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Local Housing Allowance System is urged to change

October 23rd, 2009

The Conservative Government promised to reinstate the choices for tenants to pay their Local Housing Allowance (LHA) to their landlords directly or by themselves.

Before April 2008

Tenants who were living in private rented accommodation and receiving housing benefits had the right to choose whether to have those allowances paid to them or to their landlords directly for rent. About 40% of the housing benefits tenants chose to hand their rental payment responsibility to their local authority because they lacked confidence in managing their own finances.

After April 2008

The Government changed the housing benefit system for the private rented sector with local housing allowance (LHA), where the benefit allowances would be paid to the claimants directly. This reform aimed to empower the benefit claimants to take responsibility for their finances under personal circumstances. They are also able to look for their own accommodation.

Present

The Conservatives urged to change the existing local housing allowance (LHA) system and reinstate the choices over rent payments.

In the latest survey based on 1,000 landlords and 13,000 tenants receiving the allowances, many tenants failed to pay their allowance for rent. These tenants now suffer an average of £4,400 in local authority arrears; while research also showed that the landlords are experiencing a total sum of £4.4 million of rent arrears.

Shelter (a charity for the homeless) stated that tenants find it even harder to cope financially under the reformation of the scheme. Out of 450 surveyed benefits claimants, more than one-fourth had fallen behind with rent payments. At the same time, almost half of those who had experienced both forms of payment exposed that paying their allowance directly to their landlords is a better means of managing their rent and overall household finances.

Besides, it has been found that some landlords refused to take in tenants who are on benefits under the local housing allowance (LHA) system. Hence, the Tories announcement is certainly welcomed by the landlords, which may also increase the availability to accommodate the housing benefit claimants within the private rental sector.

Private landlords with benefit tenants can obtain landlord household insurance as well as legal expenses and rent guarantee insurance to protect themselves as well as the property.

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