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Property Hawk

From the 1st of April those landlords letting to tenants on benefit will be faced with a new regime as changes to the Local Housing Allowance (LHA) come into force.

One of the changes that many landlords have been campaigning for is the right to receive direct payments from local authorities for tenants receiving housing benefit.  This was removed as a result of changes brought in by the Labour Government under the Local Housing Allowance (LHA).



Many landlords responded by simply refusing to let to tenants receiving housing benefit because of their bad experiences.  A significant minority of tenants simply failed to pay their rent despite receiving large handouts from the council.

Some landlords on the other hand have been making the LHA work for them.

They have exploited the anomalies in rental levels in the Broad Rental Market Areas (BRMA ) to buy cheap properties that have been able to secure high rents.  LHA rental levels are set by a government organization called the Rent Service.

Changes to Local Housing Allowance


From the 1st of April big changes will come in as result of the coming into force of new Housing Benefit Regulation (2010).
The main one concerning landlords is that from the 1st April local Councils will have the discretion to make payment of rent direct to the landlord where they believe that it will help assist in securing or maintaining a tenancy.  Worryingly however, is the proviso that the rent should be affordable and that the provision to make direct payments is only a temporary provision until “longer decisions have been made in the context of Universal Credit”.  Universal Credit being the new governments attempt at simplifying ( HA – HA! ) the whole benefit system.



Downward pressure on rents

It is very clear what the underlying purpose is of linking this provision to the affordability of rent.  It’s all about reducing the rents paid to landlords and cutting the Governments overall welfare bill.


Other measures that come into force for new LHA claimants are:

  • The abolition of the 5 bedroom band of LHA
  • LHA rates being set at the 30 percentile rate rather than median for the BMRA
  • Maximum rent caps being introduced: 1 bed – 250 pounds, 2 bed – 290 pounds, 3 bed - 340 pounds, 4 bed - 400 pounds.

Existing tenants will generally have their rent protected for 9 months before the new rates apply.
The incentive for landlords is that where they are prepared to accept less rent they will at least have the carrot of direct payment of rent.  Overall the message to landlords is clear. 
The Government is determined that rents paid to landlords should go down!

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