Housing Benefit LHA DSS & Universal Credit

Landlords must be familiar with the Local Housing Allowance (LHA) which is the way Housing Benefit is paid to Tenants or Landlords in the private rented sector. These rules were introduced in April 08, amended in April 2009, April 2011, Oct 2011 and April 2012. From October 2013 Universal Credit payment replaces Benefits Payments.  This wil be phased in from April 2013 [test regions known as Pathfinders] to all benefit applicants Nationwide by the end of 2015 
 
Part of the desired objectived of Universal Credit is to make people responsible for their finances and as is it is impllied their will be no recourse for Landlords to receive rent payments direct, from the council - even where the Tenants are in serious arrears. Many landlord will abondon providing housing to DSS but at the very least they are advised to review their Vetting Benefits DSS LHA Tenants processes
 
In April 2012, the age limit of the Single Room Rate (SRR) was raised from 25 to 35 years old. Around 88,000 claimants were affected and some Landlords saw their rent reduce by 35%

About Housing Benefits / Local Housing Allowance

  • How is it determined what Housing Allowance a Tenant will receive more
  • What Housing Allowance 'Rent' can my tenants claim (or charge) for my property more
  • The council have approached me and offered me a deposit to rent to a family more
  • I want to discuss the claim with the council but they refuse to talk to me more
  • What are the considerations when vetting Tenants on benefits more
  • I have a Benefits Tenant in rent arrears what are the pitfalls more
  • The Council want to do an inspection of my property more
  • The council paid a deposit for a new Tenants what do I have to do more
  • The Tenant is over 8 weeks in arrears I want the rent paying direct to me
  • Entitlement to the LHA is means-tested the Tenant will need to provide a valid tenancy agreement as proof.
  • The council have informed me the Tenants claim has been suspended or and requested that I repay the rent money back to to the council see Overpayment suspension and repayment of LHA Housing Benefits

Considerations when renting to Benefit Claimants

     

    If the rent is higher than the LHA rate the tenant will be required to pay the difference this is know as the Top Up. If the rent you charge is less than the allowance the Tenant will be able to keep any excess benefit of up to a maximum of £15 per week. This rule will change in April 2011

    • Fewer Voids - Tenants are less mobile and likely to stay for longer periods, if long term unemployed.
    • Wear & Tear - Tenants spend more time in the property.
    • Guaranteed Income - Where the rent is paid direct to the Landlord.
    • Maintenance costs - Likely to be higher due to higher occupancy of the building during the day
    • High Rental Yield - If you rent to Tenants with the optimum allowance for the right type of property your return on investment is higher. Easier to achieve yield on lower capital cost properties that are not in the best part of town.

Pick a bad Tenant - you could be run ragged. The Tenant has the vast resources of the council, citizens advice, shelter, Legal Aid etc at their disposal all too willing to help them. You could find yourself a victim of wild accusations and law suits. We deal with such cases on a regular basis and they are very stressful for the Landlord. You must vet diligently.  

  • Hypocrisy at its best - If a Tenant rents from the Council or Housing Association the Housing Benefit is paid directly to the Landlord. [The Councils or Housing Association are exempt from the LHA. They wanted to protect their cash flow]. It is only the Private Rented Sector - where the principal of  "empowering tenants to look after their finances" applies.