In the March 2010 Issue of Property Investor News
The old adage 'You must not tarnish all tenants with the same brush' has never been truer with those tenants on local housing allowance (LHA). Due to the recession, some tenants who have perfect credit histories are now receiving LHA thanks to being made redundant. The whole point of LHA is to stop homelessness yet there seems to be a very misconceived idea of these tenants; mainly that they are rogues who avoid paying rent and spend their rent on drugs or other vices. Yes, this does occur but it is certainly not an indication of everyone on LHA. Some of these tenants are vulnerable and need housing. Many landlords and letting agents need to be educated on this sector as do local authorities themselves with some offering landlords much support and unfortunately others who are being, shall we say, less supportive.
Alan Elborough, director of Settled Housing Solutions, says: "Around 90% of these LHA tenants don't want to be in this situation, and the minority of bad tenants do project a less savoury image! One positive aspect is that these tenants don't have temptations such as debt etc so once they move in, they will often become no-problem tenants."
How does LHA work?
The LHA was introduced following a raft of measures outlined in the 2004 Housing Act.
Lucy Jones, operations manager of LSL Property Services, says: "It replaces the old Housing Benefit (HB) system and is effective for new claims or when existing claimants have a break in their claim."
Graham Kinnear, director of Landlord Assist, states that it was brought in to give tenants more responsibility for their financial affairs and to help develop the skills necessary for the claimant to make the transition back into work. He says: "The system works on the basis that the claimant is paid directly their entitlement to housing benefit, with the tenant then responsible for passing their due rent to the landlord."
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