Welfare reform for private landlords

The way that private tenants receive benefits is changing – here’s a simple guide to welfare reform for private landlords. You can find out more about Local Housing Allowance rules so you know how the system works.

Local housing allowance for under 35s

Private tenants who are single and under 35 will get the ‘shared accommodation rate of local housing allowance (LHA). Before 1 January 2012 this rate only applied to under 25s. The local housing allowance rate for each area is available from the Scottish Government. If you’re aware of a tenant who is having difficulty paying their rent, then they may be able to apply for a Discretionary Housing Payment from their local council

‘Bedroom tax’ does not affect private tenants

Because private tenants get help to pay their housing costs through the local housing allowance – not housing benefit which is paid to council and housing association tenants – they are unaffected by the under-occupancy deduction or bedroom tax.

Local housing allowance - rates updated each April

From April 2015 most LHA rates are updated in April to the lower of:
 
  • the 30th percentile on the list of rents (based on data about rents in this area collected over the previous 12 months), or
  • the existing LHA rate plus 1 per cent.
Some rates have been increased by 4 per cent.

A cap on benefits

From July 2013 a cap on benefits was applied across Scotland.

  • For single people with no dependents the cap is £350 per week
  • For everyone else the cap is £500 per week. 
Where a claimant’s benefits are above the cap amount the amount of local housing allowance they receive will be reduced to bring their benefits down to the cap amount. If there is a shortfall between a tenant’s rent and the local housing allowance that they receive then they will need to make this up out of other money. People receiving disability-related benefits are not affected by the cap.

Universal credit

Universal credit is a new way of paying benefits. It is gradually being introduced across the country with implementation due to finish by the end of 2017. It will eventually replace local housing allowance, combining it with other benefits. Payments will be made directly into claimants’ bank accounts at the end of every month.

Universal credit will replace:

  • housing benefit (which includes local housing allowance)
  • income-based jobseeker’s allowance
  • income-related employment and support allowance
  • income support
  • child tax credits 
  • working tax credits.
Universal credit will be ‘digital by default’ – meaning all claims will be made and managed online. Some help may be available on the high street or a telephone helpline.Find out more about universal credit at gov.uk and the Money Advice Service also has information about universal credit.

 

 

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