculated? ..........................................................
10. Who decides LHA rates? ..............................................................
11. When will LHA rates be published? ..............................................
12. Where will LHA rates be published? .............................................
13. What will rates look like? ..............................................................
14. How will LHA areas be decided? ..................................................
15. Will there be any right of appeal against the levels of allowances
for each Broad Rental Market Area determined by the Rent
Officer? .........................................................................................
16. What if the customer’s benefit is higher than their rent? ...............
17. Will this excess be capped? .........................................................
18. What if the customer’s benefit is lower than their rent? ................
19. Will new customers be assessed under the old rules and paid the
higher amount if they would be better off?....................................
20. What if there is provision for a contractual rent increase in the
middle of the year?.......................................................................
Service Charges, Boarders, Joint Tenants and Crown Tenants ........
21. How will service charges be handled? ..........................................
22. Are Crown Tenancies excluded from LHA? ..................................
23. How will board and lodgings cases be assessed? .......................
24. How will joint tenants be treated? .................................................
Direct payments to the landlord............................................................
25. Who will benefit be paid to? ..........................................................
26. What are these exceptions? .........................................................
27. Why is eight weeks arrears significant? ........................................
28. What if I, as a landlord, just prefer to have the rent paid direct to
me? ..............................................................................................
29. If I ask 8 weeks rent in advance, so that the tenant is ‘in arrears’
after one day of the tenancy, is the local authority obliged to pay
me directly? ..................................................................................
30. If I do receive the payment of rent direct to me, will I be paid any
of the customer’s excess as well? ................................................
31. What if the tenant is withholding rent due to a dispute? ...............
32. What is the “fit and proper” test? ..................................................
33. How will overpayments be recovered? .......................................
34. What if benefit payments were split? ..........................................
35. Will appeals against direct payment decisions be allowed? .......
36. If I won an appeal obliging the local authority to make direct
payments to me, would the LA pay me all the arrears that are
due, even though they had already paid benefit to the tenant?..
37. Can a tenant or landlord appeal against a decision that the
landlord should not receive Housing Benefit on the customer's
behalf as an agent?....................................................................
38. Will there be any right of appeal about the application of an LHA
in an individual case? .................................................................
39. What have been the experiences of landlords in the LHA pilot
areas? ........................................................................................
40. Has the introduction of LHA resulted in landlords exiting the HB
market? ......................................................................................
41. What is the position regarding the number of tenants receiving
their LHA direct?.........................................................................
42. What other information is available for me? ...............................
Local Housing Allowance questions and answers: Landlord
audience
Background to the Local Housing Allowance
1. What is the Local Housing Allowance?
The Local Housing Allowance (LHA) is a new way of deciding rent payments
for people receiving Housing Benefit (HB). 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 you charge so the benefit that
your tenants receive may be higher or lower than the contractual rent. 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.
2. When are the changes being introduced?
We will introduce the new LHA from April 7th 2008.
3. 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.
If you are a landlord providing accommodation in one of the following types of
tenancy, your tenants will be exempt from receiving the LHA:
Registered social landlord tenancies;
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; and
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.
4. What do you define as the mainstream private sector?
If you are a landlord who lets accommodation in the sector deregulated by the
Housing Act 1988, then we consider this as the mainstream private sector.
5. Will benefit claims be transferred to LHA rates right away?
Not straight away. 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 new 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.
6. What are the rates based on?
Different LHA rates will apply in different areas. Within those areas, they will
be based on the median rent charged by landlords in the private sector for
properties of various sizes. LHA rates will be further broken down into ‘Room
Rates’ that will apply depending on the size of the household, including any
non-dependants. Size criteria will be based on allowing one bedroom for:
a) Every adult couple
b) every other adult who is not part of a couple
c) any other adult aged 16 or over
d) any two children of the same sex
e) any two children regardless of sex under age 10
f) any other child
The number of living rooms, kitchens and bathrooms is ignored for the
purpose of the size criteria.
