Monitoring the impact of recent measures affecting Housing Benefit and Local Housing Allowances in the private rented sector: the response of landlords

Document type
Report
Author(s)
Cole, Ian; Beatty, Christina; Powell, Ryan
Publisher
DWP
Date of publication
1 July 2014
Series
Research report; no. 870
Subject(s)
Poverty Alleviation Welfare Benefits and Financial Inclusion, Housing and Homelessness
Collection
Social welfare
Material type
Reports

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Local Housing Allowance (LHA) is a way of calculating HB for tenants in the deregulated PRS. Changes to the LHA system were announced in the June 2010 Budget and the Spending Review of 2010. These measures include: changing the basis for setting LHA rates from the median (50th) to the 30th percentile of local market rents; capping LHA rates by property size and scrapping the five-bedroom rate; removing the £15 per week excess that claimants could keep if their maximum LHA entitlement exceeded their rent; increasing financial support for Discretionary Housing Payments (DHPs); temporarily widening the discretion of local authorities to make direct rent payments to landlords in return for rent reductions; and raising the age at which the Shared Accommodation Rate (SAR) applies from 25 to 35. The focus of this report is an analysis of primary research undertaken with landlords, and housing and benefits advisers in 19 local housing markets in Great Britain.

There were three primary impacts which cut across area differences. The first was the impact of the changes to the Shared Accommodation Rate, implemented from January 2012. The proportion of landlords who said they were affected by this measure doubled between waves 1 and 2 of the research, and increased to 37 per cent of landlords in Inner London. The second widespread impact attributable to the LHA measures was the perceived increase in rent arrears among LHA tenants. When asked about whether rent arrears had increased due to the LHA measures, there was a significant increase from 40 to 47 per cent of all respondents, and from 47 per cent to 63 per cent in Inner London, where the average shortfalls were the highest. The third generic impact of the LHA measures across different housing markets was the increase in rent negotiations between LHA tenants and landlords. Over a quarter of respondents in the overall sample said that rent negotiation with existing tenants was increasing, and just under a quarter said the same about prospective tenants negotiating before accepting an offer of a tenancy.

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