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housing entitlements in the social sector
The estimates from the VOA of the cuts when using the 30th percentile:
http://www.voa.gov.uk/LHADirect/LHA-emergency-budget-news-2010.htm
Ouch.
Thanks this is just the sort of information we need to get into the public domain. Lets try to keep this cross cutting thread updated as the information comes in during the next few weeks.
This is due to come in 2013. I also understand that Rent Convergeance is expected in the social rented sector by 2015/16 at which point there should be some discernable similarities between rent levels across the social sector for property of a certain size. Even if the convergeance is thrown off track somebody somewhere already has an idea as to what rent levels should be in any one locality for the social sector (otherwise how does the sector know if its got there). My own opinion is that this is the data that will start to form an LHA for the Social rented sector.
As far as LHA and current rates and whether L/L’s can influence LHA rates, well they clearly do but we mustn’t forget that the rents that are used to calculate LHA are genuine rents agreed for lettings where the person isn’t a benefit recipient. So if Landlords wanted to engineer LHA rates up then they need to increase the rent they charge for non benefit recipents and i don’t think the market would support that.
if Landlords wanted to engineer LHA rates up then they need to increase the rent they charge for non benefit recipents .
If they put all the lower rents up to LHA level then that pushes the median higher and hence the LHA increases.
This is due to come in 2013. I also understand that Rent Convergeance is expected in the social rented sector by 2015/16 at which point there should be some discernable similarities between rent levels across the social sector for property of a certain size. Even if the convergeance is thrown off track somebody somewhere already has an idea as to what rent levels should be in any one locality for the social sector (otherwise how does the sector know if its got there). My own opinion is that this is the data that will start to form an LHA for the Social rented sector.
Thanks Julian, have you any news about possible changes to tenure for new tenants?
No I don’t, I hadn’t really contemplated changes to tenure although I suppose there isn’t any real reason for having two different systems for setting benefit ceilings.
It will be interesting to see what happens here (and i’m sure other places too) if folk do decide to leave there 2 bedroom council house to move into a 1 bed property in the private sector because of the prospect of restrictions.
Here they will be swapping around £65 a week HB for their council house to around £85 a week for their private rented one.
Yes it frees up their 2 bed council house for someone that needs one but there is no guarantee that the new occupier will be a benefit recipient (that would have had an even higher LHA rate on a private dwelling) so the net result is an increase in the benefits bill.
You are right Gareth but what is important is not what l/L’s will do, it is the effect of what they do that matters . The point I was making is this:
Tenant A = 100% benefit recipient - Hi jonny I’m going to put your rent up from £100 to £120 a week because if I do then the LHA madian and thus 30th percentile will go up. Jonny: Ok no problem cos I’m not paying it.
Tenant B = non benefit recipient - Hi jenny I’m going to put your rent up from £100 to £120 a week because if i do then the LHA meduan and thus 30th percentile will go up. Jenny: no you are not because if you do I will go elsewhere and nobody in their right mind is going to pay that much for this place, you are better sticking with me and leaving it as it is.
The informed observer: Well Mr Landlord Jonny’s rent is irrelevant because it isn’t used in the LHA calculation so whatever you attempt to do with property rented to benefit recipients doesn’t affect the LHA rate. You were on the right lines with jenny’s rent but as i predicted she sent you away with a flea in your ear.
In reality some Jonnies will send the L/L packing ans some Jennies will accept it through fear of losing their home but the reality is that it will take a significant effort for L/L’s to affect the LHA rate at all. In practice it is the Jennies that set it by accepting the rent proposal and so defining the the 30th percentile.
Here is National Landlord Association take on changes in LHA…. “pushing tenants to the lower roguish ends of the market”
http://www.landlords.org.uk/pdf/free/Budget_Statement_2010.pdf
What can they mean?
I know this comment isn’t the social sector but seeing as we’re covering LHA.
If LHA rates are adjusted down maybe there will be an end to the buy to let landlord? (seeing as its them who G.O. is depriving of income.)
This may just mean there’s more and chepaer housing on the market for first time buyers?
I know this comment isn’t the social sector but seeing as we’re covering LHA.
If LHA rates are adjusted down maybe there will be an end to the buy to let landlord? (seeing as its them who G.O. is depriving of income.)
This may just mean there’s more and chepaer housing on the market for first time buyers?
Ok fair point, but “buy to let” landlords, dont have to let to folks on benefits. They can chose to let to working families, singles from new communities or students.
In general terms I beleive you are right, but you would have to get rents to fall, rather than just a falling LHA.
This is the most in depth analysis.
http://housing.cih.co.uk/memberbriefing/housingbenefit-July-2010.htm
The mechanism for reducing rents in the social sector are becoming clearer.
Section 325 of explanatory notes
Using these powers the Secretary of State may limit the amount of rent that
claimant’s are treated as liable to pay as follows:
? Eligible rent may be determined by reference to local housing allowance
(“LHA”). Currently LHA determinations are made by rent officers. The
amendments made by clause 68 will ensure the Secretary of State has the
power to periodically consider re-setting LHA rates without reference to
rent officer determinations, for example, if it is considered necessary to
adjust the level of rates more closely to reflect rent levels in the local area.
? Introducing a size criteria for working age claimants receiving housing
benefit in the social rented sector. This will allow the Secretary of State to
prescribe the amount by which the claimant’s actual rent liability is to be
reduced to reflect the additional bedrooms within the property; the
claimant’s eligible rent will be restricted if their dwelling is larger than
they need. A percentage reduction will be made based on the numbers of
extra bedrooms, which will be prescribed in secondary legislation.
? In the short to medium term, housing benefit for social-rented sector
tenants (including those who rent properties with the new shorter tenures
and affordable rents), will continue to be based on the actual rents in both
housing association and Local Authority properties, including in the new
‘affordable rent’ tenure, subject to the new size criteria mentioned above.
So we will be looking at, if a working age tenant is overaccommodated a PERCENTAGE reduction, based on the rooms the tenant needs, rather than the use of LHA rates.. In my area the impact assessmnet loss is an average £13.00 per week.
Do people think that the reference rents system has a future?. It is now used almost exclusively for housing association lettings that are referred to the rent officer and board and lodging cases, but I havn’t seen any move to abolish it. I understand that indicative rents are no longer issued.
(Or at least I think that its still used for board and lodging cases, although I’ve seen reference to a LHA board and lodging rate.)
Can you work back from that to derive the percentage?
Can you work back from that to derive the percentage?
Nope, I guess some households will be overaccommodated by one, or two bedrooms, a minority 3. Its (all) social landlords so if my understanding is correct, newer build more expensive HA accommodation would suffer a bigger hit, in real terms as opposed to % terms???
Would welcome someone else taking a look as these are big reductions, and many LAs dont allocate according to HB size criteria, eg if you have a man, woman and two tiny ones (boy and girl) you happily allocate a 3 bed…..wheras come 2013 you are only going to get a two bed rate….Whoops…