7. 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.
8. Will you be introducing LHA into the social sector?
We will not be introducing LHA for tenants in social housing. However, we will
develop proposals for using Housing Benefit to help address the high levels of
worklessness in social housing. This will include encouraging tenants to take
greater personal responsibility for managing their own rent payments.
LHA Rates
9. How is the LHA calculated?
The LHA is calculated by the Rent Service for individual areas, known as
Broad Market Rental Areas (BRMAs), each month. It is based on the median
rental figure for that particular area depending on the size of the property.
Basing the LHA on the median of rents for a certain property size means that
exactly half of the rental properties of that size in the area will be affordable
within the LHA amount that the customer receives.
10. 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.
11. When will LHA rates be published?
Rates will be published at the end of the month before the month that they
come into force. For example, the April rates will be made available at the end
of March.
12. Where will LHA rates be published?
Each local authority will publish the monthly rates in their own area. In
addition, we encourage Jobcentre Plus offices and local support groups such
as Citizens Advice Bureau to publish LHA rates locally.
13. What will rates look like?
An example of what LHA rates might look like for a particular area is shown
below. (These are provided for illustration purposes only.)
Shared room rate £43.50
2 Bedroom rate £62.50
3 Bedroom rate £80.00
4 Bedroom rate £87.50
5 Bedroom rate £90.00
6 Bedroom rate £97.50
14. How will LHA areas be decided?
Each local authority area will have at least one Broad Market Rental Area
(BMRA) within which a set of LHA rates will apply. Each BMRA will include a
mix of accommodation as well as facilities such as shops, hospitals and
schools.
15. Will there be any right of appeal against the levels of allowances for
each Broad Rental Market Area determined by the Rent Officer?
No, because the BRMA covers an area which includes other tenants, any
appeal received could ultimately change the LHA rate for tenants who have
not appealed and are content with their allowance. This is because any
decision would have to be implemented to all tenants receiving that BRMA /
LHA rate.
16. What if the customer’s benefit is higher than their rent?
They may keep any of the excess that they are paid up to a maximum of £15
per week. This excess will not normally be taken into account when deciding
other benefits.
17. Will this excess be capped?
Yes, the maximum excess permitted will be £15.
18. What if the customer’s benefit is lower than their rent?
You may ask them to make up any shortfall out of their other income.
Alternatively, the customer may also choose to move to cheaper
accommodation.
However, if the customer previously paid their rent without any support from
HB in the past year they will be entitled to an initial 13 weeks of benefit that
will cover the full rent, without any restrictions.
19. Will new customers be assessed under the old rules and paid the
higher amount if they would be better off?
No. When a new claim is made, there is no 'better off' calculation. The LHA
will apply to all new claims from the date it is introduced.
20. What if there is provision for a contractual rent increase in the middle
of the year?
The rate of benefit that your tenant receives is a flat rate allowance based on
the LHA rate in effect for your area rather than the rent that you actually
charge them. This means that your tenant’s LHA rate will not change even if
the rent you charge them changes. However, their LHA rate will be reviewed
annually.
Service Charges, Boarders, Joint Tenants and Crown Tenants
21. How will service charges be handled?
Normally, customers will not be paid for service charges included in with the
rent that you charge them.
22. Are Crown Tenancies excluded from LHA?
Yes. As they are excluded from current rent restrictions they are also
excluded from LHA.
23. How will board and lodgings cases be assessed?
In general claims from boarders will continue to be assessed under current
rules; that is, they will not be subject to the LHA. However if the Rent Officer
decides that the accommodation that you let does not fit the board and
lodging criteria, your tenant’s claims will be subject to LHA rates.
24. How will joint tenants be treated?
Joint tenants will receive a rate of LHA based solely on the customer’s family
plus any non-dependants, sub tenants or boarders that the customer has.
Direct payments to the landlord
25. 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.
26. 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.
