local housing allowance final evaluation: the qualitative ...housing benefit in payment – this is...

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Local Housing Allowance Evaluation

Local Housing Allowance FinalEvaluation: The qualitative evidence of

landlords’ and agents’ experience inthe nine Pathfinder areas

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Local Housing Allowance Final Evaluation: The qualitative evidence oflandlords’ and agents’ experience in the nine Pathfinder areas

Contents

Acknowledgements ....................................................................................................................... 1

Glossary ........................................................................................................................................... 2

Executive Summary ........................................................................................................................ 5

Chapter 1: Introduction ................................................................................................................ 13

The Introduction of the Local Housing Allowance......................................................................... 13

The Evaluation of the Local Housing Allowance............................................................................ 14

The Contribution of the Qualitative Interviews ............................................................................. 14

The Sample ................................................................................................................................. 15

The Structure of the Report ......................................................................................................... 16

Chapter 2: Characterising Landlords and Letting Agents........................................................... 17

Introduction ................................................................................................................................ 17

Defining Characteristics .............................................................................................................. 17

Chapter 3: Working Under the 'Old' Housing Benefit ................................................................ 23

Introduction ................................................................................................................................ 23

The 'Unwillingness to Let' to HB/LHA Claimants ........................................................................... 23

The Circumstances of Letting to HB/LHA Tenants ......................................................................... 24

Characterising the 'Old' HB ......................................................................................................... 25

Responding to the 'Old' HB Regulations ....................................................................................... 26

Conclusions ................................................................................................................................ 27

Chapter 4: Aspects of LHA Administration.................................................................................. 29

Introduction ................................................................................................................................ 29

Introducing the LHA .................................................................................................................... 29

First Payment to Landlord ............................................................................................................ 30

Vulnerability Decisions................................................................................................................. 30


Conclusions ................................................................................................................................ 32

Chapter 5: Rent Setting ................................................................................................................ 33

Introduction ................................................................................................................................ 33

Rent Levels and the Local Housing Allowance .............................................................................. 33

Setting the Rent .......................................................................................................................... 34

Dealing with the Excess ............................................................................................................... 36

Excesses and Arrears ................................................................................................................... 37

Conclusions ................................................................................................................................ 37

Chapter 6: Rent Arrears and Dealing with Loss of Rent under the LHA .................................... 39

Introduction ................................................................................................................................ 39

Defining Rent Arrears .................................................................................................................. 39

Experience of Rent Arrears .......................................................................................................... 40

Managing Rent Arrears ............................................................................................................... 41

Conclusions ................................................................................................................................ 43

Chapter 7: Dealing with the Risk of Arrears ................................................................................ 45

Introduction ................................................................................................................................ 45

'Risk Avoidance' and the Wider Market Operators ....................................................................... 45

'Risk Mitigation' and the Benefit Landlords .................................................................................. 47

'Risk Absorption' and the Non-Strategic Landlords ....................................................................... 48

Conclusions ................................................................................................................................ 49

Chapter 8: The Impact of the LHA on the Supply of Property to Benefit Claimants ................. 51

Introduction ................................................................................................................................ 51

The Reduction in Letting to LHA Tenants ...................................................................................... 51

Conclusions ................................................................................................................................ 54


Chapter 9: Conclusions ................................................................................................................. 55

Introduction ................................................................................................................................ 55

Letting to Benefit Claimants ........................................................................................................ 55

Rent Setting ................................................................................................................................ 56

The Market Contexts ................................................................................................................... 56

Appendix 1: The Landlord and Letting Agent Qualitative Topic Guide .................................... 57

Appendix 2: LHA Evaluation Reports Published to October 2006 ............................................. 67

References ..................................................................................................................................... 69

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Acknowledgements

This report has been written by Julie Rugg of the Centre for Housing Policy. The report is part of the landlordstream of the evaluation of the impact of the Local Housing Allowance in the nine Pathfinder localauthorities. The report draws from interviews that were completed in each of the nine Pathfinder areas bymembers of the evaluation Consortium including Bruce Walker and Pat Niner (Centre for Urban andRegional Studies, University of Birmingham), Steve Wilcox (Centre for Housing Policy, University of York)and Simon Roberts, Yvette Hartfree and Elspeth Pound (Centre for Research in Social Policy, LoughboroughUniversity). Comments were also made on the report by Andy Brittan and Sonia Jemmotte of theDepartment for Work and Pensions, and David Rhodes from the Centre for Housing Policy at the Universityof York.

All consortium members would like to thank the landlords and letting agents who gave freely of their timeto discuss their experiences of letting to people in receipt of Housing Benefit and/or the Local HousingAllowance. Finally, the conclusions contained in this report should be ascribed to the author, and not to theDepartment for Work and Pensions.

The Centre for Housing Policy

Julie Rugg


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Glossary

This report, and the others in the Evaluation Report Series, use the following terminology:

Automated Credit Transfer (ACT) – A method of paying money directly from the Local Authority to therecipient’s bank or building society account.

Appropriately-occupy – Claimants whose accommodation matches the DWP size criteria (see sizecriteria below).

Contractual rent – The rent charged to the tenant by the landlord for a property.

Deficit – Claimants have a ‘deficit’ if their Housing Benefit amount (i.e. the amount they receive afteradjustments for income or non-dependents) is less than their contractual rent.

Direct payments/paid direct – Refer to payments made to the claimant (not the landlord).

Eligible rent – the maximum amount of Housing Benefit (see below) a claimant could receive based on thecircumstances of the tenant, the locality in which they live and a range of restrictions applied by a RentOfficer (i.e. before adjustments for income or non-dependents). In the Pathfinders the LHA is equal tomaximum eligible rent.

Excess – When LHA (i.e. the maximum eligible rent before income and non-dependent based adjustments)is more than contractual rent a claimant is said to have an excess.

Gain/Gainers – Gainers are claimants whose eligible rent is higher under the LHA assessment than itwould have been under the non-LHA assessment of eligible rent. The size of the gain is the differencebetween the two assessments.

Housing Benefit – Sometimes called rent rebate or rent allowance. It is a benefit that is paid by localauthorities to assist people to pay their rent. The amount that claimants receive depends on their financialand personal circumstances. It may not cover all of their rent. In Pathfinder areas, claimants are paid thereformed benefit i.e. LHA.

