Property Landlord advice: 'Local Housing Allowance cuts' interpretation still in the grey!

By Mike Edwards

Many Landlords aware of the proposed cuts in Local Housing Allowance (LHA) formerly Housing Benefit understand that the cuts only apply to new tenancies commencing from the 1st of April onwards. But we have become aware of a case where the tenancy commenced on the 16th of March on a 12 month tenancy. The rent was £2300 a month on a London 5 bed house which the local LHA office had agreed to pay when the claim commenced on the 16th March.

However in early April the tenant received notification that as from the 1st April, LHA of £1500 only would be paid. Can this significant shortfall be right?

If the LHA prove to be in error and will in fact pay the agreed figure of £2300 for the 12 month duration (because the tenancy was created before the 1st of April deadline when the changes were introduced in London), this raises another question. What of existing tenancies created before the deadline which have gone periodic? My guess would be that a periodic has the same new rules applied. After all it could stay periodic forever and never be subjected to the changes which rather defeats the object of them. 

The danger here is how the new rules are interpreted, and local variations are not unknown as with Council Tax where, for example, when discounts applied on unoccupied properties some CB offices said a property had to be uninhabitable as opposed to what the rules said – uninhabited!! Similarly when the under 25’s rules on the then Housing Benefit came in many years ago they were only supposed to apply to new claimants not existing ones and not even on their annual reassessments.

In fact many HB offices (wrongly) reduced the payment down to the new room allowance for all under 25 year old existing claimants though admittedly from their next annual reassessment.

In terms of what an LHA office will allow and what they will not they are bound by the terms of the Regulations and the rules are clearly laid out in the guidance manual at http://www.dwp.gov.uk/docs/lha-guidance-manual.pdf  and scroll down to

8.030.  

But there are a number of possibilities in this particular case. Firstly, this could simply be a misunderstanding. The rate for that property is capped to a 4 bed rate from 1 April, but any existing tenants would enjoy 9 months transitional protection. It is possible that the letter from the LHA office is simply informing of the new benefit level, ignoring the protection that exists for any current tenant. So maybe the LHA office will honour the existing rent for one month only before applying the cut?