Local Housing Allowance

For people who are unemployed or have a low income, the Local Housing Allowance (LHA) and Council Tax Benefit can help pay for accommodation. LHA, which is paid by the Local Authority, is a flat rate benefit, compared to the more complicated Housing Benefit that it has replaced for private tenants.

LHA is based on average rent levels for a given area and the size of the household. Payment will normally be to the tenant who will be responsible for paying the landlord (although where a tenant is considered ‘vulnerable’ it can be arranged for the rent to be paid directly to the landlord).

Every Local Authority has been defined in terms of Broad Rental Market Areas (BRMA). Rent Officers set separate LHA rates for each BRMA. These figures are published by the Local Authority so that for both landlords and prospective tenants the amount of rent that LHA will cover is transparent from the outset. This should enable individuals to shop around and make informed decisions, before committing to a tenancy. If they choose to take a tenancy where the rent exceeds their LHA they will need to pay for the difference (just like the old Housing Benefit system). But if they find somewhere with a rent below their LHA, they will be able to keep the difference up to a maximum of £15.

 

Although the introduction of Local Housing Allowance will bring widespread change, the ‘Single Room Rent Restriction’ (SRR) will remain.

SRR applies if an LHA claimant is a single person aged under 25. The maximum amount of LHA is capped to the average rent for a single room in shared accommodation in the area.

SRR is widely considered to be a regressive, unfair system, because there is a real shortage of accommodation that meets the single room definition, making it very difficult for many young unemployed or low income people to find affordable housing.

A coalition made up of Centrepoint, Child Poverty Action Group, Citizens Advice, Crisis, Foyer, Shelter, YMCA and the British Property Federation, has been lobbying the government to abolish SRR. The coalition argues that SRR means that 87% of under 25s claiming Housing Benefit (the research predates the introduction of LHA) face an average shortfall of £35.14 a week between what they receive in benefit and the rent they owe. This will often result in debt, eviction or homelessness.

It is important for young people to carefully consider the financial implications of moving into the private rented sector (PRS), and seek advice from Jobcentre Plus or from a PRS scheme that they are in contact with.