Housing Benefit amount – Refers to the amount of LHA or Housing Benefit that claimants receive afteradjustments for income or non-dependents.

Housing Benefit in Payment – This is the amount of Housing Benefit received by the claimant afterIncome and Non-Dependent Deductions have been made from Eligible Rent.

Local Housing Allowance (LHA) rate – This is a flat-rate allowance towards rent costs that is calculatedon the basis of the circumstances of the tenant and the broad area in which they live. It is the maximumamount of Housing Benefit a claimant could receive, before any income or non-dependent basedadjustments are made. Set at maximum eligible rent in the Pathfinders.

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Management Information (MI) – Statistics collected by DWP from Local Authorities for LHA evaluation.

New first-time claimants – Claimants who claimed Housing Benefit under LHA for the first time.

New repeat claimants – Claimants who were not receiving Housing Benefit immediately before beingswitched to LHA, but who had received Housing Benefit in the past.

No gainer – A claimant is a no gainer if their eligible rent is the same under the LHA and non-LHAassessments.

Notional loss/losers – A claimant has a ‘notional loss’ if their eligible rent is lower under the LHAassessment than it would have been under the non-LHA assessment of eligible rent. The size of thenotional loss is the difference between the two amounts. These claimants are described as notional losers.Existing claimants who would have lost when the LHA was introduced are transitionally protected andcontinue to be entitled to the higher amount of eligible rent, frozen at the time of introduction of the LHA.

Over-occupy – Claimants who live in property that is deemed to be smaller than their entitlement underthe DWP size criteria (see size criteria, below).

Rooms – The number of ‘rooms’ is the number of habitable rooms in the property (excluding kitchens,bathrooms and toilets) that the tenant has access to. In cases of shared accommodation, this does notinclude rooms that are used solely by the other tenants.

Shortfall – When LHA (i.e. the maximum eligible rent before income and non-dependent basedadjustments) is less than contractual rent, a claimant is said to have a ‘shortfall’.

Size criteria – The ‘size criteria’ are applied by the Rent Officers to calculate the number of bedrooms andliving rooms that a claimant is entitled to. LHA rates are based on this entitlement.

The conditions are as follows. One room is allowed as a bedroom, for:

• every adult couple;

• a person aged 16 or more;

• two children of the same sex under the age of 16;

• two children (of the same or opposite sex) under the age of 10;

• any other child.

In addition, living rooms are allocated as follows:

• one, if there are one to three occupiers;

• two, if there are four to six occupiers;

• three, if there are seven or more occupiers.


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Surplus – Claimants have a ‘surplus’ if their Housing Benefit amount is more than their rent.

Top up – A rent ‘top up’ is paid by a claimant whose Housing Benefit amount is less than their rent.

Transitionally Protected – A Transitionally Protected HB claimant is a person whose eligible rent underthe LHA assessment would have been less than under the non-LHA assessment when the LHA wasintroduced. They continue to be entitled to the higher amount of eligible rent, frozen at the time ofintroduction of the LHA.

Under-occupy – Claimants who live in property that is deemed to be larger than their entitlement underthe DWP size criteria (see size criteria, above).

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Executive Summary

Chapter 1: Introduction

In April 2000, the Labour Government announced – in its Green Paper Quality and Choice: A Decent Homefor All – the intention to make changes to Housing Benefit (HB) for people on low income living in theprivate rented sector (PRS). A number of problems with HB were recognised, the most substantial beingthat the way the benefit was administered undermined tenants' responsibility with regard to both rentpayment and rent level. Under the existing HB system, the payment of HB often went straight from the localauthority to the landlord or letting agent, with the tenant in some cases being unaware of the level of rentbeing paid. Detailed proposals on changes to HB were published in October 2002 in Building Choice andResponsibility: A Radical Agenda for Housing Benefit.

The Local Housing Allowance (LHA) was introduced in the de-regulated private rented sector in ninePathfinder areas from November 2003, along with other measures that aimed to improve the administrationof HB and Council Tax Benefit (CTB). The new regulations carried that presumption that the LHA would bepaid to the tenant, who would be more fully confident about the amount of support they would receive.Encouragement to act as a 'consumer' in the housing market was increased by the fact that, if the LHA fortheir household size was more than the rent being charged, then the tenant could keep the difference.

A number of safeguards were introduced to protect the landlord and agent, in the event that the tenant fellinto difficulties with paying their rent. Payments would be switched to the landlord or agent if the tenanthad more than eight weeks' arrears; if they were 'vulnerable', and could not look after their own affairs; orif they were thought to be 'unlikely to pay', and had a history of chronic inconsistent rent payment.

In addition, the administration of the LHA was simplified in that The Rent Service was not required to makea determination on every rent. Instead, the allowances were reviewed monthly, and were standardisedaccording to household size.

The new regulations were introduced in nine Pathfinder local authorities, which were Brighton & Hove,Lewisham, Edinburgh, Leeds, Blackpool, Conwy, Coventry, North East Lincolnshire and Teignbridge. The'go live' date for the earliest authorities was November 2003, and all Pathfinders had begun implementationby February 2004.

This report is based on research that is part of a programme of qualitative and quantitative surveys to reviewfour aspects of the introduction of the LHA. The operational stream considered the way in which theregulations were interpreted and administered by relevant stakeholders within the Pathfinders; theclaimant stream monitored any changes to claimant behaviour in response to the LHA; and the marketstream assessed the housing and labour market contexts for the introduction of the new regulations.

The landlord stream has so far had three principal outputs, with this report making the fourth and finalcontribution (Rhodes and Rugg (2005a), Rhodes and Rugg (2005b) and Rhodes and Rugg (2006)).

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The quantitative surveys have been essential in providing data on broad shifts in landlord and letting agentbehaviour following the introduction of the LHA. The qualitative survey has used semi-structured, face-to-face interviews to explore in more detail the complex decision-making processes that underpin landlordand letting agent portfolio development, rent-setting and management practices, and the impact of theLHA on those decisions.

Five substantive issues are explored in the report, including the circumstances of letting to people in receiptof HB/LHA; the impact of the LHA on rent-setting; landlord and agent experiences of rent arrears, andstrategies in response to arrears; changes in willingness to let to LHA recipients; and respondents'perspectives on any administrative advantages that might be brought by the new system.

