1. Local Housing Allowance
Progress to date
Dr Philip Agulnik
Entitledto

2. I am....
• An economist specialising in social security
• Before Entitledto I worked for DWP and other
central govt. departments
• Entitledto supply a free public benefits calculator
performing over 2 million calculations a year
• We provide a range of products for local
authorities
• We supply a LHA calculator for the Royal
Borough of Kensington and Chelsea at
www.rbkc.hbupdate.co.uk

4. Why reform Housing Benefit?

5. LHA reform timetable
 From April 2011
• No excess payment where rent is less than LHA
• Maximum of four bedrooms
• Cap of £250 per week for 1 bedroom, £290 for 2
bedrooms, £340 for 3 bedrooms and £400 for 4 bedrooms
• Rates set at the 30% rent level for the local area rather
than the median (50%) rent level.
 From January 2012
• Single people under 35 get shared accommodation rate
 From April 2013
• Rates will be increased in line with CPI inflation

6. Impact on LHA rates: London
4 Bedroom LHA Rate:

7. Impact On LHA rates: national
4 Bedroom LHA Rate:

8. Indicators of success
 Cuts will take the form of
• Landlords reducing rents
• Tenants moving house (downsizing and/or new area)
• Tenants having a reduced income after paying rent
 Policy success =
• Reducing rent on current property
• Moving house to lower rent
 Increased homelessness indicates failure:
tenants did not receive message that cuts would
affect them

9. Have rents come down?
116.00
114.00
112.00
110.00
108.00
106.00
104.00
102.00
100.00
98.00
96.00
Avg HB award: LHA tenants Avg HB award: Non-LHA private tenants

10. Have rents come down?
4 Bedroom LHA Rate:

11. Have people moved? LHA stock
180,000
170,000
160,000
150,000
140,000
130,000
120,000
110,000
100,000
90,000
80,000
Aug Sep Oct Nov Dec Jan Feb March April May
Inner London private sector HB Outer London private sector HB

12. Have people moved? HB inflows
14,000
13,000
12,000
11,000
10,000
9,000
8,000
7,000
6,000
5,000
4,000
Outer London Inner london

13. What does current data suggest?
• Too early to tell much: some evidence of people
moving away from inner London?
• But only new claims have been affected by main
changes – so not surprising that little change
• Only change affecting some existing claimants
is withdrawal of £15 excess

14. When will changes affect
current tenants?
On anniversary date (April 2011 – March 2012)
• Excess payment if rent under LHA amount
On anniversary date + 9 months (Jan – Dec 2012)
• Single person restriction on under 35s
• Maximum of four bedrooms
• Caps on inner London LHA rates
• Rates set at the 30% rent level

16. Other changes
 Increase in Discretionary Housing Payment
funds - but increase of £40 million is only 2% of
cuts to LHA
 Extra bedroom allowed for a non-resident carer
where overnight care needed
 Increase in non-dependant deductions
 Room entitlement calculation for all for working
age HB claimants from 2013
 HB cut by 10% after 12 months on JSA

17. Work Incentives: an aside
Universal Credit: small improvement in incentives
• Lower deduction rate: 65%/76% (if ignore Council Tax)
• Simpler administration (hopefully)
• But same disregards and no boost at 16/30 hours
Council Tax Benefit reform: effect unknown
Cap on overall benefits: big stick but few affected
Housing Benefit reform: lower rents mean high
benefit deduction rates taper out sooner

18. Rent levels in different sectors
120.00
100.00
80.00
60.00 May-09
May-10
May-11
40.00
20.00
0.00
Avg HB award: LA Avg HB award: HA Avg HB award: LHA Avg HB award: Non-
tenants tenants tenants LHA private tenants

19. HB is working! 80% increase in
employed claimants since 2009
3,800,000
3,600,000
3,400,000
3,200,000
3,000,000
2,800,000
2,600,000
2,400,000
2,200,000
2,000,000
In work HB claimants Workless HB claimants age <65

20. Contact
Email: phil@entitledto.co.uk
Web: www.solutions.entitledto.co.uk