New Tenancies and Local Housing Allowance

From 1 April 2019, the government is changing the way Housing Benefit (or the housing element of Universal Credit) is calculated.

What does it mean for you?

For all new tenancies from 1 April 2016 (1 April 2017 for supported accommodation tenancies) onwards, the amount of benefit that you may receive from 1 April 2019 could be reduced.

This is because the relevant Local Housing Allowance rate for your household size is based on how many bedrooms you need, and not on the size of the property. This may mean that from April 2019 your benefit will not cover all of your rent, and you will have to pay any shortfall on your rent yourself.

The current Local Housing Allowance rates for Derby are shown in the enclosed note, along with examples of how this might affect various households.

What do you need to do now?

If you sign a new tenancy or renew a tenancy after 1 April 2016 (1 April 2017 for supported accommodation) you will need to think about whether you will be able to afford the rent in the future.

It is important that you remember that your home is at risk if you do not pay your rent.

What is the Local Housing Allowance

At the moment your housing benefit is calculated against the rent due for your home. In the future this is changing and the maximum benefit will be based on the Local Housing Allowance. The amount of Local Housing Allowance you can receive depends on the size of your household.

Local Housing Allowance is based on the number of bedrooms you are assessed as needing not on the number of bedrooms in the property.

One bedroom is allowed for:

  • every adult couple
  • any other adult aged 16 years old or over
  • any two children regardless of sex aged under 10 years old
  • any two children of the same sex aged under 16 years old
  • any other child

Shared Room Rate for SIngle Under 35 year olds

If you are aged under 35 years old you are entitled to receive the standard rate for a bedroom in shared accommodation. This shared rate will be based on properties where a tenant has the exclusive use of only one bedroom and where the tenancy provides for him/her to share the use of one or more of:

  • a kitchen
  • a bathroom
  • a toilet, or
  • a room suitable for living in.

Single over 35 year olds, care leavers under 22 year olds, and couples with no dependant children will be entitled to the rate for a one bedroom property. For example, a one bedroom flat or studio or other kind of self-contained accommodation, provided you actually rent a property of at least this size. Current LHA rates can be accessed at www.derby.gov.uk 

The LHA rates as at 2015/16 are:

Entitlement to
£/Week
Shared Room rate £58.82
One Bedroom
£84.75   
Two Bedrooms (single or couple plus 1 or 2 children)
£103.56
Three Bedrooms £117.70
Four Bedrooms (max)
£155.34 

           

Note: LHA rates are calculated over 52 weeks. Derby City Council rents are charged over 48 weeks. To compare your rent with the LHA rates, multiply your weekly rent by 48 and then divide by 52. See the examples below or get in touch if you need any advice.


Household examples:

Single Person <35, one bedroom

Rent and Service Charge = £81.25 a week (x48/52 = £75/week)

Entitlement = shared rate £58.82

Shortfall = £16.18 a week

 

Single Person >35, same property

Rent and Service Charge = £81.25 a week (x48/52 = £75/week)

Entitlement = one bed £84.75

Shortfall = £nil

 

Adult(s) and two children aged under 10, 3 bed house

Rent and Service Charge = £97.50 a week (x48/52 =£90/week)

Entitlement = two bed £103.56

Shortfall = £nil

 

Couple (any age) no children under 18 in 3 bed house

Rent and Service Charge = £97.50 a week (x48/52 =£90/week)

Entitlement = one bed £84.75

Shortfall = £5.25 a week

 

Local Housing Allowance and the Underoccupancy Charge

If you are of working age and have one or more extra bedrooms, your rent and any service charges used in the assessment of your Housing Benefit (or the housing element of Universal Credit) is already capped.

If the difference between your rent and the relevant Local Housing Allowance rate for your household is higher than the reduction for under-occupied bedrooms, only the higher deduction will apply, not both. Similarly, if the reduction for under-occupied bedrooms is higher than the relevant Local Housing Allowance rate for your household, only the reduction for underoccupied bedrooms will apply.

Local Housing Allowance if you are of pension age

If you are of pension age, you will not receive a reduction in the rent used to assess your Housing Benefit for any underoccupied bedrooms but your rent will be capped to the relevant Local Housing Allowance rate for your household.

Please note – in all cases, you will only receive one reduction.