The respondent sample was derived from the final stage quantitative landlord and letting agent survey.Three sources were used for the quantitative survey: claimants who were willing to give their landlord oragent details; landlords or agents who were in receipt of a direct payment of HB from the local authority;and a random selection of landlords and agents taken from local newspapers.

The qualitative interviews took place with a spread of landlord types and agents in each Pathfinder area,and 66 semi-structured, face-to-face interviews were completed.

Chapter 2: Characterising Landlords and Letting Agents

The respondents were classified according to the use of a matrix comprising an 'intent/finance' axis and a'portfolio/demand' axis. Four major groupings of landlords and agents emerged, and were used to frameanalysis of the interview material.

'Wider market operators' tended to let property across the whole rental market, and operated at a rangeof scales. For the most part, this group aimed at attracting what was invariably described as a 'goodworking tenant'. The majority of landlords and agents in the sample had at one point or still let to peoplein receipt of HB/LHA but this group comprised the minority of their tenants.

'Benefit landlords' often started letting to people in receipt of HB/LHA because the properties that wereacquired were located in areas where other demand groups would be unwilling to live. This type of lettingcomprised the majority of their lettings business. Many benefit landlords had extensive experience ofletting to someone in receipt of either HB or LHA, and was conversant with the regulations. Indeed, theselandlords and agents tended to operate management practices that were adjusted to meet HB/LHAregulation requirements.

Most 'non-strategic' landlords had just one property. Letting tended to be ad hoc, and did not follow anystrategic imperative. The landlord tended not to have any definite preferences.

A small group of 'non-commercial' landlords was also evident in the sample. These landlords again tendedto have a single property, and let either to a friend or relative. It was unlikely that the properties had beenor would be advertised on the open market, and in some instances the respondent noted that when thecurrent letting ended, they would seek to sell the property.

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Chapter 3: Working Under the 'Old' Housing Benefit

Many landlords and letting agents often declare that they are unwilling to take on people who needfinancial assistance to pay the rent. The vast majority of landlord and letting agent respondents had bothHB and LHA experience on which to draw in their comments with regard to benefit tenants and theadministration of assistance generally. Some respondents viewed HB/LHA tenants as 'undesirable', sincetheir status as claimants meant that they were for some reason unwilling or incapable of dealing with theirown affairs.

Letting to claimants could either take place 'accidentally' or because the landlord or agent actively soughtthis tenant group. For the majority of respondents, letting to someone in receipt of HB/LHA took place asa consequence of their change of circumstances. Tenants who were in receipt of benefit at the start of thetenancy tended to be taken on via a strong word of mouth recommendation, or because the tenant had a'story' that somehow engaged the landlord or agent. By contrast, benefit landlords targeted this market,often as a consequence of the purchase of properties in areas where, at that time, other demand groupswould be unwilling to live.

Both the wider market operators and the benefit landlords reported similar problems with the HB system,and noted long delays whilst the initial application was being processed, and overpayments. This latteraspect was deemed to be particularly problematic for letting agents. In response to the HB regulations, thewider market operators tended simply to avoid letting to people who needed the benefit to meet theirrental obligations. The benefit landlords, by contrast, were more likely to absorb the regulations into theirmanagement practices.

Chapter 4: Aspects of LHA Administration

Landlords and letting agents reported few problems with the transfer from HB to LHA. Wider marketoperators were usually keyed into meetings for landlords hosted by the local authority, and were informedthrough special events on the change. Responses from benefit landlords indicated that they were morelikely to have found out through word of mouth, from other landlords dealing with benefit claimants orfrom their landlords' association.

Two aspects of LHA administration were considered in this chapter. Both measures were intended toprotect landlords and agents against tenants falling into arrears. First, even under the previous HB systemit was possible for local authorities to arrange payment of the first HB cheque to the tenant in the name ofthe landlord even if the tenant had requested that they should receive all payments. This measure aimed toprotect the landlord or agent from the possibility that tenants might abscond with what might be a largecheque that may be issued following some delay in assessing a claim. The 'first cheque' regulationscontinued under the LHA. Some landlords were well aware of its operation, but others reportedinconsistencies in the way their local authority interpreted the regulation.

There was widespread agreement that, where a first cheque was sent to the tenant, then the landlord oragent should be advised of that fact. It was commonly commented that, if the landlord or agent wasunaware that a claim had been processed and that payments were being made to the tenant, then it wasnot possible to be certain of the date from which 'post-processing' arrears could be logged.

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Some landlords and agents had experience of working with the regulations on vulnerability. Where tenantswere deemed vulnerable – either because of old age or mental illness for example – then payments wouldbe made directly from the local authority to the landlord or letting agent. Some landlords and agentscommented that it could be embarrassing for the tenant to have to provide proof of vulnerability and somewere unwilling to apply. There were concerns that local authorities were not clear about the proof requiredto make a vulnerability application, and that staff may not be competent to judge such an application.

Some landlords and agents commented that local authorities should suspend claims more quickly in theevent of vulnerability claim being lodged. There were anecdotes relating to loss of rent as tenantsabsconded during the period taken by the local authority to make a vulnerability decision.

Chapter 5: Rent Setting and the LHA

The LHA introduced a flat-rate allowance for tenants depending on their household size. Although the LHArates were set on broadly the same principles as the previous Local Reference and Single Room Rents, somelandlords and agents reported increases in the level of support given under the LHA. It is possible that someproperties were attracting higher levels of LHA because of the household composition of the tenants; orthat the end to property-specific determinations removed the possibility that a property might attract a lowdetermination because of its condition.

Two rent-setting strategies were evident amongst the respondents. For the majority of wider marketoperators, rent setting was generally market led, with landlords and agents usually setting their rents at orslightly below the levels being charged for similar properties in the same locality. Often, the prices wereundercut in order to minimise any void period between tenancies and/or to encourage tenants to stay forlonger.

Landlords who had been letting for longer periods tended to be more flexible about the rents they set, sincetheir mortgage commitment on their rental property could be low. By contrast, buy to let landlords oftenhad a high debt-to-income ratio, and so sought to achieve a given level of rent. The majority of landlordsand agents in the wider market charged a rent irrespective of the financial status of the tenant: if they werein receipt of benefit, they were expected to pay their rent like any other tenant.

