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Local Housing Allowance Benefit Rates Are Too High & Open to Fraud say Lettingfocus.com. What’s Your Experience?

In our patch and the patches of many other landlords it is clear that Local Housing Allowance (LHA) rates are some way above private market rents.
Here in our area the local authority pays tenants the equivalent of £996 per month for a 2 bed property. But if you tried letting to private tenants who are not in receipt of this benefit it is not easy to get much over £870 for that kind of property.
So, no surprise that recently I have seen a few ads on letting sites where it says something along the lines of, “If you’re interested in letting to tenants on DSS/ LHA and are willing to say the rent is higher than it really is when I make a claim so we can share out the extra, then please contact me.”
Mmmm, this sounds a bit like fraud to me.
So the over-high LHA rates are making sure the taxpayer is being well and truly ripped off by being a green light to a few rogue landlords and tenants to try to “ring” the system.
So, please tell me if you are in an area where LHA is well above local rents.
We would also be interested in hearing about any cases where you know this kind of fraud is taking place. You don’t have to give details – we would just be interested in how widespread this practice is.
Let me know by emailing [email protected]
Oh - and you may be wondering why are LHA rates so high?
Is it just that the Broad Market Rental Areas (BMRB) set by the Rent Service are just too wide and encompass too many diverse areas within a single BMRB? Yes, I would say so.
Could it also be that the high rates be a bribe by the government to get landlords to let to tenants on LHA (because landlords don't like the new system in which LHA is now normally paid to the tenant).
I think so.
The simple (though costly) solution to all this would be more council houses, but maybe I'm still living in the 1970s.
Thanks to LS for the tip off on this story. Local presence can help!

Tell the letting agent what kind of tenant you want and don’t want. Think about who you want as well as how you do tenant reference checks.
Will you accept students? Animals? How about Student animals? Will you accept DSS? What should the tenants’ minimum income be?
Why tell the agent all this? Well, if you muck an agent about he will rightly have nothing more to do with you. So, be straight and be upfront. And confirm every conversation in writing too.
Tell the letting agent you will want to see the application form the tenant completed and the Tenant Report the agent gets back from the referencing company. Insist on reserving the right to speak to a prospective tenant before you agree to the letting. But only reject a tenant if there is a good reason to do so.
I’m David Lawrenson of LettingFocus.com - the landlord experts. Read Property Articles.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - buy Property Investment Book. The new edition is for accidental and experienced landlords and is fully up to date with all the recent changes to tenancy deposit schemes, landlord registration and capital gains taxes.
I’m a property expert and property speaker - and I run the well known property blog that you are reading now.
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general advice on property letting to anyone looking to buy property for themselves or to let.
What’s unique about lettingfocus.com is that we offer independent unbiased advice on renting out property because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier.
Find out about some great deals we have arranged at our Property Affiliate page.
For landlords' insurance products such as rent guarantee cover and property insurance click on Ukinsurancenet. Don't forget to quote our reference code, LFOC, to get the best rates from them too.
Copyright: David Lawrenson 2009. This blog is updated roughly once a week.
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