Factsheet 15a - Local Housing Allowance Regulations

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Local Housing Allowance Regulations

Background: 

In October 2002 the Government announced the introduction of the Local Housing Allowance (LHA) which was part of a wider review of Housing Benefit regulations in 'Pathfinder' or pilot areas. LHA was introduced nationally on 7 April 2008 to provide Housing Benefit entitlement for tenants renting private sector accommodation in England and Wales. The LHA system introduced significant changes to the way Housing Benefit (HB) levels are restricted and how benefit is paid. It does not replace Housing Benefit - it is just a different way of calculating entitlement under the existing Housing Benefit scheme. Its aim is to improve levels of transparency when calculating Housing Benefit.

LHA is means tested and tapered in exactly the same way as Housing Benefit. Under LHA, a flat allowance was originally used to decide the eligible rent of all claimants with similar sized households living in a broad rental market area, rather than tying the level of benefit to the individual property. This was supposed to provide an incentive for those on Housing Benefit to find cheaper accommodation. If the tenant moved into accommodation that was cheaper than the LHA rate, the tenant got to keep any difference (up to a maximum of £15 per week). Changes were made in April 2011 removing the tenant’s entitlement to keep the difference between their rent and the LHA rate.

The LHA rates were also amended in 2011 to set rates at the 30th percentile in each area meaning only three in ten properties for rent in any area are affordable for people making a new claim and unless the rent is one of the lowest 30% in the area the LHA payable will be less than the rent payable. A maximum weekly rate has also been introduced.

Further changes are imminent as the Government introduce a new benefits system to try to simplify the current system. Universal Credit has been introduced into certain areas prior to a national roll out to be completed by 2017.

Operation of Local Housing Allowance: 

Housing Benefit is a means tested social security benefit in the UK that is intended to help people with low incomes pay for rented accommodation. It is governed by various acts of Parliament - see, for example, The Social Security Contributions and Benefits Act 1992 (via www.legislation.gov.uk)

 

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