By contrast, landlords and agents dealing principally with the benefit market tended to set their rents at orclose to the benefit levels for their properties. For many landlords and agents in this category, there waslittle point in charging a rent that might accrue a shortfall, since it was thought that the tenant would beunlikely to be able to meet this payment from their other benefit income. The introduction of the LHAcontinued the close relationship between rent setting and benefit levels for this group. Many were in theprocess of increasing the rents they charged to match the LHA levels, which included absorbing any excesspayments that the claimant may receive.

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Chapter 6: Rent Arrears and Managing the Loss of Rent Under theLHA

The LHA reduced the incidence of rent being paid directly by the local authority to the landlord or agent: onaverage across the Pathfinders, this type of arrangement was evident in 15 per cent of PRS LHA tenancies,compared with the average of 55 per cent under HB.

Landlords and agents employed varying definitions of rent arrears, which in part explains differences infindings on arrears across the LHA evaluation streams. In the wider rental market, most tenants pay aninitial sum of rent in advance, and then continue to pay rent in advance during the course of the tenancy.Under neither HB nor LHA has full rent in advance been possible, and for this reason some landlords andagents considered all LHA tenants to be in arrears from the day that the tenancy started.

Leaving to one side more 'technical' interpretations of arrears, landlords and agents reported variableexperience with regard to tenants' ability to pay the rent in full and on time. Many landlords and agentscommented that arrears difficulties were not confined to benefit recipients, and that tenants were eithercapable of managing their finances or not: being in work did not necessarily denote a regular payer.

The experience of arrears was most evident amongst the benefit landlords. For some respondents in thisgroup, the majority of their LHA tenants had been in arrears at some time. The principal difficulty wasperceived to be the problem of living on a low income, particularly when unexpected crises might occur tothrow budgets off balance. Tenants aiming to get into work were also deemed vulnerable to arrears, as thetenant may not always be able to calculate changes to their income entitlement.

However, for some benefit landlords, the easiest way to manage arrears that had occurred was to wait forthe eight-week rule to become applicable. Under the LHA regulations, a tenant who has failed to pay theirrent for an eight week period can have their LHA payment switched to the landlord or agent until thearrears are cleared. There was an intimation that some landlords or agents and tenants colluded withregard to the eight-week rule, to ensure that the payment would revert to the landlord.

Wider market operators were more likely to deal with arrears through legal routes, and generally soughtrepossession of their property in the first instance. Few saw any merit in trying to pursue a tenant forarrears, when the tenant had stopped paying perhaps because they had lost their job.

There were some instances of landlords 'waiting it out', and simply hoping that the situation would resolveitself: perhaps the tenant would find work or borrow money to pay the arrears, or simply leave.

Chapter 7: Dealing with the Risk of Arrears

It was anticipated that some landlords and letting agents would alter their management practices tointroduce measures aimed to minimise the risk of arrears occurring. Changes might include increasing orintroducing payments of rent in advance or deposits; methods for collecting the rent and strategies forchoosing tenants.

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Overall, three types of responses were evident: risk avoidance, risk mitigation and risk absorption. Theresponses were linked to some degree to each landlord and letting agent type. The wider market operatorswere more likely to introduce 'risk avoidance' measures. This landlord and agent type already operated themost formal management practices: they usually insisted on advance payments; tended towards moreautomated rent collection methods; and pursued rigorous methods of checking before accepting a tenant.This landlord and agent type already tended to restrict the number of HB tenants they took, but with theintroduction of the LHA often expressed the opinion that they would no longer take any such tenants.

The benefit landlords were much more likely to pursue a strategy of 'risk mitigation. Many of theselandlords and agents were much more flexible in their letting practices, and did not always ask for rent inadvance or deposits; tended to operate a variety of rent collection methods; and accepted tenants oftenwith little more than a word of mouth recommendation. In response to the LHA, some benefit landlordsbegan introducing more formalised procedures. Where it was not possible for a tenant to produce anadvance payment, they might instead be asked to provide a guarantor who would promise to pay owedrent. The benefit landlords also began moving towards more automated rent collection methods. Somerespondents said that they were reducing the number of lets available to LHA tenants if they could findalternative demand groups. A further option was for landlords and agents to target vulnerable tenants, onthe understanding that their LHA would be paid direct to the landlord or agent.

A final strategy, most evident amongst the non-strategic landlords, was simply to absorb the risk. Theselandlords tended to operate informally, and often only pursued more formalised practices when promptedto do so by the involvement of a letting agent. These landlords were most likely say that they relied on'instinct' with regard to letting, and generally expressed no preferences for tenant type. This type oflandlord appeared largely unaware of any risk of rent arrears posed by the introduction of the LHA.

Chapter 8: The Impact of the LHA on the Supply of Property toBenefit Claimants

Taking all respondents together, the general tendency was for landlords and agents to say that they werereducing the number of lets available to LHA tenants, or simply not letting to LHA tenants at all. It isnecessary to stress that for many landlords and agents, the shift away from this demand group had startedto happen before the introduction of the LHA.

A number of contextual rental market factors contributed to the ability and willingness of landlords toreduce their lets to benefit recipients. First, many landlords were selling their houses in multiple occupation,which tended to have a largely benefit-dependent tenant population. In part, the sale was provoked by thelicensing legislation, but also reflected the intensive management needed by such properties, where hightenant turnover was common. It was thought that some of the properties were being re-converted toeither single person flats or to family homes.

Second, the growing demand for rental property meant that even benefit landlords and agents were oftenable to let to working tenants. In particular, the increasing number of migrant workers meant thatalternative demand groups were available even for otherwise difficult-to-let property in more undesirablelocations.

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A further factor reducing the supply of lets to LHA tenants was the inability of benefit landlords to increasetheir property portfolios. Where there were landlords who were targeting the benefit market, and wantingto expand their holdings to let to more LHA tenants, it was often the case that house price increasesprecluded further purchase: the rental yield from a benefit tenant would not adequately cover themortgage cost.

Finally, in some areas, supply of property to 'ordinary' LHA tenants was being reduced as landlords andagents looked to let to the more markedly vulnerable tenants who were being supported by local authorityhomelessness schemes. These schemes could guarantee that their 'sponsored' tenants would not receivethe LHA themselves, and that the payment would go directly to the landlord or agent, often for a specifiedtime period. These schemes introduced a degree of competition for property within the benefit market.

