[2] LHA rates were created by the Department for Work and Pensions with the goal of controlling costs and establishing a standard amount for those in receipt of Housing Benefit.
[5] Since 2012, year-on-year LHA increases are capped based on the rise in the Consumer Price Index, even if the 30th percentile of rents that year would mean a larger rise in the rate, thereby changing the underpinning of the policy from one where LHA rates are tied to the actual rents in a given area at a certain time to one where the rate is based on a standard increase each year, similar to most other benefits such as Jobseekers Allowance, Employment Support Allowance, etc.
LHA is means tested and tapered in exactly the same way as Housing Benefit - however, the eligible rent is fixed for a household of a given size in a given region.
Local Housing Allowance was introduced starting in November 2003 as part of a wider review of Housing Benefit regulations in nine 'Pathfinder' or pilot areas: Blackpool, Brighton & Hove, Conwy, Coventry, Edinburgh, Leeds, Lewisham, North East Lincolnshire and Teignbridge - starting in Blackpool in 2003.
The legislation to enable Local Housing Allowance was introduced under the Welfare Reform Act which received Royal Assent in May 2007.
This provided for the national application of the LHA regime on 7 April 2008 and the introduction of the Employment Support Allowance, which replaced Incapacity Benefit.
In the main only new claims and tenants who move into a private assured shorthold tenancy will be paid Local Housing Allowance.
As part of the 2009 Budget, the Secretary of State for Work and Pensions proposed to amend the Housing Benefit regulations from 5 April 2010 so that the up to £15 weekly excess that customers can receive over and above their contractual rent is removed.
[12] This proposal would remove the incentives for tenants to seek less-expensive accommodation which was one of the primary rationales for the roll-out of Local Housing Allowance.
Coupled with the removal of the supervisory role formerly played by the local rent officer, this raises questions about the long-term sustainability of the programme.
Where the landlord is a not for profit company (or voluntary organisation), a Registered Social Landlord or a Local Council that provides care support or supervision, they will be exempt from Local Housing Allowance and will fall under the housing benefit rules in operation prior to 2 January 1996.
This means a property in which the claimant has the exclusive use of one bedroom, but shares one or more of a kitchen, a bathroom, a toilet or a room suitable for living in.
[21] A 2014 report examined the impacts of the changes to LHA rates introduced by the coalition government, in the context of London's higher housing costs.
The study found that lowering LHA rates always makes a household worse off, as measured by its disposable income after working.
For example, a person might not be able to drive and therefore may not be able to live far away from active sections of the public transport network, where accommodation is cheaper.
In contrast to the bottom 30%/30th percentile rent figure used in LHA, access to public transport, ground floor and garden accommodation has a premium.
Consideration of proximity of carers, friends or relatives is also not a justifiable reason to live in a certain area, no matter how often a person might need assistance during the day.