27. Why is eight weeks arrears significant?
Under Schedule 2 of the Housing Act 1988 (as amended by the Housing Act
1996) a landlord may be able to terminate an Assured Shorthold Tenancy
Agreement when at least eight weeks rent is unpaid and the rent is payable
weekly or fortnightly.
28. What if I, as a landlord, just prefer to have the rent paid direct to me?
The choice of having the payment made directly to the landlord will not exist
under LHA. Taking responsibility for the payment of essential items such as
accommodation is an important aspect of helping customers with the move
into work. Most customers will be paid their benefit into a bank account and
then will be free to set up a Standing Order to pay you, just as they would if
they were in work.
29. If I ask 8 weeks rent in advance, so that the tenant is ‘in arrears’ after
one day of the tenancy, is the local authority obliged to pay me
directly?
Direct payments should be made to a landlord where “the person is in arrears
of an amount equivalent to 8 weeks or more of the amount he is liable to pay
his landlord as rent”.
The Department for Work and Pensions’ takes the view that a person cannot
be in rent arrears in respect of a period that has not yet been served.
Additionally, the requirement to pay directly is intended as a safeguard to
protect vulnerable tenants as well as legitimate landlords and remedial action
may be taken if there is evidence that this safeguard is being abused.
30. If I do receive the payment of rent direct to me, will I be paid any of
the customer’s excess as well?
Not normally. Where a payment is made direct to you, it must not include any
amount above which the tenant is liable to pay in rent. If there are rent
arrears, any excess may be paid to you but only until the arrears are paid off.
31. What if the tenant is withholding rent due to a dispute?
Once arrears of rent, whatever the cause, have reached 8 weeks then it is
mandatory for the local authority to make payment direct to the landlord
provided that there has been no finding that the landlord is not a “fit and
proper” person or that it is not in the customer’s overriding interests to make
direct payments. This can include where the tenant is in dispute with the
landlord, but they must provide evidence of this.
32. What is the “fit and proper” test?
Local authorities are not obliged to make direct payments where they are not
satisfied that the landlord is a “fit and proper person to be the recipient of a
payment of rent allowance”. This will apply even when the criteria for a direct
payment would otherwise have been met.
A landlord may not be a “fit and proper person” where it is proven that they
have engaged in financial impropriety. This should normally include an
element of HB impropriety, such as fraud or a knowing failure to declare
changes in circumstances affecting the payment of benefit. Authorities may
choose to consider other areas, such as failure to pay Council Tax or
business rates, but generally the lesser connection that the offence or
impropriety has with Housing Benefit, the less relevant it will be.
Recovery of overpayments
33. How will overpayments be recovered?
The rules on the recovery of overpayments are not being changed. Currently:
Benefit overpaid to a landlord can be recovered from either the landlord or
the customer, as the local authority chooses; and
Benefit overpaid to a customer can be recovered only from the customer.
As most customers will receive their benefit themselves under the LHA, most
overpayments will, therefore, be recovered from the customer and not the
landlord.
34. What if benefit payments were split?
Split liability for overpayments can already arise where an overpayment
accrues over a period, and the payment was made to the landlord for part of
that period and to the tenant for the rest of it. In these cases, the local
authority can recover from either or both of the landlord and tenant. If the local
authority decides to recover from the landlord, the overpayment can be
recovered from future payments, by invoice or other appropriate means.
Appeal Rights
35. Will appeals against direct payment decisions be allowed?
Yes. Both you and your tenant, as persons affected by the decision, may
appeal against any decision about whether or not to pay rent direct. Appeals
can also be made against decisions on vulnerability.
36. If I won an appeal obliging the local authority to make direct
payments to me, would the LA pay me all the arrears that are due,
even though they had already paid benefit to the tenant?
No. Even if you win an appeal, the local authority will not make duplicate
payment of benefit. Direct payments would be made from an acceptable date
in order to ensure that no overpayment occurs.
37. Can a tenant or landlord appeal against a decision that the landlord
should not receive Housing Benefit on the customer's behalf as an
agent?
