The Local Housing Allowance (LHA) rate is set at the 30% percentile of local rents, so 3 out of 10 properties in any area should, by definition, be available.
And sure enough, a quick look at Rightmove and we can see lots of properties are on the market to let in Newham at cheap rents.
But the real issue is that they are not readily available to LHA dependent applicants. This fact and the reasons for it appear to have been missed.
The reasons why landlords are often reluctant to let to tenants who are on LHA are many, varied and are more complex than has been reported in the main media…..
• When letting to tenants who depend on LHA, assuming the LHA can be paid direct to landlord - (which is not always the case following Labour’s 2008 changes to the system) – the payments are always made in arrears, unlike non-LHA lets where they are always paid in advance. This is obviously worse for the cash flow of landlords.
• LHA tenants don’t usually have a deposit they can hand over to the landlord to protect. And even where local govt can help with a deposit, as is the case in Newham, the landlords often tell us that the deposit schemes are cumbersome, slow to administer and claim against in the event of damages caused by tenants.
• Buildings and contents insurance premiums are often higher where a landlord lets to people dependent on LHA. Sometimes insurance is refused altogether.
• Some buy to let mortgage loan terms and conditions do not allow landlords to let to people on benefits such as LHA.
• LHA admin is slow, cumbersome and involves lots of form filling. Payments can start and stop without notice and the council can even try to claw back from the landlord past payments, if it later emerged that the tenant was claiming fraudulently.
• Some landlords (a minority but sadly a significant one) think that LHA tenants are more likely to be non-payers or to not look after properties properly.
The real issues are around LHA and how it works. Sorting this out should be the priority.
And yet we don't hear senior people in local govt housing highlighting these issues.
At LettingFocus we wonder whether this is because they don't think it is worth highlighting because central govt won't change how LHA is administered (or the coming UC) or is it because they don't understand how the PRS works WRT Local Housing Allowance.
Private Rented Sector Advice