On the 7th April 2008 there was a big change in the way Housing Benefit is calculated for some customers. This new scheme is called Local Housing Allowance (LHA)

You won't be affected if you:

• currently receive Housing Benefit  
• make a claim for Benefit for a Housing Association property that you rent
• make a claim for Benefit for private rented accommodation which has a start date prior to 7th April 2008
• live in a caravan, houseboat or tent
• are being housed by the Council.

Benefit will still be calculated and paid as it is at the moment.

It will affect you if:

You live in private rented accommodation and you:

• make a new claim for Housing Benefit, or
• currently receive Housing Benefit and move to private rented accommodation, or
• live in private rented accommodation, receive Housing Benefit but then have a break in your claim of more than one week.

What's the difference between the existing Housing Benefit and the new Local Housing Allowance?

Both schemes are designed to help tenants meet their housing costs.

Under the old scheme Benefit was calculated based on rent that you actually paid, or the rent the Rent Officer decided was a 'fair rent'.

Under the new scheme the Rent Officer decides what he considers are appropriate rent levels, based on the number of bedrooms in a property, and will apply them across the whole area. This is called a Broad Rental Market Area (BRMA). South Hams has two BRMA's.

To find out which BRMA you are in, use the LHA Direct Postcode Search facility.

For landlords, the main difference is that Local Housing Allowance payments are paid direct to the tenant and not to the landlord.

There will be exceptions to this;

• if the claimant falls under certain vulnerable criteria, (see our LHA safeguard policy), or
• tenants fall 8 weeks or more into arrears.  

How Local Housing Allowance (LHA) is calculated

LHA is calculated by comparing your 'income' against your 'needs' - using figures provided by the government.  As has already been set out, the main difference is the rent figure used in the calculation.

You can work out the rent on which the LHA rate will be calculated by working out the number of bedrooms you require as follows:

one bedroom for:

• every adult couple  
• any other adult, aged 16 or over
• any two children, aged under 16, of the same sex
• any two children, regardless of sex, aged under 10
• any other child

Any person included in your household calculation must be normally resident in the property.

You can use the online room calculator to help determine the LHA rate

There will be different rates for single claimants aged under 25, with some exceptions.

The LHA rent levels for each number of bedrooms used in the calculation are published so that you can find out in advance what the LHA will be based on.

To find the number of bedrooms you would be entitled to, use the rent service's bedroom entitlement calculator.

LHA will be calculated using the Broad Rental Market Area (BRMA) rent figures – not the actual amount of rent you pay.

If your actual rent is less than the Local Housing Allowance for the number of bedrooms in your Broad Market Rental Area, you will be able to keep the additional money up to a maximum of £15.

If your actual rent is more than the Local Housing Allowance for the number of bedrooms in your Broad Market Rental Area you will have to pay your landlord the difference.

To find out which BRMA you are in and the appropriate rates, use the LHA Direct Postcode Search facility.

How payment will be made:

Payment will usually be made either two weekly or four weekly in arrears, and will be paid directly into your bank/building society account.

If you do not have a bank account we will help you to open one.  This will also enable you to set up a standing order to make sure payment then goes direct to your landlord.

If you are overdrawn and worried that the money will not be there to pay your rent, you can ask your bank to only use that money for your rent. You must do this before the first LHA payment goes in to your bank account. This is called the 'first right of appropriation' - Citizens Advice Bureau Advice Guide

Why the Government is introducing Local Housing Allowance

The main aims of the Government in reforming Housing Benefit in the private rented sector are to promote:

• Fairness - to ensure two households with similar circumstances receive similar amounts of benefit
• Choice - tenants receiving benefits can take a greater responsibility in the choice of property they rent just like those who are not in receipt of benefit - spend less on housing and increase available income (see How LHA is calculated)
• Transparency - Tenants and landlords will find it easier to know in advance how much rent could be covered by Housing Benefit
• Personal Responsibility - LHA will be paid direct to the tenant  to encourage responsibility for budgeting and paying their rent, rather than having it paid for them

What happens now?

If you think you qualify for Benefit, do not delay in making an application today (see making a claim).

If you have any questions about Local Housing Allowance and how it will affect you, please forward them to customer.services@southhams.gov.uk . Where appropriate, we will publish them anonymously in a "frequently asked questions" fact sheet on this website.

Useful links:

LHA Direct - Rent Service website

Money Made Clear - for impartial financial advice, including setting up and running a bank account

Leaflet - Frequently Asked Questions  

Leaflet - Information for Landlords  

Local Housing Allowance (LHA) Safeguard Policy