LHA incentive payment to end!

Currently some Local Housing Allowance (Housing Benefit) Tenants in Peterborough are able through an incentive payment to keep up to £15 per week of the surplus if the LHA Housing Benefit they receive is higher than their actual rent payment to a landlord.

The government states “The government is reforming the Local Housing Allowance (LHA) so that it is fairer and supports work incentives. From April 2010, households will no longer be able to keep any of the surplus if the LHA they receive is higher than their rent.

 “For those already receiving LHA, this reduction will not apply until the anniversary of their claim. This measure will only affect surpluses, and will not produce rent shortfalls.” Direct.gov.uk

This may significantly impact some tenants household budgets therefore tenants should review their own budgets to ensure they are prepared by April 2010 or by the anniversary of their claim to prevent any financial difficulty.

Currently the incentive payment in Peterborough is up to £15 per week when a tenant’s rent is lower than the LHA they would qualify for. This was to encourage tenants to fined properties with a rent lower than the LHA rate and therefore save tax payers money.

However in some cases what this may have done is encourage tenants to accept properties with substandard accommodation just to receive an additional £60 every four weeks.

Whilst this may have helped LHA tenants financially and the tax payer, for some of the most vulnerable people in our society living in substandard accommodation is less than desirable; what will now happen to these tenants who have fallen into this trap when these payments end and how will they feel?

What are your thoughts on this? Feel free to leave your comments!