Local Housing Allowance or LHA is a new way of deciding rent payments for people receiving Housing Benefit (HB). It will not replace HB. A flat rate is used based on the size of the tenants household and the area in which they are renting the property. This amount is not directly related to the rent that you charge so the benefit may be higher or lower than your contractual rent. There is a £15 cap on the amount of LHA that can be received over the contractual rent. The rate of LHA that a customer receives will be reviewed on an annual basis.

Other circumstances such as money that the tenant has coming in or other people living in the household, will still affect the amount of benefit paid so the tenant may not always receive the full rate of LHA.

When are the changes to be introduced?

Alnwick District Council will introduce Local Housing Allowance on the 7 April 2008.

What does the LHA scheme cover?

The new scheme will apply to Housing Benefit customers in the deregulated private sector and mainstream private tenancies only.
If you are a landlord providing accommodation in one of the following types of tenancy, your tenants will be exempt from LHA.

• Registered social landlord tenancies
• Protected cases, such as supported housing provided by certain local authorities, social landlords, charities and voluntary organisations.
• Tenancies which are excluded from current rent restrictions ( such as pre 1989 tenancies).
• Exceptional cases such as caravans, houseboats and hostels; and cases where the rent officer judges that a substantial part of the rent is attributable to board and attendance ( e.g. hotel accommodation which already exists in the private sector )

Customers renting within these sectors will continue to receive Housing Benefit calculated under existing rules.

What do you define as the mainstream private sector?

If you are a landlord who lets accommodation in the sector deregulated by the Housing Act 1988, then we consider this as the mainstream private sector.

Will existing benefit claims be transferred to LHA right away?

Not straight away. Tenants will continue to receive benefit under existing rules until a change occurs that affects either the number of occupants in the household, they have a break in their claim of one week or more or they move to a different address. Benefit will then be transferred to the LHA scheme. However if there is a death in the household, and the change would result in a reduced LHA, the authority will protect the tenant for 52 weeks from the date of death at their current rate.

What are LHA rates based on ?

Different LHA rates will apply in different areas. Within those areas, they will be based on the median rent charged by landlords in the private sector for properties of various sizes. LHA rates will be further broken down into 'Room Rates' that will apply depending on the size of the household, including any non dependants. Size Criteria will be based on allowing one bedroom for:

• a) Every adult couple
• b) every other adult who is not part of a couple
• c) any other adult aged 16 or over
• d) any two children of the same sex
• e) any two children regardless of sex under the age of 10
• f) any other child

The number of living rooms, kitchens and bathrooms is ignored for the purpose of the size criteria.

Why are the changes being made?

• Fairness – The same amount should be paid to tenants in a similar situation.
• Choice – Tenants can take greater responsibility of their finances and choose how to spend their income. Like other tenants, who are not in receipt of benefits, they can choose whether to rent a larger property, or to spend less on rent and increase their available income.
• Transparency – Tenants (and landlords) will know how much financial help is available, they will know the amount of their maximum LHA, regardless of the size of the property they move into.     
• Personal responsibility – Paying Housing Benefit directly to the tenant rather than the landlord encourages the tenant to take responsibility for their financial obligations.
• Financial inclusion – Housing Benefit is paid directly into a bank account. This is a safe and secure method of payment and gives the tenant the opportunity to pay their rent via direct debit or standing order.
• Increased work incentives – LHA provides greater certainty about what help is available in and out of work. A simpler system results in quicker administration of housing payments and there is no longer a need to refer each private tenancy to the rent service. A more transparent system may also improve the ability of individuals to move between areas and to take advantage of employment opportunities.

How is the LHA Calculated?

The rent service will calculate the LHA for individual areas. These areas are known as the broad rental market area (BRMA’s), these are set each month. It is based on the median rental figure for that particular area depending on the size of the property. Basing the LHA on the median of rents for a certain property size means that exactly half of the rental properties of that size in the area will be affordable within the LHA amount that the customer receives.

Who will decide upon the rate of LHA?

Having set the BRMA’s, Rent Officers are responsible for calculating the LHAs for different sizes of property in that area. Once the Rent Service has determined the LHA rates for an area,  individual customer’s benefit will depend on their age and the size of their household. For example a person aged under 25 will receive the shared room rate whilst a couple with one child will receive the two - room rate.

When will LHA rates be published?

Rates will be published at the end of the month before the month that they come into force. For example, April rates will be available at the end of March. Rates will be on display at council offices across Alnwick District Council. Rates will also be published on this website on a monthly basis.

How will LHA areas be decided?

Each local authority area will have at least one Broad rental market area (BRMA) within the local authorities boundaries. Each BRMA will have a set of LHA rates. Each BRMA will include a mix of accommodation, amenities, hospitals and schools.

Will there be any right of appeal against the levels of allowances for each Broad Rental Market Area determined by the Rent Officer?

No, because the BRMA covers an area which includes other tenants, any appeal received could ultimately change the LHA rate for tenants who have not appealed and are content with their allowance. This is because any decision would have to be implemented to all tenants receiving that BRMA/LHA rate.

What if the customer's benefit is higher than their rent?

They may keep any excess that they are paid up to a maximum of £15 per week. This excess will not normally be taken into account when deciding other benefits.

What happens if the customer's benefit is lower than their rent?

They will need to make up any shortfall in their rent from their own income. Alternatively  they will need to find cheaper accommodation. However, rent can be protected at a higher rate where for the first 13 weeks of a claim, the tenant was previously able to pay the rent without the help of Housing Benefit and has not been on Housing Benefit in the last year. They must have been able to pay the rent on their accommodation when the tenancy began.

Will new customers be assessed under the old rules and paid the higher amount if they would be better off?

No when a new claim is made, there is no 'better off' calculation. The LHA will apply to all new claims from the date it is introduced.