New Local Housing Allowance rules to affect Tenants and their Landlords

Private sector landlords will be able to choose to receive Local Housing Allowance direct, if they reduce their rents.

LHA is the allowance paid to housing benefit tenants in private rented accommodation. Unlike previous benefits, it is paid direct to tenants, leading to a number of landlords saying that the tenants fail to pass the payment on.

It is one of several measures laid before Parliament in new Housing Benefit Regulations.

Welfare reform minister Lord Freud said: “We are looking for private landlords to respond to the need for lower rents and in return we are prepared to permit direct payments from the state.

“This incentive will bring an overall downward pressure on rents in the private sector. As these rents come down, more properties will become available to claimants and landlords will have certainty that their income will be protected.”

The regulations also delay, to January 2012, capping LHA which is paid to existing recipients.

However, new recipients of LHA will have their allowances cut from next April. From then onwards, the maximum paid to any LHA tenants anywhere in the country will be £400 a week for a four-bed property.
 
The regulations also bring forward changes to the way LHA is calculated. At the moment, it is 50% of local average rents. From next April it will be 30%.

The National Landlords Association welcomed some of the concessions but added a note of caution: “Bringing forward the 30th percentile cut to April 2011 for new claimants will test how easily accessible rented housing will be for this group in need.
 
“The Government still needs to show how it will ensure that these tenants will be able to access at least the cheapest third of private rented properties and not be crowded out by other renters.”If you have tenants in receipt of benefits and would like to chat through the impact the changes may have on you then please contact Lee Bilbrough who will be delighted to assist.