Chapter 9: Conclusions

The impact of the new regulations has not been uniform across the whole rental market. For many of thelandlords operating in a largely non-strategic and non-commercial fashion, the introduction of the LHA hasnot changed the largely ad hoc, fairly informal letting practices evident in those groups. The LHA hasneither encouraged nor diminished a willingness to let to benefit claimants.

With regard to the wider commercial market, there remains a widespread unwillingness to let to LHAclaimants. The LHA has had no impact on a broad presumption that claimant households are somehowculpable for their financial difficulties, and has also generally not changed the view that there aresubstantial disadvantages in having to deal with any system of local authority support with housing costs.

For landlords and agents operating in the wider market, dealings with HB/LHA might generally follow onlywhen an existing claimant's household circumstances change, and a benefit claim becomes necessary.Under the previous HB system, the only advantage to be drawn from this situation was the understandingthat the rent would be paid directly by the local authority to the landlord or agent.

For landlords and agents operating more squarely in the benefit market, the LHA has again had littlepositive impact. Many landlords and agents in this market are accustomed to changing their managementpractices according to shifts in benefit regulations. Many introduced alterations to their rent collectionmethods, and reported little difficulty in doing so. However, in order to mitigate the possible lossesaccruing through rent arrears, some benefit landlords were altering their portfolios in order to reduce theirlettings to benefit claimants.

The LHA was more likely to influence rent setting decisions for benefit landlords, since traditionally theyhave tended to set rents at or close to the benefit levels payable.

An upturn in the wider rental market has had a substantial impact on the supply of properties to LHAtenants, as has increased demand for rental property from immigrant Eastern European workers.Landlords who were unhappy with the shift away from direct payments to landlord were more able to findan alternative supply of tenants.

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Chapter 1: Introduction

The Introduction of the Local Housing Allowance

In 2000, the Labour Government Green Paper Quality and Choice: A Decent Home For All outlined anumber of difficulties with the existing system of Housing Benefit (HB) for low income households in theprivate rented sector (PRS). The Green Paper characterised HB as complex to understand and time-consuming to administer, leaving both tenants and landlords anxious with regard to the level of rent beingpaid. In particular, it was thought that the system took away responsibility from claimants. HB could insome circumstances cover the full rent, and in many instances was paid by the local authority directly to thelandlord. Some tenants were, according to the Green Paper, 'not even aware of how much rent is beingpaid.' As a consequence, tenants were in a poor position to negotiate the rent level or any increase in therent payment once the tenancy had started.

The joint principles of clarity on the level of support being given and clear responsibility for paying the rentwere central to the new Local Housing Allowance (LHA), which was introduced in nine Pathfinder areasfrom November 2003. It was felt that if tenants were fully confident about the amount of support theywould receive then they would be able to act like any other 'consumer' in the housing market and shoparound for housing best suited to their circumstances. An added incentive was given in the ability of tenantsto keep any difference between the amount charged by the landlord or letting agent and the amount ofallowance for their household size. In addition, in normal circumstances, the allowance would be paid tothe tenant. In receiving the allowance and taking responsibility for paying the rent themselves, the tenantwould become more aware of the cost of their housing and more likely to seek a good 'deal' in terms of therent level and property quality.

In order to protect landlords and letting agents, a series of safeguards was introduced that definedcircumstances in which the allowance would not be paid to the tenant. These included: where the tenanthad fallen eight weeks into arrears; where the tenant was deemed 'vulnerable' or incapable of dealing withtheir own financial affairs for example because of mental ill health or physical infirmity; and where thetenant was thought to be 'unlikely to pay' because of a past history of chronic rent arrears.

Other aspects of the regulations were introduced to ease the task of administering the benefit. The LHA setstandard rates for household sizes, and so removed the requirement for every rent to be sent to The RentService for determination as is the case under previous HB rules. The expectation was that this move wouldimprove processing times: long delays in receiving the initial payment had long been a complaint bylandlords and letting agents, and was noted in the LHA baseline landlord survey (Rhodes and Rugg 2005a,p37).

The LHA was introduced in nine Pathfinder areas from November 2003 to February 2004. The areas were:Blackpool, Brighton & Hove, Conwy, Coventry, Edinburgh, Leeds, Lewisham, North East Lincolnshire andTeignbridge.

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The Evaluation of the Local Housing Allowance

An evaluation of the impacts of the scheme was begun slightly prior to the introduction of the newregulations, in order to establish a 'baseline' on which to assess later impacts. The evaluation comprisedfour streams: an operational stream, which examined the interpretation and implementation of the newregulations by the Pathfinders; a claimant stream, which used both qualitative and quantitative methods tomonitor how LHA recipients reacted to the changes; a market stream, which assessed the wider housingand labour market contexts for the LHA; and a landlord stream. Selected evaluation tasks were alsocompleted in three control areas, which were Cardiff, Wolverhampton and Wakefield. Appendix Two liststhe full report output of the evaluation.

The landlord stream has so far had three principal outputs, with this report making a fourth and finalcontribution. The prior reports were: Rhodes and Rugg, Landlords and Agents in the Private Rented Sector:the baseline experience in the LHA Pathfinders (2005a), Rhodes and Rugg, Working with the LHA: Landlordand Agents' early experiences of the LHA in the nine Pathfinder areas (2005b) and Rhodes and Rugg, LocalHousing Allowance Evaluation: The survey evidence of landlords and agents experience in the ninePathfinder areas (2006). The earlier landlord reports presented findings from three large-scale surveys oflandlords and letting agents in the Pathfinder and Control areas prior to, 12-15 months after, and two yearsafter the introduction of the LHA.

The Contribution of the Qualitative Interviews

The quantitative surveys have been vital in providing data that has illustrated some broad shifts in landlordand letting agent behaviour following the introduction of the new regulations. The purpose of thequalitative interviews was to untangle the complex decision-making that underpins landlord and lettingagent portfolio development, rent-setting decisions and management practice, and in particular to unpickwhether any of these activities have been affected by the introduction of the LHA.

There are perhaps four substantive issues that can be addressed by the qualitative material, which willunderpin much of the detailed discussion to follow:

• Who lets to people in receipt of HB/LHA, and under what circumstances does such letting take place?Understanding this issue is vital to any exploration of the impact of the new regulations.

