The Government plans to use money saved through the Local Housing Allowance rate freeze to provide extra cash for rents in areas where market rate has shot up.
Local Housing Allowance rates are used to calculate housing benefit for tenants renting from private landlords.
Rates have been frozen at 2015 levels but the Government now plans to use some of the cash saved to help landlords in areas affected by rent rises.
Here, in his latest blog, Universal Credit and tax expert Bill Irvine explains the proposals:
He said: “Most private landlords, accommodating LHA tenants, will be well aware of the fact the rates applicable to LHA tenants have been frozen at 2015 levels for a period of four years.
“The freeze was applied following George Osborne’s Summer Budget of 2015. At the time, the Government made a commitment to include some additional relief provision for areas affected by higher rents.
“In keeping with this, the Government is now proposing to use thirty per cent of the savings from the LHA freeze to create, what they refer to as Targeted Affordability Funding (TAF).
“This funding will be used to increase some LHA rates in certain high rent areas by three per cent starting from April 2017. The three per cent increase however cannot, in any situation, exceed the LHA maximum limits (i.e. the national caps).
|1. Category of dwelling as defined in the following paragraphs of this Schedule||2. Maximum local housing allowance for that category of dwelling|
|(one bedroom, shared accommodation)||£260.64|
|(one bedroom, exclusive use)||£260.64|
“The bad news is, all other rates, not specifically targeted for this increase, will either remain at the April 2015 level, in line with the current LHA Freeze policy, or will be set at the 30th percentile of local rents, determined by the Rent officer, if this produces a lower figure.
“The Rent Officers Order has been amended to permit these arrangements to move forward. The Statutory Instrument (SI) includes a list of which Broad Rental Market Areas and rates will be targeted for the extra funding, were laid and published on 12 December 2016 and can be found by clicking the link.
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