A progress report found that the
piloting of a new
free market scheme to pay flat rate Local Housing Allowance (LHA) to private tenants has been introduced smoothly
in the nine test areas.
The new scheme pays the same amount of benefit to private tenants with similar circumstances living in the same area. LHA payments are based on the size of a family, the area they live in, and their income and capital. Payments, unlike traditional Housing Benefit, are unrelated to the rent paid (this is subject to a range of restrictions applied by a rent officer).
Currently, tenants who live in smaller properties than they are entitled to, or less attractive properties, generally receive less Housing Benefit than those with similar needs in the same area, but who live in larger, or more attractive properties; this is because the Housing Benefit paid is tied to the rent paid.
Under the LHA scheme, tenants have the chance to shop around, finding cheaper property and pocketing the difference, or trading up and making up the extra rent themselves. The piloted reforms in Housing Benefit also increases transparency (making it easier for tenants and landlords to find out in advance how much rent could be covered by benefit payments), and personal responsibility; in most cases, and in the absence of extenuating circumstances, LHA is paid directly to tenants.
The report found that there have been few problems, and councils testing the scheme, along with their partner organisations, are generally happy with the way the scheme has been introduced. Concerns that the LHA would impact on levels of homelessness have not materialised.
The report also found that the way councils are assessing vulnerability and arrears has generally worked well in all the pathfinder areas. Overall, under the new arrangements, less than one in ten claimants have Housing Benefit paid to their landlord. Most claimants under the new scheme now have a bank account, and, overall, six out of ten of these claimants are using those accounts to receive Housing Benefit payments.
There are nine councils already testing the LHA scheme (for the past two years), being Blackpool, Brighton & Hove, Conwy, Coventry, Edinburgh, Leeds, Lewisham, NE Lincolnshire, and Teignbridge. A further nine councils will start implementing the scheme in the first half of 2005.
