A Guide to Housing Benefit, Local Housing Allowance, and Council Tax Support for Landlords
What are Housing Benefit and Council Tax Support?
Housing Benefit and Council Tax Support are state benefits which help people on low income pay rent, Council Tax or both, on the home they live in. Local councils run the schemes using regulations set out by the Government.
Housing Benefit and Council Tax Support are means-tested benefits. This means that the amount people get depends on:
- their income;
- their savings; and
- who lives with them.
What is Local Housing Allowance (LHA)?
Local Housing Allowance is a form of Housing Benefit for tenants renting from private landlords.
LHA is based on the number of bedrooms people need and not how much the rent is. This is called the ‘size criteria’ and is worked out as follows.
Tenants are allowed one bedroom for:
- every adult couple;
- any other adult aged 16 or over;
- any two children under 10;
- any two children of the same sex aged up to 15; and
- any other child.
Which tenants are affected by LHA?
The LHA rules, introduced in April 2008, affect any private landlord whose tenants receive Housing Benefit. LHA rules do not apply to the following.
- Tenants who rent from the council.
- Tenants who rent from registered social landlords.
- Supported housing provided by certain local authorities, social landlords, charities and voluntary organisations.
- Registered rent tenancies which started before 1989. (This is where a tenant is registered with the Rent Service, which means you cannot increase rent over a certain amount.)
- Tenancies in caravans, houseboats and hostels.
- Tenancies where the rent officer decides that a large part of the rent is for board and attendance, such as hotel accommodation.
The LHA rules affect new claims, breaks in claims and changes of address from 7th April 2008.
Tenants aged under 25 years who live alone
If the tenant is aged under 25 and lives alone, they can only get the Local Housing Allowance shared room rate. You can find out what the shared room rate is by checking the shared room rate here or you can contact us. See the more information section for details.
The role of The Rent Service
Under LHA rules, The Rent Service do not value individual properties. Instead, they will set monthly LHA rates for different sized properties within areas based on the middle figure (median) of a range of rent charged by private landlords. These areas are called broad rental market areas.
The Rent Service are responsible for supplying the local authority with LHA rates for their area every month. They will provide figures for the shared-room rate and the one-bedroom, two-bedroom, three bedroom, four-bedroom and five-bedroom rates.
From April 2009, if the tenant is entitled to more than six rooms, Local Housing Allowance will be only be paid at the five-bedroom rate.
The Rent Service are also responsible for deciding what rent people are entitled to if they are not claiming LHA.
Broad Rental Market Areas
The Broad Rental Market Area (BRMA) is the area used to set the level of LHA. Each LHA is the middle figure in the range of rents for all types of property with that number of rooms in the BRMA. A BRMA will cover a number of neighbourhoods. In the BRMA there will be a mix of property types and other places to live within a reasonable travelling distance of similar public facilities.
The Rent Service continually monitors the local rental market and collects details about properties available to rent and the rents that have been agreed for properties let recently. This information comes from different places, including letting agents, landlords and tenants and a range of advertisements.
Who can claim Housing Benefit or LHA?
Anyone who pays rent for the home they live in can claim. But not everyone who pays rent will qualify.
Tenants may not qualify if:
- their income is too high;
- they live with, and pay rent to, a close relative;
- they used to live with the landlord as a family member, relative or friend, and now pay that person rent;
- they are a member of a religious order;
- they live in a care home such as a nursing or old people’s home;
- it is not a business arrangement;
- they rent a former joint home from their ex-partner;
- they are responsible for a child of their landlord;
- they rent their property from a company, and they are a director or employee of that company;
- they rent from a trust and they are a trustee or beneficiary of the trust;
- they used to own the property within the last 5 years which they now rent;
- they live in the home as part of their job; or
- they are students. Most students don’t qualify but some still do, so please ask us.
- You or your tenant should not assume that benefit will be paid, or how much will be paid, until we tell you in writing.
Who must pay Council Tax?
An owner-occupier or tenant aged 18 or over living in the property is usually responsible for paying the Council Tax.
In certain circumstances, owners who do not live in the property must pay the Council Tax. The most common example of this is a House in Multiple Occupation (HMO).
What is a House in Multiple Occupation (HMO)?
