What is local housing allowance?
Local housing allowance (LHA) is used to calculate housing benefit for tenants who rent their home from a private landlord. The amount of benefit paid to the tenant is based on the location of the property, whether it's shared accommodation and the number of bedrooms each claimant is allowed.
Why does the number of bedrooms matter?
Like any benefit, the criteria for calculating LHA is a complex one. The number of bedrooms is an important part of the equation. Under the rules, the maximum number of bedrooms is four.
The council (who make the payments) will assume one bedroom is needed for:
- Each adult couple.
- Every single person over the age of 16.
- For every two children of the same sex under the age of 16.
- Any child or person with a disability who is unable to share a room.
Who receives the local housing allowance payment?
The tenant receives the payment. The idea, of course, is the tenant then pays the landlord. And in most cases, that's exactly what happens.
However, if the tenant is struggling with debt LHA payments can sometimes be swallowed up and used for other things. This leaves the tenant short of their rent and the landlord out of pocket. Unfortunately, a number of private landlords will be only too familiar with this scenario. This is why some landlords are reluctant to rent to tenants claiming housing benefit.
Private landlords will argue removing the opportunity for a tenant to spend LHA payments on other things would be best for all concerned. After all keeping a roof over someone's head should be the most important consideration. Making LHA payments direct to the landlord makes sense.
Exceptions to the rule
There are some circumstances when the landlord will receive the payment directly. This can happen if:
- The tenant has rent arrears of eight weeks or more.
- If the tenant is already having deductions made from their benefits for rent arrears.
But the council also have the power to choose to make payments directly to the landlord. They may do this if the tenant has had issues in the past with paying the rent or perhaps if they are vulnerable. They may have a learning disability for example.
What's the payment timetable?
The tenant receives the payment in arrears. Usually every two or four weeks.
But with private landlords expecting their rent in advance this timetable can cause problems. If the tenant hasn't budgeted correctly they can fall into arrears while waiting for their LHA payment. To avoid this they can apply for a discretionary housing payment. This payment meets any shortfall between the rent and the benefit the tenant receives.
LHA and private landlords
Local housing allowance and benefits, in general, is something many private landlords prefer not to be involved with. They will insist on tenants being in full-time employment and in receipt of a permanent wage. With the ever-changing rules and regulations regarding benefits and the great unknown of universal credit, it's an understandable point of view.
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