Housing Allowance is changing. Tenants and landlords need to change with it.

Garry Heil, the National Landlord Association’s Local Representative for the North West, gives us his advice on working with Local Housing Allowance (LHA) tenants…
Garry Heil, the National Landlord Association’s Local Representative for the North West, gives us his advice on working with Local Housing Allowance (LHA) tenants…

Garry Heil, the National Landlord Association’s Local Representative for the North West, gives us his advice on working with Local Housing Allowance (LHA) tenants…

Local Housing Allowance is to change dramatically in the next three years and it is important that landlords understand what impacts this will have on them and their tenants.

As a result of the Welfare Reform Act, all benefit recipients – including LHA – will soon be in receipt of Universal Credit instead of their current benefits package.

Universal Credit, which will be introduced in October 2013 for new claimants and from April 2014  for existing claimants, combines all benefit entitlement into one, wage-like payment. This new system will cap the benefit amount paid to each household at £26,000 per year.

At present, LHA varies according to the area and the subsequent rental costs. Under Universal Credit, capping the amount per household per year to £26,000 could mean that many tenants receive hundreds of pounds less in benefits per month and may no longer to be able to afford their current rental arrangements.

The changes to LHA are likely to have a significant impact on tenants living in high rent areas, particularly on families. In turn, the landlords are likely to see more instances of rental arrears.

My advice to landlords is that they work with their tenants, taking time to talk through the changes, discussing how they plan to manage their finances and helping tenants make arrangements for a bank account, if necessary.

Tenants may find credit unions helpful when setting up bank accounts and arranging for standing orders and direct debits. These outgoings can be deducted from the bank account as soon as the benefit payment is received, helping the tenant to manage their funds when Universal Credit is introduced.

It is essential that landlords are aware of the pending changes and understand that their tenants may be receiving significantly less money as a result of Universal Credit. Ahead of its introduction, landlords should work with their local council to plan how they can work together during the changeover.

And if, when Universal Credit is introduced, tenants do begin to struggle with their rent, landlords should work with them, perhaps arranging a short-term reduced rent or a repayment plan. Ending a tenancy should only ever be a last resort.

And for those landlords who currently don’t have LHA tenants, you’d be wise to keep informed of the changes – in this economic environment all tenants could find themselves needing to turn to Universal Credit for support.

For more information on the changes to Local Housing Allowance, visit http://www.landlords.org.uk/news-campaigns/campaigns/local-housing-allowance and attend your next NLA branch meeting for the latest update.

6 thoughts on “Housing Allowance is changing. Tenants and landlords need to change with it.

  1. Talking to your tenants is good but the bottom line is that the tenants will not be able to afford any top up rents even if the landlord reduces to current LHA levels. So many benefit claimants are having their income slashed there is just no money left in the kitty for incidentals like rent.
    The only way to go is have the tenants’ Universal Credit paid to a third party which is permissible so long as it is not the landlord (yes – believe it or not, the government just do not want us to receive it) make sure the Third Party acts as the gurantor and they pay the rent to you. The guarantor should be a home owner – you can check this at HM Land Registry for £4 fee.

    1. I am glad I am not the only one with this problem, I have found many LHA tenants priorities are such that rent is bottom of the list and no amount of talking to them and trying to work out a plan they could stick to will be followed for more than a month or two then we have huge arrears. How are we supposed to handle these tenants.

  2. The other challenge looming on the horizon is that private landlords need to look seriously at increasing rents med-long term espicially as low interest rates won’t be around for ever. This only makes clear business sense.

    However……it makes life very difficult where you have Universal Credit tenants in occupancy.

    Quarantor paperwork needs to be water tight when the tenant falls into arrears.

  3. Sorry but will not be taking LHA tenants, and when a current tenant finds themself out of work unfortunitly they will be asked to leave.
    We do not provide All Inclusive homes and all the time the local councils do not support the Good landlords then we have no alternative but to “block” benefit tenants, as one person has mentioned when Interest rates increase so will Rents, even though Service Charges and maintenance increase year on year, the Good LL has not always passed these increases on but this cannot be sustained for ever.
    The local councils will have to start providing accomodation, again.

  4. i agree with Steve we will NOT be taking any LHA Tenants when this comes into force , we find it hard to to keep are heads above water NOW . So if this happens then i for 1 will not take LHA Tenants and the Council will have to find them some where to live . They { the councils } should be backing the private Landlords of this country as we make up a very large proportion of Landlords in the uk. and this saves them the problems of having to accommodate them .As we know they { do not build houses any more . So HOW are they going to find them somewhere to live . Or are they trying to frighten us into thinking we will drop are rents {I for 1 cannot afford to do that}

  5. Are landlords aware that as of APRIL 2013 housing benefit will not be paid for those who receive £500 wk in benefits, you should check what benefits your tenant gets – my tenant currently gets £675pwk inclusive of HB but in April just 0.50p will be paid in HB, the tenant will continue getting her cash benefits until oct 13 and only at that point will she only receive £500.
    Also from April council tax will be payable on empty properties even if inbetween tenancies.

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