Local housing allowance was rolled out nationally in April 2008 for customers in the deregulated private rented sector who make a new claim for housing benefit, and for existing customers who move address. It is a way of calculating the rent element of housing benefit based on the area in which a customer lives and their household size. Local housing allowance is paid to the tenant rather than the landlord in most circumstances.
We believe that local housing allowance is a much fairer, simpler and more transparent way of calculating housing benefit. One of the key features of local housing allowance is that where possible the benefit will be paid to the customer, so that they can take more personal responsibility for their housing, helping to prepare for when they move into work.
We accept that it is not possible in every case to make the payment to the tenant and, once the local authority has determined a maximum rent in accordance with the relevant regulations, payments are therefore made to the landlord in the following circumstances:
when the tenant is unlikely to pay (for example, where the local authority knows from past experience that the tenant is likely to abscond with the rent payment); or
when the tenant is likely to have difficulty in managing their rent payments; for example, due to an alcohol/gambling/drug dependency or because of a serious medical condition such as Alzheimer’s disease; or
when the tenant is in arrears of eight weeks or more.
Local authorities may make payments to the landlord where they consider that the claimant is likely to have difficulty in paying their rent and it is in the interest of the claimant to do so. We therefore encourage landlords not to wait for the eight-week period to be reached but to contact the local authority as soon as a payment is missed so that they can begin gathering the evidence required to make a decision on direct payment.
We are satisfied that these safeguards will ensure that vulnerable customers do not fall into unmanageable difficulties and that their rental payments will be met.
Local housing allowance was introduced in nine pathfinder authorities in 2003-04 and was subject to extensive and independent evaluation. A further nine authorities implemented the scheme in 2005 to test operational readiness.
Despite landlords’ initial fears, there is overwhelming evidence that customers have responded extremely well to the responsibility of managing their rent payments. Evidence from the evaluation has shown that customers regard paying the rent as a matter of prime importance and that most would prioritise this above all other payments. 84 per cent. of tenants are successfully managing their own housing benefit. Of the remaining 16 per cent. only a third are having their housing benefit paid to the landlord because they have fallen into arrears of eight weeks or more. Two-thirds are having their benefit paid to the landlords because the local authority, working together with landlords, has identified that they might not be able manage their rent payments. The local housing allowance evaluation reports are available on the DWP website at:
We are closely monitoring how the local housing allowance scheme is working in practice and will undertake a review during the first two years of operation following national rollout.