Please find below a brief update on government proposals for the Local Housing Allowance (LHA). With the dust continuing to settle, the implications of the changes are becoming clearer as are the opportunities likely to arise for savvy investors. Look out for our Tips below!
New LHA claims will be capped at a maximum of £250 per week for 1 bed, £290 for 2 beds, £340 for 3 beds and £400 per week for 4 or more beds. Only five London boroughs will be affected – nowhere else.
New LHA claims will be calculated using the 30th per centile of local rents instead of the current median. This will restrict tenants on LHA to properties in the lower third of rents in an area. The whole country will be impacted but the extent of any impact will vary from area to area.
Tip 1 – Landlords renting to LHA claimants should ensure claims are logged before 1st April, 2011 to benefit from Transitional Protection intended to hold rents at pre-capped levels for up to 21 months.
Tip 2 – More so now than ever before, property purchased primarily to house Benefits tenants should be cheaper end of the scale and in more affordable locations. Therefore in the context of London for instance, target outer London boroughs rather than more central areas.
The £15 per week maximum excess that LHA tenants currently keep if their rent is lower than the applicable LHA will be removed. This should not impact the Landlord.
Tenants may be able to get LHA for an additional room if their household qualifies for a non-resident carer.
From this date, as any Transitional Protection ends, existing claimants will be impacted by rent caps.
LHA will be set to the 30th per centile for existing claimants. This will ensure that all claimants will face some level of reduction as any Transitional Protection ends.
2012/13 – Government legislation is not yet in place for the following proposals so changes are possible.
Tenants on Job Seeker’s Allowance for longer than 12 months will have their LHA cut by 10 per cent.
LHA payment levels will be reviewed annually in line with the Consumer Price Index and not monthly by the Valuation Office Agency as at present.
The age at which a single person qualifies for self-contained accommodation will be increased from 25 to 35.
Tip 3 – Demand for shared accommodation will increase, possibly at the expense of one-bed/studio flats.
Government proposes to replace all existing Benefits – including LHA, with a Universal Credit.
Tip 4 – Review existing investments regularly to ensure that they are ‘optimised’. All new opportunities should be analysed against the anticipated criteria wherever possible, to ensure that they will be viable.
For further information, updates and invites to Social Housing Investor Webinars, please ensure you are registered at www.socialhousingexpert.com
Authors: Ben Hughes & George Nartey – www.socialhousingexpert.com