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Local Housing Allowance - Information for Landlords

A new form of Housing Benefit, called Local Housing Allowance, is being introduced from 7 April 2008 for tenants who rent properties from private landlords.

With Local Housing Allowance, benefit is not based on the actual property the tenant rents, but the area they live in, the number of rooms they need, who lives with the tenant and what income and savings they have.  We also look at how much the rent is, and whether anyone living with the tenant is expected to contribute to it.  We have not changed the way we calculate Housing Benefit; it will still be based on income and savings so we still need proof of rent, income and savings.

We will publish the Local Housing Allowance rates every month.  You can check the rates for your area by contacting us by telephone, in person or by checking our pages here on internet

How does Local Housing Allowance affect landlords

The only change for most landlords is that payment of benefit worked out using Local Housing Allowance rates will normally be made direct to the tenant.  The tenant will be responsible for paying their rent to the landlord.

Which landlords does Local Housing Allowance affect?

Local Housing Allowance affects any landlord who enters into a de-regulated private tenancy agreement with a person awarded Housing Benefit after 7 April 2008.  By de-regulated, we mean a tenancy that has been entered into since 1989 and is not covered by one of the exceptions listed below.

Who is not affected by Local Housing Allowance?

Local Housing Allowance does not affect council or Housing Association tenants; some tenants in supported accommodation; tenancies which started before 2 January 1989; tenants who rent caravans, houseboats or live in hostels; and some tenants whose rent covers board and attendance, such as hotel accommodation.

Why is Local Housing Allowance being introduced?

Local Housing Allowance is being introduced to increase responsibility, place choice firmly in the hands of tenants, and help develop the skills to make moves into work easier.

  • The main aims of introducing Local Housing Allowance are:
  • fairness - to pay similar amounts to tenants in similar circumstances
  • choice - to allow tenants to choose between price and quality of accommodation)
  • transparency - to make it easier for tenants, before they sign a lease, and for landlords to find out how much rent may be covered
  • personal responsibility and financial inclusion - paying Benefit direct to the tenants’ bank account and making them responsible for paying their rent
  • improve administration and reduce barriers into work - a simpler system helps speed up administration and give confidence that when claimants start work, their new claim will dealt with quickly.

I already get direct payment for some of my tenants.  Will these payments stop?

No.  If you are receiving Housing Benefit payments direct on behalf of your tenant(s), on 7 April 2008, these will continue to be paid to you.  The Local Housing Allowance rules will only affect any tenants who make a new claim, who move address to new private rented accommodation, or have a break in their claim on or after 7 April 2008.

Why are we stopping direct payment to landlords?

Tenants should be able to take greater responsibility for managing their financial affairs and paying their rent to their landlords in the same way as other tenants do.  This is why any benefit will usually be paid to the tenant and not to the landlord.

In the past, there has never been a right for a landlord to receive Housing Benefit payments direct.  However, there is a right for tenants to ask for this arrangement, and it is this right that is changing.  Tenants can no longer ask for their Benefit to be paid to their landlord, but if they feel that they may have difficulty in managing their affairs and may be entitled to direct payment to their landlord, we can consider this request.

What protection exists for landlords?

There are a range of safeguards in place to protect the interests of the landlord.  Payment may be made direct to the landlord where

  • we decide that the tenant is likely to have difficulty in managing their financial affairs.  This may be because they have a learning disability, or problems with drugs or alcohol.
  • it seems unlikely that they will pay their rent.  They may have consistently failed to pay their rent in the past.
  • if they have rent arrears of eight weeks or more.  We recommend that if a tenant is starting to build up rent arrears, you should get in touch with us before it gets to eight weeks.  This will allow us to investigate and contact the tenant.

A form must be completed to request direct payment to a landlord.  Evidence to support this request must also be provided.  This request can be made by the tenant, landlord or other interested party.

Who decides if a tenant is likely to have difficulty in paying their rent?

The Local Authority will decide whether a tenant is likely to have difficulty in paying their rent.  You as a landlord can approach us if you think it likely that your tenant will have difficulty in paying or you feel they cannot deal with their financial affairs, we will then contact your tenant for further information regarding this.

It is up to us to decide whether a tenant is unlikely to pay their rent.  We can only do this if we have evidence of past, or likely, failure to pay rent.  We will take into account all knowledge and evidence available to us at the time, including any known past history when making our decision.

It will also be important for the landlord to keep proper and adequate records of rent payments received and details of any contact made with the tenant.

Where direct payments are made to me, how long will they go on for?

Where we consider it likely that a tenant will have difficulty in paying their rent and there is no prospect of their situation changing, payment of benefit to the landlord is likely to be long-term.

In cases where the situation is likely to be temporary, or where rent arrears of more than eight weeks have been repaid, the situation will be reviewed.  If the tenant is in a better position to have their benefit paid to themselves, and to pay their rent in full and on time, direct payments to the landlord will stop.

Won’t tenants spend their Local Housing Allowance on other things?

Many tenants in the private rented sector get their Housing Benefit paid to them and regularly pay their rent on time.  The Local Housing Allowance scheme has been operating in 18 Local Authorities across England, Scotland and Wales since October 2003.  In these areas, 84% of tenants whose benefit is calculated using the Local Housing Allowance rules, are successfully managing their own rent payments.  Of the remainder, only a third are having their Housing Benefit paid to the landlord because they have fallen into arrears of 8 weeks or more.  The rest are having their benefit paid to the landlords because the local authority identified that they might not be able manage their rent payments.

Won’t this discourage landlords from letting their properties to claimants?

We believe the Local Housing Allowance scheme has positives for both landlords and tenants.  The reforms are intended to help landlords, as well as tenants, by creating a system that is simpler to understand and administer.  Overall, it will support and clarify the relationships between the local authority, tenants and landlords.

Landlords will still be able to approach the Local Authority for help with rent arrears for tenants getting benefit calculated using the Local Housing Allowance rules.

Because payments are going to tenants in most cases, this removes the possibility of landlords being asked to pay back large amounts of overpaid benefit.  Under the Local Housing Allowance scheme, it is unlikely that the local authority would ask you to repay any money that your tenant has paid directly to you.

We believe that the safeguards that exist regarding direct payment to landlords strike the right balance in protecting the interests of both landlord and tenant.

Can I make direct payment a condition of the tenancy?

No.  A local authority is not party to the tenancy agreement between a landlord and tenant, so it is not bound by any conditions in a tenancy agreement.  The Local Authority cannot pay benefit to a landlord directly at the tenant’s request – the rules about when we can pay the landlord directly are outlined above.  You cannot change this by making direct payment a condition of the tenancy.

What appeal rights do I have against a payment decision?

Appeal rights are not changing as a result of the new scheme.  You will still have the right to appeal against a decision by the authority not to make direct payments.

Where to get more information

If you want to know more about the changes and how they affect you, you can: