Local Housing Allowance
From 7 April 2008, Housing Benefit in the
Private Rented Sector is changing, and is being replaced by the new
Local Housing Allowance (LHA). These changes will affect how
Housing Benefit is worked out, and how it is paid.
Any tenant who rents from a landlord in the
deregulated private sector and makes a new claim for Housing
Benefit on or after 7 April 2008, will be paid Local Housing
Allowance.
Local Housing Allowance will be the new way of
working out Housing Benefit. It is for people who rent their homes
from a private landlord, who are on a low income and need help to
pay their 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.
Local Housing Allowance will be 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
entitlement rules; these will still be based on a person's income,
savings and proof of rent.
The fundamental aims of the LHA 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 having taken
into account that if their LHA rate exceeds their rent then they
can keep up to £15.00 of the difference.
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.
