What is Local Housing Allowance LHA
LHA is a method of calculating Housing Benefit for claimants who rent properties from private landlords and which took affect on 7th April 2008. Claims are based on a standard LHA rate determined by the area in which the claimant lives (called the broad rental market area, BRMA) and the household composition.
LHA is for tenants on a low income and will be means tested under current Housing Benefit rules. An application form is still required to clarify the circumstances including income and savings as this will determine the amount of LHA received. LHA will be paid to the claimant, although there are safeguards in place to protect those who are unable to mange their own affairs. If the LHA rate is lower than the contractual rent then it is the claimant’s responsibility to pay the LHA and the shortfall to the Landlord.
If the claimant is under 35 years of age the amount of Benefit payable is restricted to the Single Room Rent. This change took place in January 2012 and replaces the old age limit of under 25 years of age.
Who is affected by LHA?
LHA affects tenants in the private rental sector who are in receipt of Housing Benefit, although there are some exemptions to this rule (please see list below). Private sector landlords with tenants claiming LHA will also be affected due to the majority of direct LHA payments going to their tenant, instead of the preferred choice of the claimant that is currently in place.
The scheme focuses on mainstream private tenants, therefore the following cases are exempt from LHA:
- Registered social landlords
- Protected cases, such as supported housing provided by social services, charities, voluntary organisations, etc
- Pre 1989 regulated tenancies
- Exceptions such as caravans, houseboats and hostels
- Board & attendance cases
When will existing Housing Benefit (HB) claims change to LHA
If there is a break in a Housing Benefit claim or,
The claimant changes address.
The 2012 emergency budget included the proposal that LHA rates would no longer be set every month in line with local rent growth. From April 2013 LHA rates will be uprated in line with the Consumer Price Index (CPI) inflation.
LHA rates will be set annually each April at the lower of, either the previous LHA rate uprated by the previous September's CPI, or the 30th percentile of local market rents in the previous September.
This will allow claimants to know what the maximum amount of LHA will be for the coming year.
Changes in rent
Mid year changes in rent, whether an increase or decrease, will be treated as a change of circumstances. Where the claimant's rent has increased leaving a shortfall, a determination of a new LHA rate will be needed. However, this is not the case where the claimant's rent is already above the LHA rate.
The above changes will mean it is no longer necessary to review a claimant's LHA rate in line with the anniversary date that was previously determined by their date of claim or change of circumstances. LHA rates will only be uprated once a year, each April, starting from April 2013.
From January 2013 the provision to review anniversary dates has been abolished. Those claimants whose anniversary date is in the period January 2013 to March 2013 will continue to receive the current LHA rate until it is uprated in April 2013.
LHA Rates from April 2013
Shared accommodation - £45.00 (same as current rate)
1 bedroom - £60.00 (reduced from £64.62)
2 bedroom - £75.00 (same as current rate)
3 bedroom - £88.44 (increase from £86.54)
4 bedroom - £115.38 (reduced from £121.15)