LHA Rent allowances for Housing Benefit Claimants
It is important Landlords and Letting Agents understand that a Tenant only qualifies for a certain level of Housing Benefit [LHA] and this is based on their needs NOT what the property is.
- As an example - Just because they have three children it does not mean that the claimant will be entitled to an allowance that provides a bedroom for each child. It is not uncommon that a Landlord will rent a four bedroom property to discover after the Tenant is in situ that the tenant only qualifies for a two bedroomed property.
- A couple with no dependents may only qualify for the allowance of a 1 Bedroom flat
- A person under 35 only qualifies for a room in a shared house (aged increased from 25 April 2012)
Landlords and Agents should make their own investigations as to what a Tenant is entitled to prior to agreeing a tenancy.
The way in which the Local Housing Allowance, the Housing Benefit Tenants of private Landlords receive, will change in 2011.
It is important Landlords consider the following - it has already been announced that from April 2011 and Oct 2011 there will be a new way in which Housing benefits will be calculated. This fundamentally means that the affordability of recipients on benefits will be significantly reduced. Presently 5 out of 10 properties in the rented sector are affordable to people in receipt of benefits. After the changes this will reduce to 3 out of 10. Equipped with this knowledge Landlords should be cautious when entering into long term lets to benefit recipients.
- Local Housing Allowance rates will be based on the amount of bedrooms a family needs (to a maximum of five)
- LHA will be based on a wider range of local rents than they are at the moment. This may result in lower average rents.
- Housing Benefit increase will be linked to Housing Benefit (LHA) will be set in line with the Consumer Prices Index (CPI) instead of the Retail Prices Index (RPI). The RPI includes mortgage interest payments and housing depreciation, while the CPI does not. As of Nov 2010 CPI inflation was 3.1%, whilst RPI 4.6% in effect Housing Benefit will reduce by 1.5% below the inflation measure previously used.
- maximum ceilings introduced for the Housing Benefits tenants will receive
The major impact of the benefit reform introduced being is that tenants will receive less money than previously. In essence tenants will have to contribute more to the landlords in the form of top ups.
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