The Government’s local housing allowance is restricting choice and causing financial hardship for claimants, a housing charity warned today.
Shelter said the local housing allowance (LHA), a form of housing benefit which was introduced last year, had left thousands of tenants struggling to manage their finances, with many in danger of losing their home.
LHA was intended to promote fairness, choice and personal responsibility among claimants, by paying the money directly into their bank accounts, rather than to their landlord.
But a survey carried out by the group among 450 recipients found that 81% of people said they had found it fairly or very difficult to find a home that was affordable, with 59% saying they had had to make up shortfalls in their rent themselves.
Many respondents claimed they were only able to find the extra money by going without essentials such as food and heating.
Shelter said part of the problem was that the boundaries used to calculate the levels of the allowance people receive – known as broad rental market areas (BRMA) – were too large.
As a result, people in expensive parts of the BRMA were being forced to move to cheaper areas or find the shortfall in rent themselves.
But it warned that in cheaper areas, anecdotal evidence suggested some landlords were raising their rents as they knew the LHA would pay out more than they were charging.
The group added that the majority of claimants who had experienced both their rent being paid into their own account and directly to their landlord said they preferred the latter system.
The charity said 95% of people receiving the LHA said they were struggling to manage their finances, while the new system had contributed to more than a quarter of people falling behind with their rent.
There was also evidence that a growing number of landlords are refusing to accept LHA claimants as tenants, with 60% of people receiving the benefit saying they had struggled to find a landlord who would let them a property.
Kay Boycott, director of policy and campaigns at Shelter, said: “Under this system tenants have no choice about whether their benefit is paid to them or to their landlord.
“Many claimants are already struggling financially, so when they get rent money paid into their bank account there is a huge temptation to spend it on necessities such as food or bills rather than paying their rent.
“It is vital that the Government makes urgent changes to LHA to ensure claimants do not continue to be disadvantaged.”
It wants tenants to be able to choose whether the benefit is paid to them or to their landlord, as well as reviewing the boundaries of BRMAs.











