Rent Officer Handbook: Local Housing Allowance

Local Housing Allowances: determination

How the Rent Officer determines Local Housing Allowances.

Broad rental market areas (for LHA purposes)

(v1.1 2012)

The area considered by the Rent Officer when determining Local Housing Allowances.

Background

The broad rental market area is defined within the Rent Officers (Housing Benefit Functions) Order (the Order) and a broadly similar definition applies to the BRMA (LRR) (referral cases) and the BRMA, used for LHA setting. In theory the BRMA for both purposes should be the same, however due to a change in the review process, whilst the implementation of a new or changed BRMA (LRR) may happen immediately the Rent Officer decides to implement the change, the BRMA (for LHA purposes) may only be implemented when or if approved by the Secretary of State. The practical effect of this change may be that the BRMA(LRR) and BRMA may be different at any one time, and it is possible that the 2 will never coincide if a review to the BRMA is not approved by the Secretary of State.

A BRMA is an area:

within which a person could reasonably be expected to live having regard to facilities and services for the purposes of health, education, recreation, personal banking and shopping, taking account of the distance of travel, by public and private transport, to and from those facilities and services

The BRMA is subject to two conditions. Firstly, it must contain:

residential premises of a variety of types, including such premises held on a variety of tenures

and

sufficient privately rented residential premises, to ensure that, in the Rent Officer’s opinion, the local housing allowance for the categories of dwelling in the area for which the Rent Officer is required to determine a local housing allowance is representative of the rents that a landlord might reasonably be expected to obtain in that area.

Once determined, the extent and name of a BRMA is notified to the local authority along with the relevant LHA figures.

Determination

There are three elements to the BRMA determinations.

1. Access to facilities and services

This element can be approached as two tasks:

  • identification of facilities and services, and
  • assessment of accessibility to them

For convenience we refer to them collectively as the HERBS:

  • Health
  • Education
  • Recreation
  • personal Banking, and
  • Shopping

The Rent Officer should identify and take account of:

  • General practitioners, dentists, opticians and pharmacies, health centres and hospitals
  • Primary schools, secondary schools and colleges of further education. (Universities should be noted but, as their catchments tend to be regional, national and even international, using them as determining factors is not advised)
  • Parks, leisure centres, sports centres, swimming pools, outdoor sports facilities, spectator sports venues, theatres, cinemas, museums, places of interest, restaurants, clubs and other community activities
  • Banks, building societies, post offices and automated cash machines
  • Convenience stores, shopping parades, supermarkets, high streets, street markets, shopping centres and out of town sites. (Regional centres should be noted but, because their catchments are regional, using them as a basis for a determination is not advisable)
  • Rent Officers must consider access to the HERBS identified. The requirement is that a BRMA must offer reasonable access to them by both public and private transport. The Order requires consideration of the “distance of travel” and, inevitably, “distance” is commensurate with ‘time’. If journeys take an unreasonable time, for the tenant of a dwelling or a potential recipient of an allowance, it is likely that an area is too broad

In the context of determining area boundary, access to some HERBS will be influenced in one direction while access to others will be influenced in another. Rent Officers should therefore strive to exercise careful judgement when determining boundary. The important thing is that the tenant of a referred dwelling has reasonable access to the HERBS and that people living across an area share a reasonable level of access to them.

The use of the word “reasonably” in the definition exerts a limit on broad extent. ‘Reasonableness’ is a concept that allows public bodies to exercise discretion in following Parliamentary intentions but, at the same time, restrains officials from exceeding those intentions. It is impossible to provide a precise definition of reasonableness that could cover every situation. The provision of good transport links means an area is justifiable when someone enjoys access to a not unreasonable degree. In a broad area context, the term “reasonable” may vary. For example, people in rural locations expect to travel greater distances to access HERBS than people in urban locations.

2. Variety of property types and tenures

This element represents a checking mechanism, or test, after the consideration of the primary HERBS element.

The requirement is straightforward and requires Rent Officers to ensure that an area contains an assortment of property types (e.g. houses, flats, bungalows, terraced, semis, detached, purpose built and converted). Rent Officers may also consider whether other, less usual, types of dwellings are present, such as caravans or caravan sites, boats or moorings. Rent Officers must also ensure a variety of tenures such as owner occupation, local authority renting, social renting and private renting.

