Local Housing Allowance and rent increase?

by Readers Question

9:49 AM, 15th June 2020
About 3 weeks ago

Local Housing Allowance and rent increase?

Make Text Bigger
Local Housing Allowance and rent increase?

Is there anything that prevents a landlord from charging the full Local Housing Allowance (LHA) to DSS claimants?

The LHA is the amount that the DSS will pay in rent for a benefit claimant in a particular area, dependant on the number of rooms that they are entitled to. This LHA used to be capped to the bottom third or so of average rents in that area. This cap has recently risen quite substantially.

For example, in my area a person on benefits who qualifies for a two bed property can claim up to £550. This has risen from £470 at the start of the year.

I have a tenant who currently pays £450 for such a property, funded entirely by the DSS. It has occurred to me that I am being foolish by not seeking the maximum LHA rent from her, since it is the DSS that will pay.

So can I simply serve her with a Form 4 (Section 13(2)) proposed new rent and expect the DSS to fund her to the tune of £550 in full, or will there be some resistance from the DSS? (Standard AST, long term tenant, rent not increased for the last 2 years)

In case anyone thinks I am being selfish, I am simply looking at ways to afford the increase in tax we have to pay following the Section 24 rules.

Jessie



Comments

Neil Patterson

9:51 AM, 15th June 2020
About 3 weeks ago

Hi Jessie,

What is the open market rental value for your property?

Luke P

10:52 AM, 15th June 2020
About 3 weeks ago

You’ll wish you did once rent controls land on us.

Prakash Tanna

10:53 AM, 15th June 2020
About 3 weeks ago

Absolutely you can as long as the tenant is not in a fixed period of their AST. The only issue you may face is if the tenant is on a benefit cap and the increase to the rent is not fully covered by HB/UC. I would suggest you speak to the tenants and explain what you are doing so it does not come as a shock to them nd cause them distress.

Prakash Tanna

11:05 AM, 15th June 2020
About 3 weeks ago

Alan Wong

12:07 PM, 15th June 2020
About 3 weeks ago

Jessie, first of all you are entitled to be paid for providing private housing services as do any other private services like private homes, private dentistry, private care etc so please do not feel guilty. Instead you should be proud that your service is providing a roof over someones head. People who sell heroin and the likes should be guilty not you.

The Lha is what your tenant is entitled to claim for his housing and that is typically much lower than the 'average' market rental. So you are fully entitled to align your rent to the Lha as we as housing providers are faced with increasing outlays and unfair tax from the government. The service we provide are not easy to maintain and are high operational costs. And again, even if rent is in line with the Lha, it is still substantially lower than renting from other types of accommodations like Air B&B, homeless accommodations and most importantly much lower than the average rent which is what the Lha is based on.

Bill irvine

12:30 PM, 15th June 2020
About 3 weeks ago

Hi Jessie

As others have suggested, the LHA rate is simply the 30th percentile, of the range of rents, in the Broad Rental Market Area in which your property is located.

After 4 years of being frozen at the 2015/16 level it's not surprising that the increase in some areas amounts to 20/25%. The increase was also part of the Government's COVID measures, launched by the Secretary of State for Work & Pensions on 20th March.

So you should find no opposition or hesitation either from councils or DWP as long as you've properly advised the tenant of the proposed increase and provided him/her with the right to challenge.

Bill

Gennie Nash

18:05 PM, 15th June 2020
About 3 weeks ago

If the Council provide that money, then they obviously are able to pay it. I would definitely increase the rent, but why are you not doing that on a yearly basis anyway?? We ALWAYS do a yearly review on ALL of our properties. Increasing the rent after several years and expecting the tenant to suddenly cut back elsewhere to afford it is a bit unreasonable. A gentle increase each year keeps everyone in line with finances.

WP

19:08 PM, 15th June 2020
About 3 weeks ago

Reply to the comment left by Bill irvine at 15/06/2020 - 12:30
Bill - I presume you mean a letter to the tenant giving notice of a rent in crease as per TA? (in my case one months notice?) Or is there a specific form - Form 4 (Section 13(2))??? I have to use?

WP

15:09 PM, 16th June 2020
About 3 weeks ago

Once the Council or DWP have agreed to the rent increase (as per details supplied by the tenant) and started paying it presumably that's legally accepted? In my TA's I have abided by the clause that says I give a months notice of an increase. I send out letters explaining this rather than a Form 4.
I ask as it says in Form 4 that Form 4 should only be used if there is not an already agreed contract between tenant and landlord in regard to rent increases. ???

Bill irvine

15:46 PM, 16th June 2020
About 3 weeks ago

Hi WP

If the Council or DWP are already paying the latest LHA rate then that's hunky dory. However, councils should expect to see proof of the section 13 notice having been issued, in advance of the new rent charge becoming effective.

Coincidentally, Ive just dealt with a situation where the landlord incorrectly completed section 3 of the notice and was asked to re-issue with the corrected dates before the Council would implement the new rental charge.

Bill

1 2 4

Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

OR

BECOME A MEMBER

Guarantor agreement still valid after rent increase?

The Landlords Union

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents

Learn More