• Where landlords and letting agents are routinely letting to people in receipt of LHA, have the newregulations had any impact on rent-setting behaviour?

• How are landlords and letting agents responding to an end to direct payment from local authority tolandlord or agent, and what practices are being put in place to mitigate the risk of tenants falling intoarrears?

• In what circumstances are landlords and letting agents withdrawing from letting to people in receiptof LHA?

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The Sample

The quantitative survey was derived from three sources: claimants who were contacted as part of theclaimant stream of the evaluation, who were willing to give their landlord or letting agent details;individuals or agencies who had the claimants' HB paid directly to them by the local authority; and arandom selection of landlords and letting agents who had advertised in the local newspapers. A fullexplanation of the quantitative sampling strategy is available in Rhodes and Rugg (2005a). The landlord andletting agent qualitative respondents were drawn from the quantitative survey of landlords and lettingagents at the final survey stage. The sample related to the Pathfinder areas only, and excluded the Controls.It should be noted that neither the quantitative and qualitative surveys included landlords or letting agentswho had begun letting to LHA claimants following the introduction of the regulations.

The landlords and letting agents in the quantitative sample were ordered in terms of whether residentialletting was a central or peripheral aspect of their day-to-day business. There were three categories whichincluded 'business landlords', where letting was the main activity; 'sideline landlords', whose principalincome came from other sources; and letting agents. A simple matrix based on this classification wasdevised so that the qualitative interviews in each of the Pathfinders would achieve a spread of landlord andletting agent types. Beyond a need to meet a quota of landlord and letting agent types, the interviewerschose respondents at random. A maximum of eight and minimum of six interviews were to be completedin each area. Table 1.1 gives a breakdown of the interviews achieved by Pathfinder area. Note that chaptertwo will give more detailed information on the landlord and letting agent characteristics.

Table 1.1: Qualitative interviews by Pathfinder area

Pathfinder Number of interviews

Blackpool 8

Brighton & Hove 8

Conwy 8

Coventry 7

Edinburgh 7

Leeds 8

Lewisham 6

North East Lincolnshire 6

Teignbridge 7

Total 65

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The interviews were completed according to a semi-structured interview schedule, which is reproduced inappendix one. The interviews were recorded and then analysed using a uniform 'note and quote' gridmatrix that gathered material under principal headings. All the material used in this report has beenanonymised, and it will not be possible to recognise any individual from the experiences, attitudes anddescriptions given. In the report, italicised text indicates a verbatim quotation.

The Structure of the Report

Following this introduction, the report has eight chapters. Chapter 2 deals with the task of defining andcharacterising the respondents in terms of their portfolio characteristics, intent and financial circumstances.The chapter defines the three principal landlord and letting agent types that will be used to frame theinterview analysis.

Chapter 3 outlines the respondents' familiarity with letting under the old system of HB, and defines someof the advantages and disadvantages that were thought to pertain to the regulations that were in placeprior to LHA. Chapter 4 explores respondents' experience of the introduction of LHA, and considers twoaspects of its administration: first payment to landlord and vulnerability decisions.

Landlord and agent strategies with regard to rent setting are reviewed in Chapter 5, which also exploreshow far the new regulations influenced the rents being asked for. Chapters 6 and 7 consider the impact ofLHA on landlords and letting agents on the incidence of arrears, and strategies taken to avoid or mitigatethe risk of arrears including the ways in which tenants were chosen, the charging of deposits and changesto rent collection methods.

Chapter 8 reviews the impact of the LHA on letting preferences in the context of other rental marketchanges in the Pathfinder areas. The final chapter considers the thematic issues central to the streamevaluation.

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Chapter 2: Characterising Landlords and Letting Agents

Introduction

Research on landlords and letting agents has used a number of methods for characterising respondents,including reference to the centrality or otherwise of residential letting to income and/or day-to-day activity;organisational set-up; motivation and size of portfolio (see, for example Thomas and Snape, 1995). Thequantitative research followed earlier research, in categorising landlords as sideline landlords, businesslandlords or letting agents.

The qualitative interviews explored with each respondent how they came to be letting property, thecharacteristics of their portfolio and how and why it developed. Analysis of this material has led to thecharacterisation of four distinctive landlord and letting agent types within the sample. These groupings willbe used to frame analysis of the interview material, since they distinguish sets of experiences, attitudes andpractices that have tended to respond differently to the introduction of the LHA. This chapter will describethe four groupings of landlord and letting agent, and indicate the number of respondents within eachgroup.

Defining Characteristics

The value of qualitative approaches to research includes the ability to chart complex patterns of behaviourand offer classifications that rest on a combination of factors that may not be easily quantifiable. Therespondent classification given here rests on the intersection of two bundles of factors: intent/finance andportfolio/demand characteristics. Each of these will be discussed in turn.

Intent/Finance

As will become clear, landlords become involved in letting property for a variety of reasons. For the mostpart the reasons carry along an 'intention' continuum that includes at one extreme a strong desire topurchase and let property, which comprises a full-time occupation; and at the other an almost passiveacquisition of property with a limited desire to gain any financial benefit from its use. Amongst therespondents, four categories under this heading were evident.

Letting agent: A letting agent was interviewed in each of the Pathfinder areas, and in all cases both ownedproperty themselves and managed property on behalf of others. Two of the agents were relatively smallscale, and had no more than twenty properties in a Pathfinder area. The remaining letting agentrespondents each had in excess of 150 properties on their books. All agents were letting as a full-timeoccupation.

Long-term player: A high number of respondents fell into this category. Long-term players tended to haveportfolios that were, for the most part, mortgage- free either because they had been held for a long period– a couple of the respondents had been in the market for over 30 years – or had been able to buy theirproperties outright. Their action in developing their portfolios had been driven by the conscious desire to

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invest in the residential property market. In some instances, long-term players were 'sitting' on theirproperties: they were completing repairs and maintenance and deriving good income from the rents, butwere largely looking to capital gains and did not seek to change their portfolio. In other circumstances, therespondent was looking to expand their property holding, should the right opportunities arise. Many notedcapital gains tax as a reason why they would not consider reducing their portfolio.

New buy to let landlords: These landlords had started buying property within the last five or six years, andhad acquired their portfolios quickly, sometimes in a matter of weeks. Perhaps the largest Buy to Letlandlord in the group had acquired 60 properties – all in the last two or three years – and was at one stagebuying new property every two weeks. The landlords still had to meet mortgage commitments on theirproperties. Many were looking to invest further, but house price increases had pushed even lower-endproperties out of their reach.

