What is Local Housing Allowance?

On 7 April 2008 the Local Housing Allowance (LHA) scheme is introduced nationally and will change how we calculate the maximum rent we can use for a housing benefit claim. Please refer to the Guide to LHA for further information.

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?

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
  • you change your address – if you rent a room or rooms this includes a change of room or rooms within the same property

All new housing benefit claims received after the 7th April for privately rented properties will also be processed under the LHA scheme.

Who is not affected?

Local Housing Allowance 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

The number of people who live with you is used to work out how many bedrooms you are entitled to. We do not count other rooms such as a living room, kitchen or bathroom.

The number of bedrooms you are entitled to is then used to work out which Local Housing Allowance rate applies to you.

You can use the following information as a guide to work out how many bedrooms you are entitled to.

You are entitled to one bedroom for:

  • every adult couple (married or unmarried)
  • any other adult aged 16 or over
  • any two children of the same sex aged under 16
  • any two children aged under 10
  • any other child.

Examples:

  1. A couple with a daughter aged nine and a son aged five will be entitled to a property with two bedrooms
    = One for the couple and one for the children.
  2. 2. 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.

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.

“LHA rates for the current month”

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 “HERE”.

The Rent Service will determine the LHA rates for each size category of property by selecting the median (middle value) of rents within a particular Broad Market Rental Area (known as a BRMA). To do this the Rent Service collects evidence of rents charged in a BRMA and selects the middle value.

When you have been on LHA for a year (or less if your circumstances change) your benefit will be re-calculated with a new LHA rate. This will be the LHA rate for the month in which the re-calculation is being made.

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

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

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 BRMA do 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. South Kesteven District Council has the following four Broad Rental Market Areas:

  1. Grantham and Newark
  2. Peterborough
  3. Lincolnshire Fens
  4. Lincoln

The postcode of a property is used to work out which BRMA a property is in. The Rent Service website can be used to find out.

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

Under normal circumstances LHA is paid directly to the tenant and not to the 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.
  • 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 because you believe the bank will refuse to give you an account please contact the councils customer services and ask for a leaflet about paying your rent and setting up a basic bank account. This leaflet gives details of several high street banks who offer basic bank accounts which are available to almost anyone.

If you need help to do this you may wish to speak to the citizen’s advice bureau.

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. South Kesteven District Council will need information from you to explain why you feel you will have difficulty making your rent payments.

A “Direct Payments Request Form” 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.

The “Benefits Safeguard Policy” explains how we make decisions to pay private landlords direct.

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

Rent Arrears

If we are advised that you have fallen behind with your rent payments we may consider paying your housing benefit direct to your landlord until the amount owing has been cleared. We will consider the evidence from the landlord and check this with you when making this decision. We will definitely make payments to the landlord if you are more than eight weeks behind with your rent and we also have discretion to consider paying a landlord direct when you owe less than eight weeks rent.