Local Housing Allowance
From 7 April 2008, Housing Benefit in the Private Rented Sector changed with the introduction of a new Local Housing Allowance scheme. The change affected how Housing Benefit is worked out, and how it is paid.
The Local Housing Allowance applies to anyone who rents from a landlord in the deregulated private rent sector and makes a new claim for Housing Benefit on or after 7th April 2008. It is based on the rent levels for the area in which a person wants to live, and on the number of people who live with them. There is no change to the basic benefit entitlement rules; these are still based on a person's income, savings and proof of rent.
Local Housing Allowance makes it easier for tenants and landlords to find out in advance how much rent could be covered by way of Housing Benefit.
The fundamental aims of the Local Housing Allowance scheme are to promote:
Fairness
Local Housing Allowance bases the maximum amount paid to tenants on the size, composition and location of the household. Therefore, two households in similar circumstances in the same area will be entitled to similar amounts of benefit.
Choice
Tenants are encouraged to take greater responsibility and choose how to spend their income in a similar way to tenants who are not in receipt of benefits. Like other tenants, they are able to choose whether to rent a larger property, or to spend less on housing and increase their available income.
Transparency
The current link between Housing Benefit and individual rents is complex and does not set out clearly what level of state support is available for people on low incomes. A clear and transparent set of allowance rates helps tenants (and landlords) know how much financial help is available from the state. Tenants are able to compare how much support is available towards their housing costs in different areas and for different property sizes.
Personal responsibility
Empowering people to budget for and to pay their rent themselves, rather than having it paid for them, helps develop the skills unemployed tenants will need as they move into work. The Government believes that, wherever possible, Local Housing Allowance should be paid to tenants, as are most other benefits and tax credits.
Financial inclusion
Ideally, we want people to have their housing payments paid into a bank account and to set up a standing order to pay the rent to their landlord. This has the advantage of being a safe and secure method of payment and provides certainty for landlords that rent will be paid.
Improved administration and reduced barriers to work
For working-age tenants, Local Housing Allowance provides greater certainty about what help is available in and out of work. A simpler system also helps speed up administration of housing payments, giving tenants more confidence when starting a job that any in-work benefit will be paid quickly. A more transparent system may also improve the ability of individuals to move between areas and to take advantage of employment opportunities.
External links
Contact the revenues and benefit service