Monitoring the Impact of Changes to the Local Housing Allowance System: Interim Report
May 15, 2013
Summary of main findings• Claimants in higher rent areas (especially London) were more likely to start a new claim just before the reforms were introduced in April 2011: these tenants would have more to lose in cash terms from the changes in Local Housing Allowance (LHA) rates caused by the reforms; these claimants did not, therefore, become subject to the new rules until late in 2012.• The analysis estimates that the LHA reforms reduced maximum LHA entitlements for new claimants up to the end of 2011 by an average of £8.21 per week, which was comprised of rent reductions of £0.46 per week and increased shortfalls (gaps between rent and LHA) of £7.76 per week over this immediate post-reform period: these estimates imply that 94 per cent of the initial incidence of reduced LHA entitlements was on tenants and six per cent on landlords.• These results vary by claimant sub-group. Single claimants and younger claimants seem to have been able to pass a greater share of the incidence of the reductions on to landlords (via reduced rents), which may reflect their greater propensity to move house. • The incidence of the reforms on landlords also varied geographically: it was greater in urban areas outside London and in London suburbs. • A note of caution is needed about the results at this stage of the analysis: they may be short-term effects, in that it may take tenants time to negotiate lower rents with landlords; it may also take time for tenants to seek cheaper accommodation; and landlords may accept informally lower than the contracted rents from LHA tenants.• The next stage of the analysis will incorporate existing claimants as well and will be able to investigate the longer term impacts of the reforms, to establish if this pattern of impacts on landlords and tenants is sustained.