Local Housing Allowance

Local Housing Allowance (LHA) was introduced on 7 April 2008 to provide Housing Benefit entitlement for tenants renting private sector accommodation in England, Scotland and Wales. The LHA system introduced significant changes to the way Housing Benefit (HB) levels are restricted and how benefit is paid. It did not replace Housing Benefit - it is just a different way of calculating entitlement under the existing Housing Benefit scheme: the Local Housing Allowance is based on the 30th percentile of local rented accommodation. LHA rates relate to the area in which the housing benefit claim is made. These areas are called Broad Rental Market Areas, defined as "where a person could reasonably be expected to live taking into account access to facilities and services."

LHA rates were set up so as to ensure tenants in similar circumstances and areas could claim similar amounts; ie based on their needs rather than based on their property, and so that in advance it was possible to know for an area how much rent could be covered by housing benefit. However it was found after LHA's first limited implementation in 9 Broad Rental Market Areas that rent levels rose more rapidly in those areas - particularly in those parts of these areas where previously the price was lowest - resulting in criticism that LHA could increase homelessness and remove the poor and unemployed from areas in which they could more easily find work, or find access to vital services related to disability needs.

In October 2002 the Government announced the introduction of the Local Housing Allowance (LHA) to replace existing Housing Benefit rent restrictions for private tenants. Local Housing Allowance uses the same regulations as the existing scheme. LHA is means tested and tapered in exactly the same way as Housing Benefit - however, the eligible rent is fixed for a household of a given size in a given region. This region will include many towns. Housing Benefit is not normally restricted below the advertised LHA rate; up until 2009 a tenant moving into accommodation cheaper than the LHA rate was allowed to keep the difference, after 2009 this was limited to a maximum of £15.

Local Housing Allowance was introduced starting in November 2003 as part of a wider review of Housing Benefit regulations in nine 'Pathfinder' or pilot areas: Blackpool, Brighton & Hove, Conwy, Coventry, Edinburgh, Leeds, Lewisham, North East Lincolnshire and Teignbridge - starting in Blackpool in 2003. From April 2005 a further nine councils started to implement the LHA, starting with Wandsworth, followed by East Riding, St Helens, Argyll and Bute, South Norfolk, Norwich, Pembrokeshire, Guildford and Salford.

An evaluation of the operation of the LHA was commissioned by the Department for Work and Pensions, and carried out by The Centre for Housing Policy, working as part of a consortium of universities, together with the National Centre for Social Research.

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