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Tag Archives: Local Housing Allowance

Five ways for landlords to ensure payment of housing benefit

CashOne of the problems with housing benefit, or local housing allowance (LHA) is that it is, by default, paid direct to the tenant. This is one reason why many landlords do not want to take in tenants on benefit.

Landlords can demand direct payment if the tenant falls into arrears of over 8 weeks. However landlords will generally prefer rent to be paid direct to them from the start so that the arrears never happen. Here are five ways that this can be done.

1. Credit Unions

Many credit unions provide a service where benefit payments are made to a special account and then passed on to the landlord. There are quite a few credit unions that will do this (I have a page with a list of all credit unions that I am aware of).

However credit unions can normally only take on local customers, and not all of them are able to deal with benefit payments, so you may not have one in your area able to offer this service.

2. Tasker Payment Services

There is also a new service, Tasker Payment Services, set up by Leanne Tasker. This is very similar to the credit union service. The Tasker service however is open to all tenants wherever they are located.

Fully registered with the FSA, this is a good choice for tenants who do not have a bank account, or who have a big overdraft. You can read more and find the forms online at the Tasker Payment Services website.

3. Using guarantors

This is the approach developed by Steve Perrons which he described in our podcast in March.

Essentially it involves signing up a relative of the tenant as a guarantor, and then arranging for the benefit payments to go to the guarantor rather than the tenant. The guarantor is then responsible for paying the benefit over to the landlord and ensuring that any shortfall is made up.

Steve has used this method for years and says it works very well. Find out more by listening to the podcast here.

4. Direct payment for vulnerable tenants

If the tenant is a person who finds it difficult to manage their financial affairs or who is unlikely to pay for some reason, an application can be made to the Local Authority for direct payment, to protect the tenant.

This may be appropriate if, for example the tenant has learning difficulties, or is illiterate or cannot speak English. An application needs to be made to the local authority supported by evidence which they will then assess. You can read more about this process in Chapters 5 and 6 of the LHA Guidance Manual here.

5. Direct payment for ‘affordable rents’

Finally, there is the new rule, which came into force in April 2011, which allows local authorities to pay direct to landlords to ‘safeguard affordable rents’. This was brought into force to ‘help exert a downward pressure on rents’ and will be available if a landlord is willing to drop his rent to make it ‘affordable’ to the tenant.

You can read about it in Chapter 7 of the LHA Guidance Manual.

As one is constantly reading about the massive rise in rents recently, this would suggest that landlords are more likely to want to get HB tenants out so they can rent to someone willing to pay more, rather than reduce their rents so HB can be paid direct. It would be interesting to know whether this new power has actually been used yet.

A caveat

Finally, it might be worth mentioning that there are advantages in not having rent paid direct to the landlord. If rent is paid direct the landlord is vulnerable to ‘clawback’ if it is later found that the payments should not have been made to the tenant.

This used to be a big problem when direct payment of benefit to landlords was the norm. The problem does not occur where payments are made via a credit union (or the new Tasker service) or via the guarantor approach pioneerd by Steve Perrons.

Landlord Law Podcast – with housing benefit expert Steve Perrons

RSS

Tessa Shepperson talks to housing benefit letting agent Steve Perrons. Steve specialises in renting to benefit tenants, and shares some of his secrets in this podcast. Continue Reading

Housing Benefit – the government answers questions

London flats

The housing law bulletin issued by Garden Court Chambers every week had some interesting links to housing benefit related items this week. Most interesting of all perhaps was a link to the Government’s response to the Work & Pensions Select Committee’s report on the forthcoming housing benefit changes. Here are a few points I haveContinue Reading

Housing Benefit changes – an update

Alan Smith

I received a very useful briefing recently from Alan Smith (pictured), housing officer at Hartsmere Borough Council, and he has kindly given me permission to reproduce this for you all. Budgetary Changes being made to Housing Benefit (NB: Except where stated, existing HB recipients will be affected from their tenancy anniversary, or possibly sooner ifContinue Reading

Housing benefit and LHA – what are they thinking?

The remains of Grumbeg Village, site of one of the Highland clearances

Our regular guest blogger Ben Reeve-Lewis gets out his soapbox, and even peers into his crystal ball … Housing benefit and LHA – what are they thinking? I notice today that after climbing down over prison sentences for knife crime the government is also getting,……well not exactly cold, but definitely chilly feet about housing benefitContinue Reading

When will Local Housing Allowance be paid direct to landlords?

Many landlords would prefer LHA to be paid to them direct

One of the  most consistent threads running through my Notable Property Persons posts is the need to get Local Housing Allowance (LHA) paid direct to landlords.  Practically everyone mentions it. Many tenants would infinitely prefer their benefit to be paid over to their landlords, as it would prevent them spending it by accident or havingContinue Reading

Housing benefit and ethnic cleansing

Losing your home is never nice

The problem Reading the press this weekend we learn that Boris Johnson has likened it to “Kosovo-style social cleansing” in the capital and has vowed to resist it. An analysis prepared for him predicts a “50% increase in homelessness acceptances in the first year of the changes”. Labour MP Chris Bryant talks about the poorContinue Reading



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