An HMO is where:
- a tenant or tenants rent a room in the property and share facilities, for example a bathroom or kitchen (or both); and
- each has a separate tenancy agreement with only their name on it.
The landlord or owner is usually responsible for paying the Council Tax for an HMO.
Do students have to pay Council Tax?
If all the tenants are full-time students in further or higher education, the property will be exempt from Council Tax during term time, even if it is an HMO.
Courses must be for at least one academic year, and periods of study, tuition or work experience must be at least 21 hours a week.
All the students must provide a student certificate from their college for the exemption to apply.
What about joint tenants?
If a property is rented out to more than one person and is not classed as an HMO, the tenants are responsible for paying the Council Tax.
If you rent out a joint tenancy like this, there should usually only be one tenancy agreement. It should show all the tenants’ names and should have only one rent charge.
If you have any questions about Council Tax, please contact us. See the more information section for details.
How does my tenant make a claim for benefit?
Tenants must fill in and sign a benefit claim form. We also ask the tenant’s partner to sign the form. They can get a form from us. See the more information section for details.
If someone helps your tenant to fill the form in, we ask them to sign it too.
Your tenant must show us some documents. Please see the section called ‘What documents can you accept?’. Your tenant can speed things up by sending us these in with their claim.
What documents can you accept?
Your tenant and their partner must each provide separate proof of their identity and National Insurance number because the law says we must see these before we can deal with a claim.
We will tell your tenant what they need to provide as proof, and we need to see original documents.
However, no-one should delay a claim because they do not have these documents. They should send their application in straight away and tell us that they will send us the documents later.
What proof of rent do you need?
All private tenants must supply proof of the rent they pay. This will usually be a tenancy agreement, which must include:
- the full name and home or business address of the landlord;
- the full name and home or business address of any agent for the landlord;
- the full names of those renting the property;
- the landlord or agent’s signature;
- the tenants’ signatures;
- the date the tenancy will start;
- the full address of the property they are renting;
- the amount charged;
- how often the rent is payable – usually every week, four weeks or month;
- the date the document was signed;
- what is included in the rent, for example, meals, gas, electricity and water rates;
- the amount included for these services; and
- how long the tenancy will last for.
When do you pay benefit?
We pay benefit in weeks, and a benefit week usually starts on a Monday and ends on a Sunday. We usually pay benefit from the Monday after the date the tenant first contacts us to make their claim.
If we get a claim in the same benefit week as the tenancy starts, we will pay benefit from the start of the tenancy unless we have paid benefit at a previous address.
Sometimes we can pay benefit for an earlier period. This is called ‘backdating’ benefit, and your tenant will need to show that they had a good reason why they did not apply for benefit at the appropriate time.
What are the general rules on payments?
Payments are usually made every four weeks, for the previous four weeks.
Under the LHA rules, we cannot pay you direct. The tenant will be responsible for receiving their Housing Benefit payments and paying you their rent.
However, the Housing Benefit regulations say that if a tenant has not paid you eight weeks’ rent or more, we can consider paying you direct.
Please write to us as soon as your tenant owes you eight weeks’ rent or more.
If we think the tenant is unlikely to pay their rent or they are not able to pay their rent because they are vulnerable or have severe financial difficulties, we may pay you LHA on their behalf.
A tenant is unlikely to pay their rent if they:
- are behind with their rent;
- have continually not paid their rent; or
- have previously left a property and owed rent.
Financial difficulties might include people who:
- are not able to open a bank account or building-society account;
- have severe debt problems; and
- are bankrupt.
Someone is vulnerable if they have difficulty managing their own money. This might include people:
- with certain medical conditions;
- with learning disabilities;
- with mental-health problems;
- who cannot read or speak English; and
- with certain addictions.
This is not a full list and there may be other reasons why a tenant might be considered vulnerable.
If you want to receive payments direct from us, you must write to us and ask. If possible, please provide proof to support your application. If you would like more information on what we accept as proof, please contact us using the details in the more information section.
In some circumstances, the first cheque we send to the tenant may be made payable to the landlord. This is usually because the first payment is for a large amount.
We do not take any of the tenant’s responsibilities to pay their rent by agreeing to pay Housing Benefit direct. For example, we will not pay you compensation if your tenant does not pay you rent.
What could delay benefit being paid?