No. This decision is not appealable.
38. Will there be any right of appeal about the application of an LHA in an
individual case?
There is no right of appeal or redetermination about the level of LHA or the
BRMA on which those levels are based unless, for example, the rent officer
has made an arithmetical error.
LHA and landlords
39. What have been the experiences of landlords in the LHA pilot areas?
DWP has commissioned independent social research to assess the impact of
the LHA on interested groups such as landlords. The latest evaluation has
found that landlords are adapting to the new ways of assessing and paying
benefits and continuing to let properties to Housing Benefit customers. There
is also evidence of landlords moving towards automated rent collection, for
example, standing order, as a method of collecting rent. The segment of the
market available to benefit customers has remained relatively stable.
All the published evaluation reports can be found at:
www.dwp.gov.uk/housingbenefit/lha/evaluation
40. Has the introduction of LHA resulted in landlords exiting the HB
market?
There has been some turnover of landlords both entering and leaving the HB
market, with. Overall the evaluation findings show there has been little impact
on the supply of property to benefit customers.
41. What is the position regarding the number of tenants receiving their
LHA direct?
Payments are being made to tenants in around of 84% of cases. This is an
increase of approximately 48% prior to implementation of LHA.
42. What other information is available for me?
DWP and local authorities are working together to ensure that landlords are
kept informed of the changes being made to Housing Benefit and that they
know where to obtain further advice and information. Your local authority will
be able to provide you with more information about the LHA and how it will
operate in your area.
Alternatively you can visit the DWP website:
www.dwp.gov.uk/housingbenefit/lha or contact
The Housing Benefit Office
Council Offices
Broadway
Sandown
PO36 9EA
Telephone : 01983 823950
Background to the Local Housing Allowance .....................................
1. What is the Local Housing Allowance? .........................................
2. When are the changes being introduced? ....................................
3. What does the LHA scheme cover? .............................................
4. What do you define as the mainstream private sector? ................
5. Will benefit claims be transferred to LHA rates right away? .........
6. What are the rates based on? ......................................................
7. Why are the changes being made? ..............................................
8. Will you be introducing LHA into the social sector? ......................
LHA Rates ...............................................................................................
9. How is the LHA calculated? ..........................................................
10. Who decides LHA rates? ..............................................................
11. When will LHA rates be published? ..............................................
12. Where will LHA rates be published? .............................................
13. What will rates look like? ..............................................................
14. How will LHA areas be decided? ..................................................
15. Will there be any right of appeal against the levels of allowances
for each Broad Rental Market Area determined by the Rent
Officer? .........................................................................................
16. What if the customer’s benefit is higher than their rent? ...............
17. Will this excess be capped? .........................................................
18. What if the customer’s benefit is lower than their rent? ................
19. Will new customers be assessed under the old rules and paid the
higher amount if they would be better off?....................................
20. What if there is provision for a contractual rent increase in the
middle of the year?.......................................................................
Service Charges, Boarders, Joint Tenants and Crown Tenants ........
21. How will service charges be handled? ..........................................
22. Are Crown Tenancies excluded from LHA? ..................................
23. How will board and lodgings cases be assessed? .......................
24. How will joint tenants be treated? .................................................
Direct payments to the landlord............................................................
25. Who will benefit be paid to? ..........................................................
26. What are these exceptions? .........................................................
27. Why is eight weeks arrears significant? ........................................
28. What if I, as a landlord, just prefer to have the rent paid direct to
me? ..............................................................................................
29. If I ask 8 weeks rent in advance, so that the tenant is ‘in arrears’
after one day of the tenancy, is the local authority obliged to pay
me directly? ..................................................................................
30. If I do receive the payment of rent direct to me, will I be paid any
of the customer’s excess as well? ................................................
