New Rules April 2011 Direct Payment

The Department for Work and Pensions are implementing significant reformsto Housing Benefit that impact on all social landlords. PIMS explains how.

  Councils will be requesting landlords who rent to Housing Benefit claimants to reduce the rent they charge and in return the rent will be paid direct to the landlord. Should the landlord not accept the lower rent then the money will be paid direct to the Tenant.
 
The key objectives are:
  • To exert a downward pressure on rents for tenants claiming Housing Benefit from April 2011 when changes to Local Housing Allowance (LHA) rates take effect.
  •  If you would like to find out what the new Local Housing Allowances are click here
  •  These changes will come into affect immediately for new customers who claim from 1 April 2011. Existing customers (tenants) will normally have up to nine months from the anniversary of their claim on or after 1 April 2011 to give them time to make alternative arrangements if necessary.
  • The sting in the tale - or where councils may apply pressure to the landlord. Direct payment can only be made where the tenant is able to retain or secure a tenancy if the rent is at a level considered affordable whilst in receipt of Housing Benefit. If the tenant continues to have a shortfall which they cannot meet they will be unlikely to be able to meet their rental commitment and will be at risk of eviction. In these circumstances, they will not be able to retain the tenancy and so the safeguard will not apply. (The 8 weeks in arrears still applies)
  • For existing tenants, the Council will need to confirm that there has been a genuine reduction in the rent charged by the landlord and that the reduced contractual rent is in the tenancy agreement. In the majority of cases, this will need to be a reduction to the relevant LHA rate. it is implicit that the rent should be affordable to the tenant. (This means acceptance of the new lower reduced LHA rents)
  • If the Council are aware that the landlord has routinely let to HB customers at affordable rents without direct payments it would be reasonable to expect that they would continue to take on new tenants without direct payments. It is not the intention that the safeguard be used to make payment to the landlord as a matter of routine. This could imply that the council simply expect Landlords to accept a 10% reduction in rents - Do NOT issue AST at the previous rent and the council will have to negotiate the rent down by offering you direct payment.
  • Full rules click here
The outlook for the future. The rent will continue to be paid direct to the landlord where it is deemed the rent is affordable. However should Local Housing Allowance rates reduce by a further 8% next year does this mean Landlords will need to accept a further reduction or will they pay the tenant direct at a time where the tenants are likely to see their benefits also reduce?
 

What are the new LHA rates?

Enter the Postcode of a property below to find out the maximum rent the tenant can claim. Please remember LHA payable is determined by how many rooms the Tenant is entitled to claim for; not the number of rooms in the property. (more information see  Eligibility for Housing Benefits)