Housing benefits are paid by the government if a person is unemployed and in some circumstances when working. Usually only people on a low income or getting certain state benefits qualify for it.
If your tenant is on housing benefits, Local Housing Allowance (LHA) is used to work out how much housing benefits a tenant can get when renting a property or room from a private landlord. The amount of housing benefits a tenant will get depends on where the property is and who lives with them. LHA rates are set for different types of accommodation in each area. The rates range from a single room in a shared house, up to properties with four bedrooms.
We calculate the amount of benefits that your new tenant(s) is entitled to before granting a tenancy agreement. The amount of benefits your tenant(s) will be claiming will be in-line with the monthly rental figure. However, sometime a tenant(s) has a contribution towards their rent because housing benefits does not cover the full amount. We have a set rental criteria that allows a maximum contribution of £40.00-£60.00 that a tenant(s) can put towards their rent per calendar month depending on the size of their family. This has been put in place to prevent unmanageable rental contributions by tenant(s).
What paperwork must the tenant(s) fill in if they are on housing benefits?
The tenant(s) has to complete an application form and provide information and proof of:
- Their income, and any savings
- Their identity and details of their immigration status in the UK, if applicable
- The rent to be paid (usually a written tenancy agreement is sufficient)
- Name and address of the landlord/agent
We will not allow a tenant(s) to take your property unless they have proof that the information required to process a housing benefits application has been given to the relevant council. This is achieved at the home visit stage where we see a prospective tenant(s) in their current property to confirm the condition that they are keeping it in and to complete either a change of address or a new LHA claim form. The tenant(s) is then given a sign-off sheet that they must take to the council and get stamped to confirm all the relevant documents have been provided. We state that we will not move the tenant(s) into the property unless they can produce this stamped sign-off sheet. We also call the local Job Centre Plus on behalf of the tenant(s) to arrange an appointment for the pending change of address. Following the move-in, we will send the tenancy agreement and any additional documents to the council to complete the claims process.
How long does it take for the council to process a housing benefit claim?
Most local authorities aim to process housing benefit claims within 14 days from receipt of all the appropriate documentation they have requested. They cannot pay a claim until they have all the information they need. Regrettably, some local authorities fall short of the 14-day target.
Within our tenancy agreement we have a client authority form which allows us to find out about a tenant(s) LHA claim. On a weekly basis we have a member of staff who phones the council to find out at what stage a claim is at. This allows us to control the process and influence the overall decision.
Direct payment of LHA
Direct payment of local housing allowance to us will definitely occur if your tenant(s) is classed as “vulnerable”. We will also look to obtain direct payment in-line with the changes in LHA which came into effect from April 2011.
In line with these changes, our tenancy agreements have a cover-note stating that we will not accept a tenant(s) unless LHA is paid direct to us and the rent is affordable. While this generic approach often does work, direct payment is never guaranteed and success rates can vary council to council. In some cases our rental department may also have to provide additional information confirming why LHA should be paid direct to us and not to the tenant(s). We have a specific department which specialises in this and you will also be informed if we need to provide additional information.
What monies do we take up front from a housing benefit tenant(s)?
When a housing benefit tenant(s) applies for a property we ask the tenant(s) to pay one month's deposit and their expected monthly contribution towards the rent which is pro-rated. (i.e. the difference between the rent and the expected housing benefit, worked out on a monthly basis and then pro-rated depending on what date the tenant moves in). We are very strict with this policy and only deviate away from this when the property is classed as a “problem area property”. Our new lettings department will have confirmed with you, what money would be taken up front from a tenant(s) before marketing your property.
When do you receive your rent for a housing benefit tenant(s)?
Housing benefits can be paid in two ways. If it is paid to the tenant(s) via the local authorities it will be paid fortnightly but if it is paid direct to the landlord / agent it is paid four weekly in line with that particular councils payment run.
Before the council can make any payments they have to process the claim and as previously mentioned this can take a number of weeks. When the claim is processed though the council will back pay any money due from the date the tenant(s) moved in.
In addition, a housing benefit tenant(s) may have a contribution towards their rent. This will be calculated on a monthly basis. The first payment will be paid as a pro-rata amount, based on the date the tenant(s) moved in, and then monthly thereafter.
Universal Credit tenants
If your tenant is claiming universal credit rather than housing benefits our lettings department will discuss this with you through the vetting process before a tenant is allowed to move into the property. Universal Credit differs to Housing Benefits in the sense that the tenant receives a lump sum payment once a month direct into their bank account combining all elements of their benefits including the housing element. To achieve direct payment the tenant has to be seen as vulnerable with substantial evidence required to prove it. As a result, if your tenant does claim Universal Credit the likelihood is that direct payment will not be achieved. In such tenancies, we will endeavour to set up a direct debit payment once a month to take the rent from the tenant’s bank the day after the funds are due to be received.
You will be given specific details of the tenant(s) entitlement, contribution amounts and payment dates during the move-in process by both the lettings and property management departments.