Local Housing Allowance in the spotlight

As the day for the introduction of the changes to Local Housing Allowance (LHA) draws closer landlords warn that the changes will have a negative impact on their business.

The proposed changes brought about by George Osborne in the emergency budget will see LHA capped at £250 a week for a one bedroom property and £400 for a four bedroom home. The new maximum rates could also see the government with a new homelessness problem on its hands as well.

A survey by Upad.co.uk, a property website, revealed that almost 40% of landlords questioned said the changes would affect them, and this rose to a staggering 90% in London and the South-East. Most landlords ascertained that when the changes come into place they would be asking tenants on LHA to leave and will seek other tenants. Only 12% said they would be lowering their rent to the cap.

The property website suggests that if the sample of landlords surveyed is a true indicator of what would happen on a national scale, then well over 300,000 LHA claimants could find themselves homeless.

James Davis, the Chief Executive of Upad.co.uk, commented “Some property industry observers have speculated that LHA levels have artificially inflated the market and that removing them will lead to a general lowering of rents, but clearly many landlords disagree with this.”

For the time being all eyes are on the October spending review. It does seem more problems could be just around the corner as landlords review not only their landlord insurance policies, but which tenant’s actions they shall be covering.