Many landlords are cautious about housing benefit tenants. Here's an honest assessment of the opportunities, risks and practicalities of the LHA market.
Local Housing Allowance (LHA) and Universal Credit housing costs provide rental support for eligible low-income households. Some landlords actively seek housing benefit tenants; others categorically refuse them. The reality, as with most things in property, is more nuanced.
What is LHA?
Local Housing Allowance sets the maximum housing benefit payable to private tenants in each local area, based on the Broad Rental Market Area (BRMA) and household size. Rates are updated annually. LHA rates have historically not kept pace with market rents, meaning many LHA claimants struggle to find suitable accommodation — creating an opportunity for landlords willing to accommodate them.
The risks
The main risks landlords cite with LHA tenants are: benefit payments going directly to tenants rather than landlords (though direct payment to landlords is available in some circumstances), the administration involved in understanding benefit entitlements, and a perception (not always accurate) of higher arrears risk.
The opportunities
LHA tenants often stay longer than market-rate tenants — stability matters more to them. Local authorities sometimes have specific landlord engagement programmes offering additional support. Properties in some areas achieve LHA rates that compare favourably to market rents, particularly for larger family-sized properties where LHA rate coverage is better.
What the law says
The Equality Act 2010 prohibits discrimination on the grounds of disability in lettings — and many LHA claimants are disabled. Blanket policies of refusing LHA tenants may be legally challenged in some circumstances, particularly where "no DSS" policies disproportionately affect disabled people.
A balanced approach
We assess each prospective tenant on their individual circumstances, not their benefit status. A long-term LHA tenant who pays reliably is often a better proposition than a market-rate tenant with unreliable employment. Contact us to discuss how we manage LHA tenancies within our portfolio management service.