Local Housing Allowance

When the Local Housing Allowance scheme was rolled out nationally in April 2008 to replace Housing Benefit, many landlords were extremely worried. The main fear was that they would never get their rent, as LHA was now to be paid to the tenant, instead of directly to the landlord, as before.

The noble idea here was to give low-income and unemployed tenants more control of their affairs and finances, and so increase their self-respect.

But this was not the only major change. Rents for tenants on benefit would no longer be set by landlords, but calculated by Rent Officers for each local authority, divided into Broad Market Areas.

In return for handling their own rental payments, accommodation rules became extremely strict. A single person or cohabiting couple would be allocated a one- bedroom flat, while a family with two children may be permitted either a two- or three-bedroom property depending on the ages and genders of the children. Since April, frequent inspections are made to ensure these rules are being followed, and speedy eviction will follow any contravention.  The LHA is means-tested although if a tenant secures a property at less rent than the set LHA, they are allowed to keep up to £15 a week for themselves.

Private landlords do not have to rent to LHA tenants of course but in areas of high unemployment it is often virtually the only tenant pool that exists, and many have little choice but to accept the new conditions.

A number of local authorities have been piloting the scheme since 2004, so how is it all now working out in practice?
Benefits manager Mo Lawless of Brighton and Hove Council is extremely enthusiastic, and insists it is all going beautifully. She says: “We were one of the authorities pioneering the scheme and we held many meetings with landlords who naturally had many concerns.

“The main fear was that tenants would keep the rents for themselves once they were paid directly. But this simply hasn’t happened as, if the rent is not paid, the tenant is evicted and would have a problem finding other accommodation.

“Where tenants are considered vulnerable, and suffering from mental or physical problems,  rents are still paid directly to the landlord. We accept that you can’t just give tenants money when they have never handled money before and may be incapable of budgeting. Otherwise, the LHA is paid into the tenant’s account two weeks in arrears, and rents can only go straight to the landlord after eight weeks of non-payment.. Under the previous scheme, rents were paid four weeks in arrears directly to the landlord.”

So, if a tenant defaults, can the landlord ever recover this lost money? “Yes, definitely,” Lawless says. “We have the capacity to clear the arrears, but we advise landlords not to wait for eight weeks. If the rent is not being paid as agreed, we suspend the benefit while we investigate the case.” Deposits are taken and protected under the Tenancy Deposit Scheme and LHA tenants have to come up with a deposit before being allowed into a property.

But not all landlords are satisfied.  Bernie Lewis, who lets to a number of LHA tenants in North Staffs,  says “The aim was to increase the personal responsibility of unemployed tenants to help them develop skills as they moved into employment.  But in many areas, there are just no jobs for them.

“And we have found that many LHA tenants do not have the right kind of bank account, which means they cannot pay by direct debit.  This means they have to find cashpoints and pay the landlord by cash. Many of these tenants are now begging their landlords to take the money direct from the local authority yet this is not allowed. “The latest survey found that 84% of LHA tenants were paying rent properly, but 16% were not and the result is that landlords are much less likely to let to Housing Benefit tenants than before.”

But the overriding concern, Bernie Lewis believes, is that communities are being destroyed by the new LHA. “As the allowance is based on personal entitlement, tenants have to move as household size changes. For instance, a family which has lived happily in a three-bedroom house for, say, 15 years would have to move to a one-bedroom property once the children have grown up and left.

“Landlords then either accept a greatly reduced rent or turn the tenant out. And the £15 excess they are allowed to keep is encouraging LHA tenants to seek substandard properties.”


Bradford and Bingley Magazine