‘Difficult’ LHA might work better if based on local authority boundaries
Minister moots funding overhaul
The amount of local housing allowance paid to private tenants could become dependant solely on the council area in which they live, the housing benefit minister has indicated.
Helen Goodman told Inside Housing the government saw advantages to tying the way local housing allowance is calculated to local authority boundaries.
At present, LHA is calculated based on the median rent in ‘broad rental market areas’, which can cut across local authority boundaries. Critics say the areas are much too big in some cases. This means that LHA rates can be significantly higher than market rents in some parts of the BRMA.
Ms Goodman said: ‘It is exceptionally difficult to get this right: there is not a system that would work equally across the country.
‘But there would be advantages in reconnecting to local authority boundaries.’ Since April 2008, housing benefit has been paid direct to most tenants in the form of local housing allowance. In 2008/09, this bill had reached £1.9 billion.
A Shelter spokesperson said BRMA boundaries needed to change to make housing benefit fairer in all areas.
‘Tying LHA rents to local authority boundaries may be one way of doing this,’ she said. ‘However, there would need to be a full and comprehensive assessment of how changing the boundaries would affect claimants in terms of levels of shortfalls and access to affordable housing compared to the current BRMAs.’
Vincenzo Rampulla, public affairs officer at the National Landlords Association, warned against rushing into a decision. He added: ‘What we do not want is the government to just run with the neatest sounding idea but instead to think of the consequences of it.’
Giving evidence to the Work and Pensions select committee last Wednesday, Ms Goodman said: ‘I do not think we are ever going to reach a solution which is going to satisfy everybody in all parts of the country.’
Alan Ward, chairman of the Residential Landlords Association, voiced concern over the effect the proposal could have on rural communities.
‘We are concerned that it could create anomalies if the council boundaries overlap rural areas where there is a very different housing market. It could distort price,’ he said.
The reforms to BRMAs would be part of a wider shake-up of housing benefit currently out to consultation from the Work and Pensions department. The consultation has invited views on changing the way benefit rates are set. The deadline for responses is 22 February.
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Readers' comments (4)
Melvin Bone | 12/02/2010 9:02 am
Sounds like a good idea.
Makes sense as well. Which is not normal government policy...
Note to Isabel Hardman. I like the use of the word 'moots'. Its underused in my opinion.
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B.S. Townroe | 12/02/2010 9:36 am
"We are concerned that it could create anomalies if the council boundaries overlap rural areas where there is a very different housing market. It could distort price". Which are bigger, LA or BRMA? Which, therefore, have the greatest capacity for overlap? Some BRMAs include whole cities and large parts of their rural hinterland. If there's a problem of overlap, it's already here and on a larger scale than a move to LA boundaries might cause.
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sue thompson | 15/02/2010 3:28 pm
Please do not change anything until present system has highlighted all the pitfalls of LHA. Please listen to the real stakeholders, i.e. tenants, landlords, Shelter, CAB etc. It has been identified that some LHA rates are significantly higher than market rates in some BMRAs but converseley some LHA rates must be significantly lower. Tax payers should not be paying for benefit people to live in accommodation which working people could not afford. The present system is the fairest way of calculating LHA - it is irrelevant if it crosses Local Authority boundaries. The Rent Service went to great lengths to work out areas which included core facilities.
How do other countries deal with this problem?
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A real landlord in a real world | 21/02/2010 3:35 am
True. I agree with NLA. I think the government is being stupid. Look at the way housing benefit works now, they got LHA, which is a good idea, but the payment made to tenant is not being paid to landlords. So what option does that leaves to the landlord, if the rent is not paid, what can a landlord do?
The government lives in a fairyland, they don't realise a lot of unemployed tenant have finance problems and many are also on drugs or have gambling addiction. Government need to wake up. Some of the tenants are claiming housing benefit and not paying the rent, shouldn't that be seen as benefit fraud?
Secondly the register for landlord will not work. Best thing to do is have a ombudsman to work by resolving issues for tenants and landlord. And the deposit protection scheme should be scrapped, the deposit protection scheme is not working and its very unlikely the landlord register will work.
Just open a ombudsman for tenants and landlords to resolve issues, scrap the deposit protection scheme, scrap paying housing benefit paid directly to the tenant, pay the housing benefit direct to the landlord, this will reduce the fraud.
Create a database for all non UK citizens. The database to contain all European Union national as well as all foreign nationals to ensure they don't cheat the housing benefit system. I know there are lots of fraud due to the government paying housing benefit to the tenant, now the tenant don't pay the rent, and secondly once they get tenancy agreement then they stop paying the rent and claim housing benefit, so the landlord evicts them, however the tenant use mail redirection letter with the post office services to redirect all housing benefit cheques to other address and they cash the cheque, when the innocent landlords have no idea whats going on as he have already evicted the tenant and knows nothing about the housing benefit claim as the landlord is not informed the tenant is claiming the housing benefit. Now why should the landlords get punished???
Look at the tenant, the tenant offers no security, they just run away with rent, furniture, and appliances, now when these tenants steal and leaves without paying rent then the landlord have to be very worried next time s/he rents out as they don't want same things happening again. So get the tenant sorted, get the law sorted to protect landlords too just like there is law overprotecting the tenants then see whether the landlord follows and works ethically.
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