31. What if the tenant is withholding rent due to a dispute? ...............
32. What is the “fit and proper” test? ..................................................
33. How will overpayments be recovered? .......................................
34. What if benefit payments were split? ..........................................
35. Will appeals against direct payment decisions be allowed? .......
36. If I won an appeal obliging the local authority to make direct
payments to me, would the LA pay me all the arrears that are
due, even though they had already paid benefit to the tenant?..
37. Can a tenant or landlord appeal against a decision that the
landlord should not receive Housing Benefit on the customer's
behalf as an agent?....................................................................
38. Will there be any right of appeal about the application of an LHA
in an individual case? .................................................................
39. What have been the experiences of landlords in the LHA pilot
areas? ........................................................................................
40. Has the introduction of LHA resulted in landlords exiting the HB
market? ......................................................................................
41. What is the position regarding the number of tenants receiving
their LHA direct?.........................................................................
42. What other information is available for me? ...............................
Local Housing Allowance questions and answers: Landlord
audience
Background to the Local Housing Allowance
1. What is the Local Housing Allowance?
The Local Housing Allowance (LHA) is a new way of deciding rent payments
for people receiving Housing Benefit (HB). 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 you charge so the benefit that
your tenants receive may be higher or lower than the contractual rent. 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.
2. When are the changes being introduced?
We will introduce the new LHA from April 7th 2008.
3. 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.
If you are a landlord providing accommodation in one of the following types of
tenancy, your tenants will be exempt from receiving the LHA:
Registered social landlord tenancies;
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; and
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.
4. What do you define as the mainstream private sector?
If you are a landlord who lets accommodation in the sector deregulated by the
Housing Act 1988, then we consider this as the mainstream private sector.
5. Will benefit claims be transferred to LHA rates right away?
Not straight away. 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 new 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.
6. What are the rates based on?
Different LHA rates will apply in different areas. Within those areas, they will
be based on the median rent charged by landlords in the private sector for
properties of various sizes. LHA rates will be further broken down into ‘Room
Rates’ that will apply depending on the size of the household, including any
non-dependants. Size criteria will be based on allowing one bedroom for:
a) Every adult couple
b) every other adult who is not part of a couple
c) any other adult aged 16 or over
d) any two children of the same sex
e) any two children regardless of sex under age 10
f) any other child
The number of living rooms, kitchens and bathrooms is ignored for the
purpose of the size criteria.
7. 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.
8. Will you be introducing LHA into the social sector?
We will not be introducing LHA for tenants in social housing. However, we will
develop proposals for using Housing Benefit to help address the high levels of
worklessness in social housing. This will include encouraging tenants to take
greater personal responsibility for managing their own rent payments.
LHA Rates
9. How is the LHA calculated?
The LHA is calculated by the Rent Service for individual areas, known as
Broad Market Rental Areas (BRMAs), each month. It is based on the median
rental figure for that particular area depending on the size of the property.
Basing the LHA on the median of rents for a certain property size means that
exactly half of the rental properties of that size in the area will be affordable
within the LHA amount that the customer receives.
10. 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.
11. When will LHA rates be published?
Rates will be published at the end of the month before the month that they
come into force. For example, the April rates will be made available at the end
of March.
12. Where will LHA rates be published?
Each local authority will publish the monthly rates in their own area. In
addition, we encourage Jobcentre Plus offices and local support groups such
as Citizens Advice Bureau to publish LHA rates locally.
13. What will rates look like?
An example of what LHA rates might look like for a particular area is shown
below. (These are provided for illustration purposes only.)
Shared room rate £43.50
2 Bedroom rate £62.50
3 Bedroom rate £80.00
4 Bedroom rate £87.50
5 Bedroom rate £90.00
6 Bedroom rate £97.50
14. How will LHA areas be decided?
Each local authority area will have at least one Broad Market Rental Area
(BMRA) within which a set of LHA rates will apply. Each BMRA will include a
mix of accommodation as well as facilities such as shops, hospitals and
schools.
15. Will there be any right of appeal against the levels of allowances for
each Broad Rental Market Area determined by the Rent Officer?