3. Sufficient privately rented premises

This element represents the second test to be satisfied. It requires Rent Officers to ensure that the private rented sector identified in the “variety” test is adequate to support an LHA representative of the market.

Broad areas will not resemble each other in every way. The private rented sector, for example, is far from evenly spread; it tends to be concentrated in the urban areas and scattered unevenly throughout rural ones - in many places it is non existent. It is not, therefore, the intention of this guidance to attempt to settle on an amount of privately rented premises that could serve as a benchmark and meet the test for all broad area determinations. Rent Officers have a responsibility to use their judgment and, taking account of the relevant factors, reach an informed opinion.

If, in a bid to address deficiency, Rent Officers wished to increase an area’s extent, they would need to revisit the primary consideration of accessibility to the HERBS. However, the Order also requires that where Rent Officers, in a densely populated conurbation for example, wished to decrease an area’s extent in order to address perceived excess, they would need to revisit the view that the area is broad: i.e. wide in extent, large in expanse, or spacious. The key issue here is thus one of applying checks and balances, and sufficiency therefore needs to be considered within the context of the Order as whole.

Since Rent Officers have to collect lettings information on which to base the LHA, it may be reasonable for us to quantify, in general terms, the amount of lettings information Rent Officers can expect to collect. Lettings information representing 20% of the private rented sector should provide a reliable representation of a broad rental market. (It should be noted that the size of the Private Rented Sector (PRS) cannot be determined by the amount of lettings information that the VOA holds – the extent of the PRS must be independently assessed by using other data such as census data.)

Where Rent Officers identify an insufficient number of dwellings for a required room or bedroom category, they may import lettings information from similar areas. The important point to note is that, as it is the Rent Officer’s duty to decide what constitutes sufficiency for a broad area, it would be reasonable to consider only the most generally available room and bedroom categories of property when forming an opinion of general sufficiency.

It is in such ways that Rent Officers exercise judgement as to whether an area contains sufficient private rented lettings for an LHA to be determined that is representative of what a landlord could reasonably expect to obtain in a broad area.

Reviews

The difference between LRR and LHA has consequences for the review process; for while LRR is open to redetermination LHA is not. The VOA has a duty to monitor the BRMA and whenever a relevant change is detected, they will carry out a review of the BRMA.

Consultation with local authorities

The VOA has given an undertaking to consult with local authorities and other stakeholders when determining a BRMA. The determination decision rests with the Rent Officer and must be based solely on the legal requirements of the Order.

Implementation

Whilst the implementation of a change to a BRMA (LRR) is at the discretion of the Rent Officer, a change to a BRMA for LHA purposes is not. The BRMA for LHA purposes can only be implemented if and when the Secretary of State agrees. So once the VOA have identified the need to review a BRMA they must go through the review process and make a case to the Secretary of State for that change. Only if and when the Secretary of State agrees to the change can the new BRMA be implemented. The responsibility for the implementation of the BRMA lies with the Secretary of State rather than the Rent Officer.

The practical effects of this are that the Rent Officer can implement a change in BRMA for LRR purposes immediately but the BRMA for LHA purposes can be different (either until the Secretary of State approves the change , or indefinitely if they do not approve the change) even though it is based on similar criteria in the Order.

Notification to local authorities

Once a BRMA has been determined and approved by the Secretary of State, all the relevant local authorities within it will be notified. The notification will include the name of the BRMA and the postcodes within its boundary.

  • Local housing allowance pages
  • BRMA (LRR)

Capped rates

(v2.2 2015)

Limitations in statute which cap the Local Housing Allowance.

General

The Housing Benefit Amendment Regulations introduced a cap on LHA rates from 1 April 2011. While amendments to the Rent Officers (Housing Benefit Functions) Order 1997, introduced from 1 April 2012, removed the capping provisions, the original figures served as the basis for subsequent indexed changes.

Further legislation restricted the increase in LHA to a maximum of 1% annually - the first such increase occurring from 1 April 2014.

