Local Housing Allowance – the future

Richard BurrowsLettings Research Manager

Rent Officer Functions

VOA Rent Officer Functions

• We were formerly the Rent Service but were absorbed into the Valuation Office in April 2009.

• Rent Officers still register rents under the 1977 Rent Act

• Rent Officers still make determinations on pre-April 2008 Housing Benefit claims – every 52 weeks. This scheme carries on until a break in claim or change address.

Rent Officers in Lettings Research Teams

• Production of Local Housing Allowance (LHA) rates each month for over 150 Broad Rental Market Areas (BRMAs)

• From the collection of agreed lettings on houses and flats.

• Involving ongoing dialogue with Private rented Sector (PRS)

Our Challenge

• Collection of data which is provided on a voluntary basis by letting agents & landlords

• Ensuring that our data reflects rental levels in the market• Maintaining a comprehensive range of lettings

information ensuring the best available overview of the PRS

• Information is held securely and confidentially• We publish some of the information on our website

The Local Housing Allowance- a recap

• Personal entitlement based on household size• Claimant can choose smaller or larger

accommodation according to price and ability to pay

• Until the end of March 2011, the LHA is based on the middle of the range for a certain property size. This means that half of the rental properties of that size in the area will be affordable within the LHA amount that tenants receive.

• LHA rates are published on the LHA-direct website so that people know the rates before signing a tenancy

• LHA rates are also published by each local authority

• The rates are determined from 12 months of data using an automatic process

• It is a 12 month rolling database to which we add more data every month as older data falls off.

Local Housing Allowance

lha-direct.voa.gov.uk• LHA Direct website• Search by postcode for LHA rates since

April 2008 • BRMA Maps and associated review

documentation• List of Rents used for every LHA showing

number of items and low / high rents

lha-direct.voa.gov.uk

lha-direct.voa.gov.uk

Changes to the LHA - caps• From April 2011 a cap will be introduced for

each property size set at:• £250pw for a 1 bedroom allowance• £290pw for a 2 bedroom allowance• £340pw for a 3 bedroom allowance• £400pw for a 4 bedroom or larger

• The max £15pw excess that tenants renting below the LHA can retain will also cease.

Changes to the LHA - 30th%• From April 2011 a new limit will be introduced up to the 30th

percentile for new claims.

• For ongoing LHA claims made before 1 April 2011, where there is no change of circumstances, these will continue to get Housing Benefit based on the current rate of LHA received immediately before 1 April 2011.

• Safeguards - DHP & discretionary Direct Payments will help LAs manage existing and new claims

• Existing claims : transactional arrangements – remain on current rate of LHA for up to 9mths after the HB is re-assessed, after 1 April 2011. So the 30th percentile will start to apply for existing claims for most tenants from January 2012 onwards.

Direct Payments• New safeguard provision: discretion to pay HB direct to

landlord if it will assist in securing or retaining a tenancy

• Intended to help negotiate lower rents, new rents normally at LHA rate

• Not a reversal to direct payments to landlords

• Must be satisfied – genuine reduction in the rent

• Anecdotal evidence – some landlords charge higher rents to mitigate the risk of arrears

Changes to Local Housing Allowance

• The current median rent is the figure halfway up the distribution of the List of Rents in the BRMA i.e. 50%. item 9 of 17 =£195.00

List of Rents

£0.00

£50.00

£100.00

£150.00

£200.00

£250.00

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Changes to Local Housing Allowance• The 30 percentile identifies the rent or figure 30 percent up

from the lowest figure in the List of Rents. Item 5 of 17 = £185.00.

• Effectively 30 percent of the rents are available to a claimant and will also apply from April 2011 for new claims

List of Rents

£0.00

£50.00

£100.00

£150.00

£200.00

£250.00

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Changes to the LHA – comparison BRMA Medway BRMA

Household CategoryMarch 2011 LHA

Medians April 2011

30th percentile

Room (Shared facilities) £62.50 per week £62.50 per week

1 Bed £114.23 (£495pcm) £103.85 (£450pcm)

2 Bed £137.31 (£595pcm) £126.92 (£550pcm)

3 Bed £155.77 (£675pcm) £144.23 (£625pcm)

4 Bed£226.73 (£982.50pcm) £190.38 (£825pcm)

Note - All 30th percentile figures are indicative only, and not actual statements of fact

Median LHA vs 30th percentile Examples of Distribution Curve

Birmingham 2 Bedroom

0

50

100

150

200

250

300

350

400

450

500

1 213 425 637 849 1061 1273 1485 1697 1909 2121 2333 2545 2757 2969 3181 3393 3605 3817

£ pe

r wee

k

St Helens 1 Room

0

10

20

30

40

50

60

70

80

90

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76

£ pe

r wee

k

Large sample and stable

Small sample and unstable

Further ReformsLHA rates• Shared rooms (LHA Cat A), which applies to most single

people under 25, will be extended to people aged under 35 from January 2012.

• From 2013/14 the LHA rates will be baselined and uprated on the basis of the Consumer Price Index (CPI).

• The link between market rents and LHA may be removed but we are continuing to ensure we have the most representative data.

The LHA and you - how can you help?

• LHA levels are determined by the actual rental levels in each BRMA – in other words, the ‘market.’ We can not use advertised rents.

• Landlords are a good source of lettings data & we send out Mail shots to landlords such as HMO landlords

• The more lettings data we gather, the more robust and reflective the LHA figures are.

• We need to represent the whole PRS, so we need to include rooms, student lets, joint tenancies, flats over commercial etc

Lettings Information Request

www.voa.gov.uk/lettingsresearch/

Contact Details• Please send detail of your lettings via • Our website: www.voa.gov.uk/lettingsresearch• Or e-mail us: lindsey.k.smalley@voa.gsi.gov.uk• Or fax the lettings form

• Any questions?