Local Housing Allowance Cap

The Government plans to cap the amount of money our customers get to help with their rent.

It will only affect you if you signed a new tenancy on or after 1 April 2016 (including mutual exchanges, joint to single tenancies and new tenancies where the customer does not move address) or if you receive Universal Credit.

How this will work

Housing benefit, or the housing costs element for those receiving Universal Credit, is to be paid to social housing tenants to the lower of two figures:

  • Your eligible rent (after bedroom tax)
  • The Local Housing Allowance rate applicable to your circumstances.

Local Housing Allowance (LHA) is a way of working out how much housing benefit you can get if you rent your home from a private landlord.

The council works out the maximum LHA based on where you live, the number of bedrooms you need and if you live in shared accommodation.

Below is a list of situations that might apply to you. For more advice please contact us.

How will this affect people receiving housing benefit?

If you have taken on a new tenancy since 1 April 2016, (including mutual exchanges, joint to single tenancies and new tenancies where you did not move address) these new rules will affect you if the LHA rate is lower than your rent, but you will not see any reduction until 1 April 2019.

How will this affect people receiving Universal Credit?

All Universal Credit claimants, (ie not just those whose tenancy began from 1 April 2016) will be affected by this rule if the LHA rate is lower than your rent - but not until 1 April 2019.

How will this affect people under 35 years old and single?

People who have taken on a new tenancy from 1 April 2016 will receive the Shared Accommodation Rate (SAR) from 1 April 2019. This figure represents single room rent and can be significantly lower than the rent you will be charged. Take a look at the LHA rates here.

How will this affect people over pension age?

This change is likely to affect pension credit claimants. Older customers with ‘spare’ rooms and those living in accommodation with higher rent such as an adapted bungalow or sheltered housing, are likely to be affected by the social housing LHA rate.

How will this affect people who are single, over 35 and have taken on a 2 bedroom flat in a block of flats or multi-storey?

For people who have taken on a tenancy after 1 April 2016, have a spare bedroom and pay service charge for a lift, communal cleaning etc, housing benefit will be based on how many bedrooms are needed and compared to the equivalent LHA. They will receive the lower of these two amounts and have to pay the shortfall. So, for someone in a 2 bedroom flat who only needs one bedroom, the LHA rate used to work out how much help they can claim towards the rent will be based on the LHA for a one bedroom property.

How will this affect people who live in supported housing?

From 2019/20, core rent and service charges will be funded through housing benefit or Universal Credit up to the level of the applicable LHA rate. This will apply to all those living in supported housing from this date. It is thought local authorities will get additional ‘top up’ funding to cover the cost of support in the accommodation. For people aged under 35, the Shared Accommodation Rate will not apply.

How will this affect people who have recently swapped homes with another customer?

Mutual exchanges (swapping homes with another customer) are assignments and are also affected by the proposed changes. For people who have swapped homes with another customer since 1 April 2016, the LHA rate will apply from 2019.