No, because the BRMA covers an area which includes other tenants, any
appeal received could ultimately change the LHA rate for tenants who have
not appealed and are content with their allowance. This is because any
decision would have to be implemented to all tenants receiving that BRMA /
LHA rate.
16. What if the customer’s benefit is higher than their rent?
They may keep any of the excess that they are paid up to a maximum of £15
per week. This excess will not normally be taken into account when deciding
other benefits.
17. Will this excess be capped?
Yes, the maximum excess permitted will be £15.
18. What if the customer’s benefit is lower than their rent?
You may ask them to make up any shortfall out of their other income.
Alternatively, the customer may also choose to move to cheaper
accommodation.
However, if the customer previously paid their rent without any support from
HB in the past year they will be entitled to an initial 13 weeks of benefit that
will cover the full rent, without any restrictions.
19. Will new customers be assessed under the old rules and paid the
higher amount if they would be better off?
No. When a new claim is made, there is no 'better off' calculation. The LHA
will apply to all new claims from the date it is introduced.
20. What if there is provision for a contractual rent increase in the middle
of the year?
The rate of benefit that your tenant receives is a flat rate allowance based on
the LHA rate in effect for your area rather than the rent that you actually
charge them. This means that your tenant’s LHA rate will not change even if
the rent you charge them changes. However, their LHA rate will be reviewed
annually.
Service Charges, Boarders, Joint Tenants and Crown Tenants
21. How will service charges be handled?
Normally, customers will not be paid for service charges included in with the
rent that you charge them.
22. Are Crown Tenancies excluded from LHA?
Yes. As they are excluded from current rent restrictions they are also
excluded from LHA.
23. How will board and lodgings cases be assessed?
In general claims from boarders will continue to be assessed under current
rules; that is, they will not be subject to the LHA. However if the Rent Officer
decides that the accommodation that you let does not fit the board and
lodging criteria, your tenant’s claims will be subject to LHA rates.
24. How will joint tenants be treated?
Joint tenants will receive a rate of LHA based solely on the customer’s family
plus any non-dependants, sub tenants or boarders that the customer has.
Direct payments to the landlord
25. 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.
26. 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.
27. Why is eight weeks arrears significant?
Under Schedule 2 of the Housing Act 1988 (as amended by the Housing Act
1996) a landlord may be able to terminate an Assured Shorthold Tenancy
Agreement when at least eight weeks rent is unpaid and the rent is payable
weekly or fortnightly.
28. What if I, as a landlord, just prefer to have the rent paid direct to me?
The choice of having the payment made directly to the landlord will not exist
under LHA. Taking responsibility for the payment of essential items such as
accommodation is an important aspect of helping customers with the move
into work. Most customers will be paid their benefit into a bank account and
then will be free to set up a Standing Order to pay you, just as they would if
they were in work.
29. If I ask 8 weeks rent in advance, so that the tenant is ‘in arrears’ after
one day of the tenancy, is the local authority obliged to pay me
directly?
Direct payments should be made to a landlord where “the person is in arrears
of an amount equivalent to 8 weeks or more of the amount he is liable to pay
his landlord as rent”.
The Department for Work and Pensions’ takes the view that a person cannot
be in rent arrears in respect of a period that has not yet been served.
Additionally, the requirement to pay directly is intended as a safeguard to
protect vulnerable tenants as well as legitimate landlords and remedial action
may be taken if there is evidence that this safeguard is being abused.
30. If I do receive the payment of rent direct to me, will I be paid any of
the customer’s excess as well?
Not normally. Where a payment is made direct to you, it must not include any
amount above which the tenant is liable to pay in rent. If there are rent
arrears, any excess may be paid to you but only until the arrears are paid off.
31. What if the tenant is withholding rent due to a dispute?
Once arrears of rent, whatever the cause, have reached 8 weeks then it is
mandatory for the local authority to make payment direct to the landlord
provided that there has been no finding that the landlord is not a “fit and
proper” person or that it is not in the customer’s overriding interests to make
direct payments. This can include where the tenant is in dispute with the
landlord, but they must provide evidence of this.