An additional set of figures, called the maximum LHAs, introduced an annual uprating of 4% from 1 April 2014 which was applied only to categories of LHA specified in the Order.

From April 2015 the maximum weekly LHA for all categories is:

  • £260.64 for one room shared accommodation
  • £260.64 for one bedroom exclusive accommodation
  • £302.33 for two bedroom accommodation
  • £354.46 for three bedroom accommodation
  • £417.02 for four bedroom accommodation

And from April 2015 these will be:

  • £260.64 for one room shared accommodation
  • £260.64 for one bedroom exclusive accommodation
  • £302.33 for two bedroom accommodation
  • £354.46 for three bedroom accommodation
  • £417.02 for four bedroom accommodation

The equivalent monthly maximum LHA figures are applicable to the LHA rates applied under the Rent Officer’s Universal Credit role.

  • LHA – general information
  • LHA – 4 bedrooms

Errors, substitutes and amended determinations

(v1 2014)

Dealing with errors made when determining Local Housing Allowances.

The Rent Officer, under Articles 4A and 4E of the Rent Officers (Housing Benefit functions) Order 1997 as amended (‘the Order’), can provide substitute determinations for the following determinations made under the Order:

  • B and A cases
  • All cases exempt from LHA
  • All redeterminations of the above determinations

But Rent Officers can also provide, under Article 7A(4) of the Order, amended determinations of:

  • BRMAs and
  • LHAs

However it should be noted that there could be far-reaching consequences if an amended determination is provided for any BRMA or LHA. If there appears to be a possible error, line managers must be told immediately. The appropriate senior manager at Grade 7 level must give prior approval for the issue of any amended determination of a BRMA or LHA .

Rent Officers can make substitute or amended determinations for administrative or clerical errors, but not for errors of professional judgement.

  • Board and attendance
  • LHA – exemptions
  • LHA – redeterminations
  • Redeterminations (HB)

LHA - restriction of LHA rates to 4 bedroom rate

(v1.1 2012)

The highest Local Housing Allowance rate is based on lettings of dwelling with 4 bedrooms.

The Housing Benefit Amendment Regulations which came into force with effect from 1st April 2011 mean that with effect from 1st April 2011, the maximum level of local housing allowance payable for claims made thereafter are restricted to the 4 bedroom rate for the relevant BRMA.

Existing claimants entitled to larger accommodation and whose claims were made prior to 1st April 2011 continued to be entitled to receive the relevant local housing allowance rate in excess of 4 bedrooms during a period of transitional protection which lasted up to 9 months following the date of their next annual review, unless their circumstances change.

For claims made after 1st April 2011, even where the entitlement under the size criteria is for more than 4 bedrooms, the maximum LHA which such claims can attract is the 4 bedroom rate. Rent Officers do not ordinarily determine LHAs for more than 4 bedrooms. Anyone with 5 or more bedrooms making a new claim will receive HB based on the 4 bedroom LHA.

  • BRMA (LHA)
  • Lettings information – LRR & LHA differences
  • LHA – all other LHA pages

Thirtieth percentile

(V1.2 2011)

Local Housing Allowances are based on the thirtieth percentile from a list of rents.

The technical definition of a percentile is the value of a variable below which a specified percentage of the data occurs. For example, the 30th percentile is the value below which 30 percent of the data may be found.

In relation to determining LHA rates, it is important to bear in mind that all the rental data gathered is divided into lists according in which BRMA the property is situated and into which category (shared accommodation, one bedroom, two bedrooms, three bedrooms or four bedrooms) it falls. One should then visualise the data being set out in ascending order (lowest rent at the bottom and highest at the top) in a list. Starting from the bottom of that list, go 30 percent (three tenths) of the way up the list to find the figure that is the 30th percentile.

The exact statistical formula for arriving at the 30th percentile is set out in the Rent Officers (Housing Benefit Functions) Order.

It is important to note that 30th percentile does not mean:

  • 30 percent of the median or average rent
  • 30 percent of the LRR
  • 30 percent of an open market rent
  • 30 percent reduction in the LHA rate (compared to the median)
  • 20 percent reduction in the LHA rate (compared to the median)
  • All other LHA pages