Information for Landlords

What is Local Housing Allowance?

Local Housing Allowance was introduced on 7 April 2008 and is used to work out claims for Housing Benefit for tenants who rent accommodation from a private landlord. Local Housing Allowance does not affect tenants in council accommodation or other social housing. If your tenant has been getting Housing Benefit since before 7 April 2008, the Local Housing Allowance will only apply to them if they change address or have a break in their claim.

If a claim is assessed under Local Housing Allowance rules, Housing Benefit is worked out according to the area in which the tenant lives and who lives with the tenant. Local Housing Allowance rates are set for different sizes of family in each area ranging from a single room in a shared house up to properties with four bedrooms. The maximum Local Housing Allowance rate which can be used to calculate a tenant’s Housing Benefit is the rate for four bedrooms.

There have been some changes to the scheme from April 2011 and January 2012. Details are given here.

Housing Benefit entitlement is initially based on the Local Housing Allowance rate which applies to the tenant, but the actual amount of benefit payable will be affected by other things including:

• any money the tenant has coming in
• any savings the tenant has
• if we expect anyone living with them to pay towards the rent
• if the tenant shares the payment of the rent with someone else, who is not their partner

Which landlords are affected by the Local Housing Allowance?

Local Housing Allowance affects any landlord who enters into a deregulated private tenancy agreement with a person who claims 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
• tenants of registered providers of social housing in England
• tenants of registered social landlords in Scotland and Wales
• some supported housing
• tenancies which started before January 1989
• tenancies in caravans, mobile homes, houseboats and hostels
• tenancies where the Rent Officer has decided that a substantial part of the rent is for board and attendance

How do I find out the Local Housing Allowance rates for my property?

Local Housing Allowance rates are published each month. Remember that the rate for your property will vary depending on the make-up of the family that you let to.

Because the Local Housing Allowance rates are published, prospective tenants will know how much help they will get with their rent and will be able to make decisions about what they can afford when looking for accommodation which suits their needs.

How often do Local Housing Allowance rates change?

The rates are reviewed monthly, but once a Housing Benefit claim has been decided, the Local Housing Allowance rate for that tenant is not normally reviewed until the anniversary of the claim, which is usually one year from the start of the claim. The new rate could remain the same, be lower or be higher.

If the tenant has a change of circumstances before the annual review date of their claim, a new Local Housing Allowance rate could apply to them.

Examples of changes include:

• they change address
• there is a change in the number of the people living with them
• the Local Housing Allowance rate which applies to them changes because of a change in their age or the age of someone in their family

What if the tenant’s rent is not the same as the Local Housing Allowance rate that applies to them?

If the rent that the tenant pays is more than the Local Housing Allowance rate, the tenant will need to use other money that they have coming in to make up the difference. For example, if the rent is £110 and the Local Housing Allowance rate is £100, the maximum amount of benefit we could pay to the tenant would be £100 and they would have to pay the remaining £10 themselves using other money.

How is the tenant’s benefit paid?

In most cases benefit will be paid directly to the tenant. Tenants are encouraged to have their Housing Benefit paid into a bank account and then set up a standing order to pay the rent to their landlord.

Why is payment made to the tenant instead of directly to the landlord?

One of the aims of Local Housing Allowance is for tenants who get benefit 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 was always a right for tenants to ask for this arrangement, and it is this right that has changed.

I already receive direct payment for some of my tenants. Will these payments stop?

No. Any tenant who was getting Housing Benefit before 7 April 2008 will continue to be paid in the old way. If you are already receiving Housing Benefit payments directly on behalf of your tenants, this will continue.

Local Housing Allowance rules only affect tenants who make a new claim, move address to private rented accommodation or have a break in their claim 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 arrangements. This means that you may have tenants getting Housing Benefit that we pay directly to you, and other tenants getting Housing Benefit calculated using the Local Housing Allowance rules who will pay you themselves.

What protection exists for landlords?

There are a range of safeguards to protect the interests of landlords and tenants. 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 can also be made directly to the landlord where we decide that the tenant is:

• likely to have difficulty in managing their financial affairs or
• unlikely to pay their rent

We can also decide to pay benefit to a new landlord if, during the tenant’s current claim for benefit, we have had to pay the landlord because the tenant was eight weeks or more in arrears with their rent.

Which tenants might have difficulty with paying their rent?

There are many reasons why someone may have difficulty paying their rent.

The tenant might be someone who:

• has severe debt problems / recent County Court judgement against them
• is an un-discharged bankrupt
• is unable to open a bank or building society account
• has some of their Income Support or Jobseeker's Allowance paid direct to the gas, electricity or water company by the Department for Work and Pensions
• is getting help from Supporting People
• is getting help from a homeless charity

Or someone may have difficulty paying their rent if they:

• have learning difficulties
• have an illness that stops them managing on a day-to-day basis
• cannot read English
• cannot speak English
• are addicted to drugs, alcohol or gambling
• are fleeing domestic violence
• are a care leaver
• are leaving prison
• are homeless

There may be other reasons why someone might have difficulties. Please contact us for more information.

Who decides if a tenant is likely to have difficulty in paying their rent?

The Benefits Team 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 the landlord, can approach us if you think it is likely that your tenant will have difficulty in paying, or if you feel that 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 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?

Tenants can no longer simply ask for their benefit to be paid directly to their landlord. If a tenant feels that they may have difficulty in managing their financial affairs and that their benefit should be paid directly 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.

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. We 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?

You have the right to appeal against a decision by the authority not to make direct payments to you.

You cannot appeal against the amount of benefit awarded to a tenant.

Where to get more information

If you want to know more about Local Housing Allowance and how it affects you, please contact the Benefits Team.

Remember that this information is for guidance only. It is not meant to say exactly what your legal rights are. Whilst we have tried to make sure that the information is current and correct, it is possible that there may be out of date or incorrect information, or that some ideas may be oversimplified.