Real rents v LHA rents – info request

by Readers Question

9:40 AM, 24th November 2015
About 3 years ago

Real rents v LHA rents – info request

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Real rents v LHA rents – info request

I am always astounded by how much more the real market rents are compared to the LHA (Local Housing Allowance) rates. It appears to me that the LHA rates must currently be based on unreal very low rents, because when I look on Rightmove or other lettings websites at the rental figures, there is perhaps only one out of every hundred rental properties that is available at or below the LHA rate.rent

Having checked how the LHA rates are calculated, it appears to me to be based on a very narrow range of properties, because most landlords do not submit rental information to the VOA (Valuation Office Agency) who collate the figures. I would therefore urge ALL private landlords to submit rental figures to the VOA so that the LHA can be calculated based on real rents from as wide a range of landlords as possible (not just those who usually let to LHA tenants).

This is very important for both landlords and tenants, as it determines the levels of Housing Benefit payable to households (and thus the amount of rent that they can afford to pay to landlords). This can often be the difference between keeping up rent payments and keeping a home, or falling into arrears and becoming homeless.

My local VOA officer has said that I can give his contact details on the website for landlords to submit rental details to: philip.j.ashford@voa.gsi.gov.uk

The basic information required is the address of the property, how many bedrooms it has, and the rent being charged.

Thanks

Robert



Comments

Paul Franklin

10:26 AM, 24th November 2015
About 3 years ago

My vague understanding is that LHA rates WERE based on average rents and were then set at the 30th percentile (so the lowest 3rd of market rent properties should be affordable) after the crash.

However, rises in the LHA rate were then capped in I think 2011 to rises of a maximum of 1% per year. Currently LHA rates I believe are capped completely - they are not allowed to rise AT ALL.

Hence why they are now way off of actual market rents, they were already low and were not allowed to keep up. In addition to this, because rises in LHA rates are capped, it doesn't really matter whether landlords supply information or not to the VOA, they're not going to go up anyway.

Mike McDonagh

12:12 PM, 24th November 2015
About 3 years ago

One day the government, councils and local housing associations will come to recognise the folly of unrealistically set LHA rates (or more probably they won't but I am the eternal optimist)

The first issue is that because the rents are unrealistic there is no incentive for anyone to move out so many of the desperately needed properties remain occupied by people who actually have no real need. Once you have qualified you are in for life if you wish.
Secondly there are significant numbers of people who have moved out of their properties, continue to pay the rent and now illegally rent them out at a profit.
In both cases the housing associations turn a blind eye as the properties are filled and they have to do nothing.
The solution appears very simple, bring the rent in line with the market and provide housing benefits to those in genuine need.
Cheers Mike

Robert Mellors

12:59 PM, 24th November 2015
About 3 years ago

Reply to the comment left by "Mike McDonagh" at "24/11/2015 - 12:12":

Hi Mike

I may have misunderstood your post, but you seem to be referring to the rents charged by local authorities and housing associations, which are artificially low "social rents" due to massive government subsidies. This is not the same as LHA rents.

LHA rents are the Housing Benefit amounts payable to HB claimants living in private rented housing. They are supposed to be based on the "market rents" for private rented housing, but appear to be well under the average "market rent" (or even the 30th percentile of market rents).

Mike McDonagh

14:46 PM, 24th November 2015
About 3 years ago

Hi Rob,
Sorry, it is me that has misunderstood. My points remain valid but not under this topic.
And yes you are absolutely correct the LHA rents used to calculate benefits are grossly understated.
Cheers Mike

Ian Ringrose

17:59 PM, 24th November 2015
About 3 years ago

LHA rates area worked out based on the rent needed in each Broad Rental Market Area (BRMA) to cover the rent of the cheapest 30% of properties. (But they have been capped in the last year to be less if rents have gone up.)

So take Cambridge for example, the LHA rates seem VERY low, but Littleport is in the same BRMA, so has the same LHA rates, but “professional tenant rents” in Littleport are a lot lower then Cambridge. At times the LHA rates can be more then the market rent due to this sort of effect. (Most BRMA are a LOT easier to find examples of properties at less than the LHA rate.)

see https://www.gov.uk/government/publications/understanding-local-housing-allowances-rates-broad-rental-market-areas


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