There have always been criticisms of the new Local Housing Allowance (LHA) scheme, for example see this report here I did in October 2007. Shelter have now issued further criticism of the scheme after surveying “more than 450 LHA claimants” (although perhaps not the most comprehensive survey – 1,000 would have been better). Their findings indicate that the scheme is failing both landlords and tenants, and is in urgent need of reform.

Shelter report that their survey shows that

• 81 per cent of people said they found it fairly or very difficult to find a suitable home that was affordable.
• 59 per cent of claimants said they had to make up shortfalls in their rent, and.
• Many respondents were doing this by going without essentials such as food or sufficient heating

One of the main problems identified by Shelter in their report is that the boundaries of LHA areas are too wide.  This means that in some areas tenants simply cannot afford the rents, and in others landlords are putting rents up to more than the market rent, as they know that the LHA allowance is higher.

Another problems is the fact (which has always been strongly criticised by landlords) is that LHA is paid direct to tenants and cannot be paid direct to landlords as before.  Shelter says

The LHA system was also intended to give claimants choice and promote financial responsibility by paying rent money directly into their bank accounts rather than directly to their landlord. However, Shelter’s research has found that this system has contributed to more than a quarter of claimants falling behind on their rent payments.

The majority of claimants who had experience of both payment methods said they would prefer to have the money paid directly to the landlord.

Evidence from landlords also shows that a growing number are refusing to let to LHA claimants because of rent arrears due to the new payment method. Shelter’s research shows 60% of respondents found it difficult to find landlords who are willing to let to them as LHA claimants.

Well we all know that. Research by the National Landlords Association came to a similar conclusion.

It does look though, as if some sort of change if not reform is on the cards. This report here on the BBC site  states that Government plans to do away with current arrangement which allows people to keep up to £15 if they find housing at a lower rent than the level of housing allowance set by their local authority, are due to be delayed until  2011 “as part of a wider reform of housing benefit”

We will have to wait and see what this “wider reform” consists of, but landlords will be hoping that it will re-instate the right for benefit to be paid direct to them.  After all the Tories have already said that this is what they will do if they come into power.

**STOP PRESS!! My spies at the NLA tell me that the DWP will publish their Housing Benefit Reform consultation report shortly**

Related posts:

1. DWP publishes consultation paper on housing benefit
2. Housing benefit – 8 weeks arrears can be in advance
3. Great articles in the current issue of Roof – the housing magazine from Shelter