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Local Housing Allowance (LHA)

From 7th April 2008, Housing Benefit in the private rented sector changed with the introduction of Local Housing Allowance.  This change affected how Housing Benefit is worked out and how it is paid.  Any tenant who rents from a landlord in the deregulated private sector and makes a new claim for Housing Benefit on or after the 7th April 2008 will be paid LHA.  

LHA does not replace Housing Benefit, it uses a flat rate allowance based on the size and age of a tenant's household and the area they live in (known as the Broad Rental Market Area).  This amount is not directly related to the rent charged so the Housing Benefit that a tenant receives may be higher or lower than the contractual rent.  The rate of LHA received will be reviewed on an annual basis.  

LHA makes it easier for both tenants and landlords to find out in advance how much rent could be covered by way of Housing Benefit.  

  • Claimants will receive LHA for the accommodation they are renting.  LHA is the maximum rent or eligible rent  
  • LHA has been designed to pay a flat rate allowance to tenants with similar circumstances, living in the same area.  Housing Benefit will no longer be based on the amount of rent for the actual property; claimants will receive LHA for the appropriate size of accommodation based on the size criteria  
  • Service charges will not be deducted even when the landlord is being paid directly and the full contractual rent is paid  
  • LHA will be set by the Valuation Office Agency (VOA) and will be based on rents in a Broad Rental Market Area  
  • LHA amounts will be published and reviewed monthly  
  • Claimants will receive the LHA which was in force on the effective date of the claim  
  • The LHA award will run for a year unless certain changes of circumstances occur before then  
  • If the relevant LHA is more than the rent the tenant is paying they can keep up to £15.00 of the difference.  This will be ignored in the assessment of means-tested benefits  
  • If the relevant LHA is less than the rent the tenant is paying, the tenant will have to pay the difference

There is no change to the entitlement rules for Housing Benefit, these will still be based on a person's income, savings etc.  The LHA rate is the amount that is used in the calculation, it is not necessarily the amount that will be paid.  

From 6th April 2009, for new claimants and claimants moving home, where a claimant's household requires 6 bedrooms or more, the LHA rate will be capped at the 5 bedroom rate.  

Existing claimants in receipt of Housing Benefit on an LHA rate for 6 bedrooms or more will continue to receive the same amount until their case is reviewed (usually at the one year anniversary point of their claim).  Housing Benefit will then be assessed according to the 5 bedroom LHA rate, although transitional protection will apply for up to 26 weeks (from when the case is reviewed) at the higher LHA rate.