The new world of LHA starts today

Today the Government’s major changes to Local Housing Allowance come into force.

These changes, previously announced in last year’s Emergency Budget and the Government’s Spending Review, form part of a programme of 11 separate changes to Housing Benefit designed to cut around £2bn a year from Housing Benefit by 2015/16.

These changes will have a massive impact on the private-rented sector and the 1.1 million-and-growing LHA tenants who rely on landlords for their homes.

Throughout this period the NLA has been actively engaging with civil servants, MPs and Ministers to argue against changes that might make LHA tenancies financially unsustainable and significantly increase rent arrears.

The Changes coming into force today

As NLA members will be well aware, the changes that come into force today are:

  • The removal of the up to £15-excess payment to claimants whose rent is less than the available maximum LHA rate
  • The removal of the 5-bedroom rate of LHA;
  • The introduction of a national cap on maximum LHA rates:
    • £250 a week for a one bedroom property (including shared accommodation)
    • £290 a week for a two bedroom property
    • £340 a week for a three bedroom property
    • £400 a week for a four bedroom property
  • LHA rates will now be based on the 30th percentile of local market rents, rather than the median (50th percentile) as before. Example LHA rates for March can be found here. [N.B landlords and tenants can now use the new LHA Direct service on Direct Gov to find out the LHA rate accessible for a particular household here.]

These changes will immediately affect all new LHA tenancies and those tenancies where there is a change of circumstances or are up for renewal. Existing LHA tenants will have access to 9 months transitional protection from these changes, so long as there are not any change in their circumstances.

Direct Payments

Whilst most landlords can accept that the removal or the £15-excess and the introduction of national caps are ultimately fair and necessary, the rest of the programme of changes will damage the ability of private-rented sector to deliver housing to LHA tenants.

One of the greatest worries landlords have is the danger of increasing rent arrears as tenants struggle to manage their drop in finances.

To help combat these concerns, local authorities have been given the power to allow direct payment to landlords where landlords reduce the rent to an affordable level for the tenant. The Department for Works and Pensions (DWP) has issued new guidance for local authorities on this issue and landlords should speak with their local benefits office for how it affects their tenants.

More changes to come

With the Welfare Reform Bill currently before Parliament (you can see the NLA give evidence to the Bill Committee here), more changes to LHA are on the way.

And sooner than you might think, DWP Ministers have already announced that they are bringing forward the change that will see under-35 year olds only eligible for the shared housing rate of LHA to January 2012.

Keep up-to-date with the developments by checking out the NLA website’s Welfare Campaign section.

One thought on “The new world of LHA starts today

  1. This was a major worry for landlords at our Sheffield NLA meeting in January. Many can’t afford to put down their rents because their costs are too high.

    Next Sheffield meeting is April 11th if any one wants to come. 6:30pm for a 7:30pm start at the Sheffield park hotel.

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