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Local Housing Allowance:
information for private landlords
What is Local Housing Allowance?
With Local Housing Allowance, benefit is not
usually based on the property in which the tenant lives. It is
based on:
- who lives with the tenant
- which area the property is in
- how much money the tenant has coming in
- whether anyone living with the tenant is expected to contribute
to their rent.
There is no change to the entitlement rules
for Housing Benefit – these will still be based on a person's
income, savings and proof of rent etc.
How do I find out what the Local Housing Allowance rates for my
property will be?
We will publish the Local Housing Allowance
rates every month..
How does Local Housing Allowance affect landlords?
The only change for most landlords is that
payment of benefit worked out using the Local Housing Allowance
rates will normally be made direct to the tenant. The tenant will
be responsible for paying their rent to the landlord.
Which landlords does Local Housing
Allowance affect?
Local Housing Allowance affects any landlord
who enters into a deregulated private tenancy agreement with a
person awarded Housing Benefit. By deregulated, we mean a tenancy
that has been entered into since 1989 and is not covered by one of
the exceptions listed below.
Who is not affected by Local Housing
Allowance?
Local Housing Allowance does not affect:
- local authority landlords who let to 'council
tenants'
- tenancies with registered social
landlords
- some supported housing
- tenancies which started before 15 January,
1989 (2 January, 1989 in Scotland)
- tenancies in caravans, houseboats or
hostels
- tenancies where the Rent Officer has decided
that a substantial part of the rent is for board and
attendance
Why is Local Housing Allowance being introduced?
Local Housing Allowance is being introduced to
increase responsibility, place choice firmly in the hands of
tenants and help develop the skills to make the transition into
work. The objectives of introducing Local Housing Allowance
are:
Fairness – to pay similar
amounts to tenants with similar circumstances.
Choice – to allow tenants
to choose between price and quality of accommodation.
Transparency – it is easier
for tenants (before they commit themselves to a property) and
landlords to find out how much rent could be covered by Housing
Benefit.
Personal responsibility –
making tenants take responsibility for budgeting for, and paying,
their own rent.
Financial inclusion – to
encourage tenants to have their housing payments paid into a bank
account and set up a standing order to pay the rent to their
landlord.
Improved administration and reduced
barriers to work – a simpler system helps to speed up the
administration of housing payments giving tenants more confidence
when starting a job that any in-work benefit will be paid
quickly.
Why are we stopping direct payment to landlords?
Tenants who get benefit calculated using the
Local Housing Allowance rates should be able to take greater
responsibility for managing their financial affairs and paying
their rent to their landlords, in the same way as other tenants do.
This is why any benefit will usually be paid to the tenant and not
to the landlord.
In the past, there has never been a right
for a landlord to receive Housing Benefit payments direct. However,
there is a right for tenants to ask for this arrangement, and it is
this right that is changing.
I already receive direct payment for some of my tenants. Will
these payments stop?
No. Any tenant who is getting Housing
Benefit on 7 April, 2008, will continue to be paid the old way. If
you are receiving Housing Benefit payments direct on behalf of your
tenant(s), these will continue to be paid to you.
The Local Housing Allowance rules will only
affect any tenants who make a new claim, move address to new
private rented accommodation or have a break in their claim, on or
after 7, April 2008.
If you are a landlord who owns or manages a
number of properties, you may find that you have tenants who claim
Housing Benefit under the two different schemes. This will mean
that you may have tenants getting Housing Benefit that the local
authority pays to you, and other tenants getting Housing Benefit
calculated using the Local Housing Allowance rates who will pay you
themselves.
What protection exists for landlords?
There are a range of safeguards to protect the
interests of landlords. Some of these already exist. For example, a
local authority must usually pay the benefit to the landlord if the
tenant is eight weeks or more in arrears with their rent.
Payment may be made direct to the landlord
where we decide that the tenant is:
- likely to have difficulty in managing their
financial affairs.
- unlikely to pay their rent
We can also decide to pay benefit to the
landlord if, during the current claim to benefit, we have had to
pay the landlord because the tenant was eight weeks or more in
arrears with their rent.
We recommend that, if a tenant is starting to
build up rent arrears, you should get in touch with us before it
gets to eight weeks. This will allow us to investigate whether
there is a problem that needs addressing.
