Local Housing Allowance (LHA)

What is Local Housing Allowance (LHA)?
Who is affected by LHA?
Who is not affected?
How does LHA work?
What category will I come under and how is LHA worked out?
Payment of LHA

What is Local Housing Allowance?
On 7 April 2008 the Local Housing Allowance (LHA) scheme will be rolled out nationally and will change how we pay housing benefit for all private sector tenants.

The main aims of the Local Housing Allowance (LHA) scheme

Fairness: LHA is designed so that two households with similar circumstances living in the same area will be paid the same amount.
Choice: Tenants can choose whether to rent a larger property or rent a smaller property and keep some of the LHA they receive for themselves.
Transparency: Tenants and landlords can find out the maximum amount of LHA available before entering into a tenancy agreement.
Personal responsibility: In most cases LHA will be paid directly to tenants giving them the responsibility to pay their own rent and manage their own financial affairs.
Financial inclusion: The government wants tenants to have their LHA paid into a bank account and for them to pay their rent by standing order direct to their landlord. This is a safe and secure method of payment.

Who is affected by LHA?
LHA will affect tenants in the private rented sector who are not currently receiving housing benefit and make a claim on or after 7 April 2008.

If you are already receiving housing benefit on 7 April you will only be affected by the new regulations if you:

have a break of over a week in your claim
change your address – if you rent a room or rooms this includes a change of room or rooms within the same property

Who is not affected?
The new rules will not apply to:

council tenants
tenants of registered social landlords such as housing associations
protected cases such as supported housing provided by local authorities, social landlords, charities and voluntary organisations
tenants whose tenancy began before January 1989
tenants living in mobile homes such as caravans and houseboats
tenants living in hostels
tenancies that the rent officer considers contain a substantial amount of board i.e. meals and attendance
tenants currently in receipt of housing benefit unless they move or break their claim

How does LHA work?
Tenants with similar circumstances are entitled to the same category of allowance regardless of how much rent they pay.

The main changes to how benefit is calculated

Bedrooms not living rooms
The number of bedrooms that a household needs determines the size of property that will be used to set the LHA category. The Rent Service’s size criteria determine the number of bedrooms required. Find more details on what category of LHA you will come under and how LHA is worked out.

Capping
If the LHA rate that applies to a tenant is more than their rent, the maximum amount of benefit that they can receive is £15 more than their gross rent. This maximum is called the cap.

The Rent Service set the rates for each property size according to the number of bedrooms. These rates are published monthly and can be found on the the Rent Service website.

The Rent Service is a government agency and it works out the maximum amounts that can be paid to private rented sector tenants who claim LHA.

The Rent Service’s method of calculating the LHA rates
The Rent Service will determine the LHA rates for each size category of property by selecting the median (midde value). To do this the Rent Service collects evidence of rents charged in a locality and selects the middle value.

Example: £100, £120, £150, £165, £190, £210, £250, £300, £320
The median is £190.

Every year we have to recalculate private tenants’ LHA so that it stays up to date with current market rents. When you have been on LHA for a year (or less if your circumstances change) your benefit will be calculated with the new rate.

If you are a landlord you can submit market evidence to help the Rent Service set the rates.

What category will I come under and how is LHA worked out?
LHA is worked out according to:

the number and sex of the people who live with you
the area you live/want to live in
how much money and saving you have

The number and sex of the people who live with you
LHA is based on the number of bedrooms a household needs.

Your claim for LHA will be assessed on the basis that one bedroom is required for:

every adult couple
a single person aged 16 or over
any two children of the same sex under the age of 16
any two children under age 10
any other child under the age of 16

Examples:

A couple with a daughter aged seven and a son aged four will be entitled to a property with two bedrooms – one for the couple and one for the children.
A single parent with a daughter aged six and a son aged 12 will be entitled to a property with three bedrooms – one for the parent, one for the daughter and one for the son.

The categories of property that the Rent Service provides monthly valuations for depending upon where you live in the borough:

Category	Type of property
A	Shared accommodation*
B	One bedroom self contained
C	Two bedrooms
D	Three bedrooms
E	Four bedrooms
F	Five bedrooms

*Shared accommodation category
This applies where the tenant does not have exclusive use of more than one room and shares any or all of a kitchen, a room suitable for living in, or a bathroom or toilet. It also applies to joint tenants who do not have sole use of more than one room.

All single tenants under the age of 25 are only entitled to the shared rate even if they are the sole occupier.

Note: The shared room rate does not apply to under 25’s who have the severe disability premium included in their benefit assessment and to care leavers aged under 22 years.

Which area you live/want to live in?
The rent officer's valuation of similar sized properties will differ from one locality to another depending on the market evidence available. Ealing borough has the following four localities or Broad Rental Market Areas (some of the neighbourhoods are shared with neighbouring boroughs):

London west - Ealing, Hanwell, Northfield, Boston Manor and south Ealing, Greenford, Northolt, Yeading, Southall and south Southall
London north west - Alperton, Horsenden Hill and north Northolt
London inner north and west - Acton, north Acton and Harlesden
Inner south and west - Chiswick

Please note: The amount of benefit that you are entitled to may change and is dependant upon your circumstances at the time you make your claim.

Payment of LHA
LHA is paid directly to you the tenant and not your landlord. You will be responsible for paying the rent to your landlord. If your rent is:

higher than the LHA you receive, you will have to make up the difference. You may want to claim a discretionary housing payment
lower than the LHA you receive, you must pay your rent to the landlord and keep the difference

Direct payments to tenants
The easiest way to receive payment of LHA is direct into a bank account. This is a safe and secure method of payment and avoids the need for you to bank cheques. You can set up a standing order or direct debit to pay your landlord. Please note that LHA cannot be paid into a Post Office.

If you do not have a bank account you can make an appointment to see the benefits service's money advice officer by contacting the housing benefit call centre, who can help you:

open a bank account
print and complete a direct payment application form (word) for direct payments of LHA to your landlord
complete an application for a discretionary housing payment
and assist you with budgeting and debt related issues.

The LHA: Money Advice and Bank Accounts leaflet (pdf) details other sources of support.

If you would like your LHA to be paid into your bank account please contact the benefits service or print, complete and send the housing benefit/LHA change of payment form (word) to the benefits service.

Direct payments to landlords
If you feel that you cannot cope with paying rent to your landlord, it may be possible for us to pay LHA direct to your landlord.

A direct payments application form (word) will need to be completed giving reasons why you think LHA should be paid to your landlord. We may need to ask you for more evidence to support your request. Alternatively you could make an appointment with the money advice officer by contacting the housing benefits call centre who can assist you with completing the direct payments application form.

The benefits service's safeguard policy (word) tells you how we make decisions to pay private landlords direct.

Landlords should contact us if they believe that this applies to their tenant.

Eight weeks arrears
If we are advised that you owe eight weeks or more in rent, we must pay your LHA direct to your landlord until the amount owing has been cleared. We will look at the evidence from the landlord and check this with you when making this decision. We have discretion to consider paying a landlord direct when the arrears are less than eight weeks.

Landlords can print and complete the direct payments – rent arrears form (word) to advise us when a tenant’s arrears approaching or have exceeded eight weeks.