32. What is the “fit and proper” test?
Local authorities are not obliged to make direct payments where they are not
satisfied that the landlord is a “fit and proper person to be the recipient of a
payment of rent allowance”. This will apply even when the criteria for a direct
payment would otherwise have been met.
A landlord may not be a “fit and proper person” where it is proven that they
have engaged in financial impropriety. This should normally include an
element of HB impropriety, such as fraud or a knowing failure to declare
changes in circumstances affecting the payment of benefit. Authorities may
choose to consider other areas, such as failure to pay Council Tax or
business rates, but generally the lesser connection that the offence or
impropriety has with Housing Benefit, the less relevant it will be.
Recovery of overpayments
33. How will overpayments be recovered?
The rules on the recovery of overpayments are not being changed. Currently:
Benefit overpaid to a landlord can be recovered from either the landlord or
the customer, as the local authority chooses; and
Benefit overpaid to a customer can be recovered only from the customer.
As most customers will receive their benefit themselves under the LHA, most
overpayments will, therefore, be recovered from the customer and not the
landlord.
34. What if benefit payments were split?
Split liability for overpayments can already arise where an overpayment
accrues over a period, and the payment was made to the landlord for part of
that period and to the tenant for the rest of it. In these cases, the local
authority can recover from either or both of the landlord and tenant. If the local
authority decides to recover from the landlord, the overpayment can be
recovered from future payments, by invoice or other appropriate means.
Appeal Rights
35. Will appeals against direct payment decisions be allowed?
Yes. Both you and your tenant, as persons affected by the decision, may
appeal against any decision about whether or not to pay rent direct. Appeals
can also be made against decisions on vulnerability.
36. If I won an appeal obliging the local authority to make direct
payments to me, would the LA pay me all the arrears that are due,
even though they had already paid benefit to the tenant?
No. Even if you win an appeal, the local authority will not make duplicate
payment of benefit. Direct payments would be made from an acceptable date
in order to ensure that no overpayment occurs.
37. Can a tenant or landlord appeal against a decision that the landlord
should not receive Housing Benefit on the customer's behalf as an
agent?
No. This decision is not appealable.
38. Will there be any right of appeal about the application of an LHA in an
individual case?
There is no right of appeal or redetermination about the level of LHA or the
BRMA on which those levels are based unless, for example, the rent officer
has made an arithmetical error.
LHA and landlords
39. What have been the experiences of landlords in the LHA pilot areas?
DWP has commissioned independent social research to assess the impact of
the LHA on interested groups such as landlords. The latest evaluation has
found that landlords are adapting to the new ways of assessing and paying
benefits and continuing to let properties to Housing Benefit customers. There
is also evidence of landlords moving towards automated rent collection, for
example, standing order, as a method of collecting rent. The segment of the
market available to benefit customers has remained relatively stable.
All the published evaluation reports can be found at:
www.dwp.gov.uk/housingbenefit/lha/evaluation
40. Has the introduction of LHA resulted in landlords exiting the HB
market?
There has been some turnover of landlords both entering and leaving the HB
market, with. Overall the evaluation findings show there has been little impact
on the supply of property to benefit customers.
41. What is the position regarding the number of tenants receiving their
LHA direct?
Payments are being made to tenants in around of 84% of cases. This is an
increase of approximately 48% prior to implementation of LHA.
42. What other information is available for me?
DWP and local authorities are working together to ensure that landlords are
kept informed of the changes being made to Housing Benefit and that they
know where to obtain further advice and information. Your local authority will
be able to provide you with more information about the LHA and how it will
operate in your area.
Alternatively you can visit the DWP website:
www.dwp.gov.uk/housingbenefit/lha or contact
The Housing Benefit Office
Council Offices
Broadway
Sandown
PO36 9EA
Telephone : 01983 823950
Page last updated on: 17/02/2010
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