Passive landlords: These respondents had acquired properties largely 'accidentally'. All had just oneproperty, which had been inherited, or had been a spare property that arose following relationshipformation, or had been acquired as a result of a retired person downsizing. In other instances, the purchasewas opportunistic: the landlord had not been looking to buy property, but rather had come across a verylow-priced property that seemed too good an opportunity to miss. In all cases, the respondents did notwant to purchase any further property and indeed in some instances would perhaps sell but had acommitment to continue renting to a particular individual.

Portfolio/demand

As with the intent/finance definitions, the portfolio/demand classification also carries some element ofcontinuum, defined largely in terms of letting activity being more or less strategic. Again, three types arediscernable in the sample of respondents.

Non-commercial landlords: At one end of the continuum were landlords who generally operated non-commercially. They had little interest in maximising their rental profit from their property, little awarenessof any capital gain, and let at the margins of the wider rental market often to friends and relatives. Usuallythe landlord was dealing with a single property.

Small-scale landlords: A more central position was taken by landlords operating squarely in the openmarket, but whose letting tended to be small scale, with perhaps no more than five lets. Often the lettingwas opportunistic, and more likely to follow word-of-mouth recommendation than being defined in termsof any clear preference for a particular customer group.

Strategic landlords: At the other extreme were landlords and letting agents who operated strategically inthe market place, in terms of rigorously operationalising preferences with regard to demand groups. Twotypes of strategic landlord and letting agent were evident in the sample: those operating largely in a widermarket and dealing with a variety of demand groups, and those whose principal activity was letting topeople in receipt of HB/LHA.

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The intent/finance and portfolio/demand characteristics were used as an axis for a grid, on which therespondents were grouped. Four distinctive landlord and letting agent types emerged from this grouping:wider market operators; benefit landlords or agents; non-strategic landlords; and non-commerciallandlords. Boxes, below, indicate typical respondent examples.

The first and largest group was the landlords and letting agents that were seeking to let property across thewider private rented sector and which operated at a range of scales. These 'wider market operators' tendednot to serve a distinctive niche market, with the exception of one respondent who let largely to students.For the most part, the wider market operators were hoping to attract what they generally termed 'goodworking tenants'. Although the majority of respondents in this group had, and in some cases still, let topeople in receipt of HB/LHA, benefit recipients presented a minority of the types of household they had astenants. Twenty-nine such landlords and letting agents were in the sample.

Box 2.1: Wider market operators: Mr C., Brighton & Hove

Mr C. acquired property some time ago, when he was in his early twenties. He began as a 'sideline'landlord, but ten years ago was able to leave full-time employment and concentrate on letting. At thetime of the interview, he had 50 lets but had arrived at that figure following a number of changes inhis portfolio. He had originally bought a lot of houses in multiple occupation (HMOs) and let to a largenumber of people in receipt of HB. He then sold these properties in order to focus on better qualitylets that took up less management time. He had a range of property types including houses, flats andsome bedsits, and his rental income was sufficient for him to employ both his wife and a builder towork on renovations and repairs.

A second grouping actively sought to let to people in receipt of HB/LHA, and will be termed 'benefitlandlords'. Often this kind of letting arose because the landlord bought cheap property in locations whereother demand groups were unlikely to want to rent. Many of these landlords had made their first letting tosomeone on HB, and continued to let to this group as they purchased further property. It was rarely the casethat all the landlords' lettings were to HB/LHA recipients, but this number was always in the majority. In allcases, the landlord or letting agent tended to be well aware of HB/LHA regulations, and adjusted theirletting practices accordingly. Fifteen such respondents were in the sample.

Box 2.2: Benefit landlord: Mr S., Leeds

During the 1980s, Mr S. bought a property in South Leeds as a 'retirement plan'. Furthermore, thejob he had left him a couple of hours spare a day and he wanted something to do with his time.However, he became aware at that time of an increasing number of opportunities to buy cheapproperties in the area: many were around £4,000 or £5,000. His first let was to someone on HB andthis type of tenant emerged as his target market: few working people wanted to live in that area ofLeeds. At the time of the interview he had fifteen properties in Leeds and properties in other parts ofYorkshire and being a landlord was his full-time employment. He worked on all repairs, administrationand letting. He was still looking to expand his property portfolio but house prices increases meantthat few financially feasible opportunities arose.

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A third group included what will be termed the 'non-strategic' landlords. There were 15 such landlords inthe sample, and a distinguishing characteristic was the fact that all had a single property. Amongst thisgroup, letting did not follow any strategic imperative: rather, the property was let to whoever becameavailable when the letting was free. The landlord tended not to have any definite preferences.

Box 2.3: Non-strategic landlords: Mr and Mrs M., Blackpool

This couple bought a property once they were married. The wife already owned a property, in whichshe had had a lodger, and been a resident landlord. The couple continued renting this flat out afterthe wife moved into the marriage home. When their tenant moved they tried to sell but could not,and so ended up letting the flat again and at the time of the interview were letting to 'a friend of afriend'.

Non-commercial landlords comprised the final group in the sample, containing six landlords. Theselandlords were letting largely outside the wider rental market. For example, one respondent had bought aproperty to let to her son, who had learning difficulties. Had she not done so, it is probable that he wouldhave had to move into some sort of supported accommodation. In other cases, landlords were lettingrooms to people as a favour, and would cease letting the room once that person had left. In some instances,the respondents had relevant comments to make about the introduction of the LHA, and their observationswill be occasionally drawn into the analysis. However, this grouping has generally been excluded from theanalysis as being too marginal to the central task of assessing the impact of the LHA on the wider PRS.

Table 2.1 indicates the spread of landlord and agent type by Pathfinder area.

