Changes to LHA
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!
What are your thoughts on the changes?
I had this problem last year. I rented my previous property to a family member I asked the local housing to make payment direct to me which they refused. I then went with my family member to set up a direct payment account to my bank, after I left UK I received just 2 payments. I mailed the local authority every month to say that I had not received the rental money, after sometime and at the end of my tether I mailed them and said Well if I’m not receiving the funds then you may as well stop the rent as it is misappropriation of government funds Guess what they stopped it very quickly. On return to UK in the September to this date the amount owing to me was 3,600 I went to the local office where I found I was hitting my head up against a brick wall and getting more and more angry by the lack of response I said well you owe me the funds the officer said Oh no we have already paid the rent this made me more livid. I think what the government does no matter which one it is are not in favour of the landlord and you as an owner have no rights at all, to this day I am still very very angry.
Although I can see the benefits of direct payments to landlords (having been ripped off several times by tenants pocketing the money!) there can be problems. I was told by my local council that the money paid is not rent, it is a benefit. Therefore if a tenant is later proven to have been overpaid this benefit, any direct payments to landlords can be claimed back! So if a tenant was working on the side for example the council would reclaim any housing benefit payments from the Landlord. They helpfully suggest you contact the tenant to reclaim your rent (as if!) Once again the landlord is left out of pocket.
Regards Mrs L