Local Housing Allowance (LHA) is a set of rules used to work out how much social security help a private tenant can get towards their rent. It looks at the tenant's age, family circumstances and at the location of the property.
The amount of benefit can then be reduced further if
- other non-dependent adults live with the tenant
- the tenant's earning are high enough to reduce the amount of help they get
- the tenant's benefits are reduced because of the benefit cap.
The lowest rate of LHA is the Shared Accommodation Rate. This is the amount paid to people who rent a room in a shared property, but it is also paid to certain single people, even if they live alone. This rate will be used to work out your entitlement to help with rent if
- you are under 35 AND
- you are single and don't have any children.
Some single people under 35 will be exempt from this rule and eligible for self contained accommodation. You tenant could be exempt if he or she is:
- entitled to severe disability premium
- a person with dependent children,
- a person aged under 22 who has been in care,
- a person receiving Housing Benefit who is aged between 25 and 34 who is a former offender subject to PPANI,
- a person receiving Universal Credit who is aged over 19 and is a former offender subject to PPANI,
- a person aged between 25 and 34 who has spent a total of at least 3 months living in hostel accommodation for homeless people and who has accessed rehabilitative or resettlement services while in a homeless hostel.
On reaching the age of 22, a care leaver will become subject to the 'shared accommodation rate', provided they are single and have no dependants.
The LHA rate used for your tenant depends on the size of the tenant's household. If the tenant's household only requires 2 bedrooms, they will get the 2 bedroom rate, even if they home they occupy is larger.
One bedroom is allowed for:
- every adult couple
- every other adult aged 16 or over
- any two children under 10
- any two children of the same sex
- any other child.
Tenants with disabilities or illnesses who require that regular overnight care is provided by someone who is not a part of the household may be entitled to an additional bedroom for a carer. The tenant will usually have to show that there is a genuine need for overnight care, that this care is actually provided and that there is a spare room available for a non-resident carer to use.
An additional room allowance should also be paid where 2 people who would otherwise be expected to share a room are unable to do so because of a disability. To get this extra room, the tenant needs to be in receipt of certain disability benefits and will have to provide medical evidence to show:
- the nature and severity of the disability
- the nature and frequency of care required during the night
- and the extent and regularity of the disturbance to the sleep of the child who would normally be required to share the bedroom.
Broad rental market area
When LHA was introduced, Northern Ireland was divided up into 8 Broad Rental Market Areas (BRMA). The Housing Executive regularly analyses the market rents for each property type (up to 4 bedroom) in these areas and uses this figure to set the LHA rates. You should note that this regular analysis will stop in 2012 and LHA rates will be frozen. These rates will then be uprated each September in line with the Consumer Retail Index.
LHA rates are set at the 30th percentile of market rents in an area, so a tenant in receipt of LHA will only be able to afford 3 in 10 properties in a BRMA. Tenants can apply for a top-up payment, known as a Discretionary Housing Payment, but these are given as short term measures and should not be relied upon as a steady source of income.
You can find out what BRMA your property is located in and the maximum level of LHA in that BRMA on the Housing Executive's website.
How your tenants benefits will be paid
Your tenant's benefit will be paid
- once a month in arrears and on the tenant's unique payment date if the tenant receives Universal Credit
- every four weeks in arrears if the tenant receives Housing Benefit.
Usually, the benefit will be paid directly to you or to your agent. But, the tenant can ask for the benefit to be paid to them instead.
As benefits are paid in arrears, the tenant's first payment will usually only happen towards the end of their first month in the property. Benefits can't be used to pay for rent in advance, so your tenant may have to apply for a loan to help with the first month's rent if they don't have enough in savings.
Shortfalls in rent
It has become increasingly common for tenants, who get benefits to help with rent to experience large shortfalls between the amount of benefit they receive and the amount of rent they are expected to pay. If your tenants find themselves in this position, you should weigh up the options. Although tenants may be able to find top up payments on a short term basis, they will probably not be able to sustain this over a longer period of time. Consider whether its better to reduce your rent slightly and keep a good tenant, or to find a new tenant and risk a couple of months' of voids.
In some cases, where there is a shortfall between the amount of rent you charge tenants and the amount of benefit they receive under the LHA system, the Housing Executive can authorise a short term "top up" payment, known as a Discretionary Housing Payment. Your tenant will have to apply for this and will have to prove to the Housing Executive that they have investigated other options of making up the shortfall, including negotiating with you for a reduction in rent.