LOCAL HOUSING ALLOWANCE FACTS FOR LANDLORDS FROM LETTINGFOCUS.COM

LOCAL HOUSING ALLOWANCE - THE FACTS FOR LANDLORDS FROM LETTINGFOCUS.COM

LettingFocus.com property expert David Lawrenson explains how Local Housing Allowance (LHA) works. Ask us for advice with your buy to let and property investments.

Property expert David Lawrenson of www.lettingfocus.com says, "As Local Housing Allowance replaces housing benefit it is important for landlords to understand how it works, how it is paid, how long it is paid for, why it is important that tenants have bank accounts set up well in advance, under what circs it can be paid direct to the landlord (and how landlords can get it paid direct to them from the word go), frequency of payments, what happens if arrears build up, what the landlords obligations are and what rights of appeal exist."

Local Housing Allowance

Local Housing Allowance is a government reform to supposedly make the housing benefit system work better.

It is a flat rate benefit for private tenants that i’s based on what the tenant and their family needs in terms of size of accommodation and it is calculated according to household size (i.e. the number of people in the family) and location.

Under the system the tenant can choose a home with a higher rent and make up the shortfall or pay a lower rent and keep the difference. According to the government, giving the tenant this choice encourages and engenders financial responsibility.

However, many landlords are sceptical this will work in practice especially with the more vulnerable tenants.

It should be possible for a landlord to find out what the tenants will receive because this depends on size of property (which is linked to size of family) and because average rent values for different sized properties in the local “Broad Rental Market Area” or BRMA are worked out by the Rent Service. You can easily find out the rent for any area by calling the Housing Department of your local authority.

As well as using the BRMA rents and size of family, the tenants’ income and savings are also assessed to work out how much Local Housing Allowance they will actually receive.

The Allowance is normally paid for a year unless the tenants’ circumstances change and it is normally paid to the tenant (compare this to the old Housing Benefit which could in most cases be paid straight to the landlord.)

To receive the allowance the tenant must have a bank account (again, this goes back to the govt idea of encouraging financial responsibility.)

Many tenants who don’t have accounts already may struggle to cope and may come unstuck with the modern banking system’s needs (because of anti money laundering) to see a whole raft of IDs before they will open one. Cheques for Local Housing Allowance can be issued by exception but tenants who cannot get bank accounts open will have to pay extra to cash cheques elsewhere.

How to get LHA Paid Direct

Only if the tenants is classed as vulnerable can the landlord then be paid direct – examples might be people with learning difficulties, lack of English, debt, alcohol, drug or gambling problems, though the local authority will consider other reasons too.

Other bodies such as social services and doctors may also suggest to the local authority that the tenant is vulnerable and landlords with possibly vulnerable tenants ought to facilitate and encourage the tenant to get letter in support of such a classification - that way they will be paid direct!

The local authority does not advise the landlord when a payment has been made so it’s good practice to check directly with the authority’s Housing Benefit section if a cheque or other payment was expected but has not been received.

If arrears amount to over 8 weeks the Local Housing Allowance can be paid direct to the landlord. Landlords should report to the local authority any arrears of rent as soon as they emerge.

Local Housing Allowance Fraud

Landlords must inform the local authority if there has been a change in the tenants’ circumstances and it is an offence not to do so.

This was the case also under the old Housing Benefit system but it seems to be being enforced more strictly now. However, now there is no right to the local authority to claw back LHA paid to the tenant if it later turns out that the tenant has been acting fraudulently in receiving the Allowance.

’s always worth landlords getting the tenant to give the local authority permission to discuss the claim with the landlord, so you are kept in the information loop and can progress claims.

About David Lawrenson and Lettingfocus.com

This is just a rough guide to Local Housing Allowance. If you need more advice on local housing allowance or letting to people on housing benefit please send me an email. I’m David Lawrenson from property mentors lettingfocus.com.

I’m the author of the buy to let book “Successful Property Letting - How to Make Money in Buy to Let” which is the UK’s top selling property title. Click here to buy the book: property book.

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Lawrenson and Lettingfocus.com – Freelance Property Journalist, Speaker and Consultant

I am an independent property expert and a well known property blogger. I contribute to newspapers and a host of property websites as a property columnist.

My work as a property consultant and property speaker also stretches to helping companies such as banks, building societies, housing associations and web portals with their buy to let and property products and services.

You can read more about my buy to let networking programme at my website lettingfocus.com. For more information please send me an email.