There are various things that could delay benefit being paid. For example, if:
- the tenant hasn’t filled in the form properly;
- we haven’t got all the proof we’ve asked for; or
- we need to make further enquiries.
Please note that the tenant is solely responsible for supplying proof of identity, income, rent and so on.
What if my tenant has not got a bank account?
If your tenant has not been able to open a current account because they have a poor credit history, they may be able to open a basic bank account. All the major banks and building societies offer them.
Basic bank accounts are easy to use and have the basic features of a current account. Your tenant will be able to take out cash at the counter and at cash machines. They may also set up direct debits, but they will not be able to have an overdraft or a chequebook.
What if my tenant’s circumstances change?
You, or your tenant, must tell us straightaway, in writing, of any changes that may affect their benefit. If you or your tenant are not sure what to report, tell us anyway. We will let you know if it affects their benefit.
What should a tenant do if they change address?
If a tenant moves to a new address they must fill in a new claim for benefit.
If they leave your property, the benefit will end even if you are still charging them rent. The tenant is responsible for any rent due after the benefit ends.
You or your tenant should tell us straightaway if they are moving out.
If a tenant changes rooms in a house in multiple occupation, or board and lodgings accommodation, you or your tenant must tell us in writing straightaway.
What information can you give to landlords?
If we pay Housing Benefit to your tenant, we can only tell you certain things about their claim if they have given us permission to do so.
All details about a tenant’s claim are confidential so we would only be able to tell you:
- that we have received a claim; and
- that a claim has ended.
If we pay Housing Benefit to you direct, we can tell you:
- the date benefit started and ended;
- the weekly amount of benefit and how often we pay it;
- the amount we are taking direct from the benefit to get back an overpayment; and
- details of any payments paid directly to you.
If we start or stop paying you direct, we will write to you to tell you. It is up to you to collect any difference between the benefit we pay and the rent that is due.
What if you have overpaid benefit?
If we find we have paid too much benefit, we can ask you or your tenant to pay it back. We can only ask you to pay back an overpayment if it was originally paid direct to you.
How will you get the overpayment back?
If a tenant’s circumstances change and there is an overpayment, we often take the money from their continuing benefit each week, even if they live at an address that is different from where the overpayment happened.
The tenant should pay the difference in the rent they owe you.
We can send a bill to get back:
- an overpayment from a tenant who is no longer on benefit; or
- payments from landlords when, for example, you have been paid after your tenant has moved out.
If we send you a bill you disagree with, get in touch with us straight away. As a landlord, you have the right to appeal against our decision to get back an overpayment from you.
If you don’t repay overpayments when we ask you to, we can take the money out of benefit we are going to pay you for other tenants. We may decide not to pay you at all.
If we pay you direct, we can ask you to repay any overpayment, even if you couldn’t have known we were paying you too much. But, if the overpayment was because of a change in the tenant’s income or their household income, we may ask the tenant to repay it.
If you think your tenant has made a false claim for benefit, please tell us straight away. We would not normally expect you to pay back the overpayment.
What if I or my tenants do not agree with your decision - can we appeal?
That depends. As a landlord, you have fewer appeal rights than a tenant.
Appeals by tenants
Your tenant can appeal against any decision we have made about their benefit claim.
We tell them their appeal rights and the time limits on the decision letters we send out.
They have one month from the date of the decision letter in which to ask us to reconsider our decision. There are full details in our leaflet called ‘What to do if you disagree with a Housing Benefit or Council Tax Benefit decision’.
If the tenant appeals, they must sign all the letters.
Appeals by landlords
Landlords can only appeal against our decision if we:
- refuse to pay benefit direct; or
- decide they should repay an overpayment.
Landlords can’t appeal about the amount of a tenant’s benefit, or which weeks we have awarded it for.
Where can I or my tenant get help?
You can always phone us for help and advice. See the more information section for details. Or, you could contact your local citizens advice bureau or welfare rights service.
What if I want to comment on your service?
You should get in touch with us. We would like to know what you think about this leaflet or about the service we provide to you. You’ll find our details in the more information section of this leaflet.
If you want more information
If you have any questions you can phone our Housing Benefit Section. The office is open: Monday to Wednesday from 8.30am to 5.00pm Thursday from 8.30am to 4.30pm Friday from 8.30am to 4.00pm. Phone 0161 342 3708 or call in and talk to someone at one of our customer service centres.