We will provide a landlord hotline number for
you to use if you have a query or problem with your tenant paying
rent. The number is stated at the end of this leaflet. You
may only use this number between 2.00 – 5.00 pm.
Who decides if a tenant is likely to
have difficulty in paying their rent?
The local authority will decide whether a
tenant is likely to have difficulty in paying their rent. Evidence
will be required to support a request, which can be made by the
tenant or other interested party.
You, as a landlord, can approach us if you
think it likely that your tenant will have difficulty in paying or
you feel they cannot deal with their financial affairs. We will
contact your tenant for further information regarding this.
It is up to us to decide whether a tenant is
unlikely to pay their rent. We can only do this if we have evidence
of past, or likely, failure to pay rent. We will take into account
all knowledge and evidence available to us at the time, including
any known past history when making our decision.
It will also be important for the landlord
to keep proper and adequate records of rent payments received and
details of any contact made with the tenant.
Can the tenant ask for their benefit to be paid to their
landlord?
As part of the Housing Benefit reforms,
tenants will no longer be able to simply ask for their benefit to
be paid direct to their landlords. If a tenant feels that they may
have difficulty in managing their financial affairs and may be
entitled to direct payment to their landlord, we will consider any
request they make.
Where direct payments are made to me, how long will they go on
for?
Where a tenant is considered likely to have
difficulty in paying their rent and there is little or no prospect
of their situation changing, payment of benefit to the landlord is
likely to be long-term.
In cases where the situation is likely to be
temporary, or where rent arrears of more than eight weeks have been
repaid, the situation will be reviewed. If the tenant is in a
better position to have their benefit paid to themselves, and to
pay their rent in full and on time, direct payments to the landlord
will stop.
Won’t tenants spend their Local Housing Allowance on other
things?
Many tenants in the private rented sector
get their Housing Benefit paid to them and regularly pay their rent
on time. Where a tenant is moving to direct payment, we will make
it clear to them what their responsibilities are and the
consequences of not paying their rent.
There will be some customers who can’t
manage their own rent payments, so the comprehensive package of
safeguards will stop these customers falling into unmanageable
difficulties.
The Local Housing Allowance scheme has been
operating in 18 local authorities across England, Scotland and
Wales since October 2003. In these areas, 84% of tenants whose
benefit is calculated using the Local Housing Allowance rules are
successfully managing their own rent payments. Of the remainder,
only a third are having their Housing Benefit paid to the landlord
because they have fallen into arrears of 8 weeks or more. The rest
are having their benefit paid to the landlords because the local
authority identified that they might not be able manage their rent
payments.
Won’t this discourage landlords from letting their properties
to claimants?
We believe the Local Housing Allowance
scheme has positives for both landlords and tenants.
The reforms are intended to help landlords,
as well as tenants, by creating a more transparent system that is
simpler to understand and administer. Overall, it will support and
clarify the relationships between the local authority, tenants and
landlords.
Landlords will still be able to approach the
local authority for help with rent arrears for tenants getting
benefit calculated using the Local Housing Allowance rules. They
cannot do this where they have a tenant in rent arrears who is not
getting benefit.
Because payments are going to tenants in
most cases, this removes the possibility of landlords being asked
to repay large amounts in overpaid benefit. Under the Local Housing
Allowance scheme it is unlikely that the local authority would ask
you to repay any money that your tenant has paid directly to
you.
We believe that the safeguards that exist
regarding direct payment to landlords strike the right balance in
protecting the interests of both landlord and tenant.
Can I make direct payment a condition of the tenancy?
A local authority is not party to the
tenancy agreement between a landlord and tenant, and is not bound
by any conditions in a tenancy agreement. The local authority
cannot pay benefit to a landlord directly at the tenant’s request –
the rules about when we can pay the landlord directly are outlined
above. You cannot change this by making direct payment a condition
of the tenancy.
What appeal rights do I have against a payment
decision?
Appeal rights are not changing as a result
of the new scheme. You will still have the right to appeal against
a decision by the authority not to make direct payments.
Where to get more information
If you want to know more about the changes and
how they affect you:
- phone your Housing Benefit department on
02392 446362
- visit your Housing Benefit department at
Civic Offices, Civic Centre Road, Havant
- email us benefits@havant.gov.uk
- visit www.dwp.gov.uk/housingbenefits/lha