Table 2.1: Landlord and agent type by Pathfinder area

Wider market Benefit Non- Non- Totaloperator landlord strategic commercial

Blackpool 1 4 2 1 8

Brighton and Hove 5 0 3 0 8

Conwy 6 0 1 1 8

Coventry 3 1 2 1 7

Edinburgh 4 2 1 0 7

Leeds 2 5 1 0 8

Lewisham 1 1 3 1 6

North East Lincolnshire 2 2 1 1 6

Teignbridge 5 0 1 1 7

Total 29 15 15 6 65

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It should be noted that these classifications were not static, and that some landlords were in the process ofmoving from one grouping to another. For example, some landlords indicated that they had at one timespecialised in HB lets but in the years prior to the introduction of the LHA had moved away from thatmarket. For the purposes of this research, the most important shifts were the number of landlords andletting agents moving in and out of the benefit landlord category as a consequence of LHA. Chapter 8reviews this situation in more detail.

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Chapter 3: Working Under the 'Old' Housing Benefit

Introduction

A number of research projects have demonstrated that landlords and letting agents are, for the most part,largely unwilling to let to people in receipt of HB (see, for example, Crook and Kemp, 1996). This conclusionwas confirmed by the LHA quantitative surveys: for example, at the Baseline stage, 54 per cent ofrespondents said that they preferred not to let to people on HB (Rhodes and Rugg, 2005a, p35). Thisunwillingness often reflects strong preconceptions about dealing with both benefit claimants and withlocal authority administration of assistance with housing costs.

However, despite these views, many landlords and letting agents have some experience in letting to peoplewho need financial assistance with paying the rent. As this chapter will demonstrate, few landlords andletting agents in the sample set out with the intention of letting to a HB/LHA claimant, but where such letswere commonplace then distinctive attitudes and letting practices emerged.

The respondents were all asked about their experiences of administration of the previous HB regulations.Whatever the landlord type, there were many common problems that were reported, including delays inthe initial payment, overpayments, and the need to re-apply for claims. However, for many respondents –indeed, the vast majority – the ability to arrange for the HB payment to come to them rather than to thetenant constituted a major advantage that offset other difficulties with the benefit.

The 'Unwillingness to Let' to HB/LHA Claimants

At the Baseline stage, landlords and letting agents were asked for the reasons they preferred to let to non-HB tenants. Taking all respondents together, and leaving aside reference to HB administration, the mostcommon response was that HB tenants were 'undesirable'. This opinion was expressed by 32 per cent ofrespondents (Rhodes and Rugg, 2005a, p37). Few landlords and letting agents in the qualitative surveymade any specific comment about the ways in which this type of tenant may be undesirable. For onerespondent, claimants weren't quite the full shilling, else they would not be in that position. In a couple ofcases, respondents referred to specific tenants who were thought to be 'scroungers' in taking benefitwithout any intention of finding work; that for young women, single motherhood was an easy way to getthe rent paid; and that households had no respect for properties where they made no contribution to therent. Even where landlords had no 'ideological' opposition to benefit recipients, the view was sometimesexpressed that, for example, non-working tenants could be disruptive in a shared working household: theywere in all day and often socialised without consideration for others' work commitments.

For the most part, however, the comments made on HB/LHA recipients themselves tended towards theneutral and even positive. Both working and unemployed tenants were thought to be as likely to set out todefraud the landlord, and letting to anyone at the 'bottom end' of the sector was risky. However, themajority view appeared to be that claimants were just like everyone else, and could not be blamed if theylost work or their circumstances were such that they were no longer able to pay their rent. Some

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respondents noted that many of their longest lets were to tenants who had been in receipt of HB initiallyand now were on LHA. These tenants were more likely to consider properties to be their home, and asidefrom the occasional minor hiccough, were steady in ensuring that the rent was paid. Despite these morepositive views, most landlords said that, all things considered, they would always prefer to take a workingtenant.

The Circumstances of Letting to HB/LHA Tenants

Given the apparently widespread reluctance of landlords and letting agents to let to people in receipt ofbenefit, it is perhaps important to note the circumstances in which such letting then goes on to take place.It should be noted that the following discussion encompasses circumstances that could arise under eitherset of regulations. Two routes to HB/LHA letting were evident: the one-off or inadvertent HB/LHA let; andthe routine, regular HB/LHA lets.

The wider market operators tended, for the most part, to avoid letting to people on HB/LHA. However,there were situations in which such lettings arose. Some landlords, in expanding their property portfolios,simply acquired sitting tenants who were in receipt of benefit, and whose history of payment wassufficiently steady for there to be no reason to seek a termination of the tenancy. Similarly, some landlordsalso acquired property types that were more suited to benefit recipients. For example, all landlords andletting agents with houses in multiple occupation were letting to someone on LHA.

However, for the most part, the wider market operators were letting to people on HB/LHA because theyhad lost their work or other aspects of their household circumstances changed. Thus, one Leeds landlordhad let to a couple, but the break-up of the relationship left the tenancy occupied by a single woman whothen applied for HB to help pay the rent. In some situations, the shift on and off benefit was short-term. Forothers, it was clear that the tenant had developed a debilitating illness that protracted their claim. None ofthe landlords or letting agents said that they asked a tenant to leave because of a change in their financialcircumstances: many, where they could, helped the tenant through the process of application.

There was some level of overlap between the wider market operators and the non-commercial landlords inthat both groups often let to 'one-off' HB tenants when presented with a 'story'. For example, one landlordof a single property said that she'd let to a young man on HB: I knew his mother you see and that's really whyhe wound up here. Others had, through friends of friends, heard of young families in need ofaccommodation, and because of the word-of-mouth recommendation had decided to risk taking thehousehold.

For HB landlords and letting agents, where dealing with claimants was essential, 'core' business, thepathway into that niche market tended to follow a particular pattern. Often HB landlords started bymaximising their initial portfolio expansion by purchasing property at the bottom end of the sector, wherethe monthly rental income was more likely to meet the required mortgage payment. Although the landlordmight not set out with the intention of letting to HB recipients, the property location tended to dictate thedemand group. Some landlords continued, then, to purchase properties in those areas as they becamemore aware of how to deal with HB administration (see below).

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Characterising the 'Old' HB

Whatever the circumstances of the first letting to someone on HB, for many landlords and letting agentsthe experience was memorable. It was a step into the unknown: a little bit of a leap of faith, to be honest,really. One landlord who at the time of the interview had more than sixty LHA lets on his books said: Iremember it well because it was so confusing. Two other landlords called it a frightful experience and anightmare. Overall, the administration generally was considered to be stressful, but two aspects of the 'old'HB were singled out for comment.

First, almost all the landlords and letting agents commented that the first payment had always taken weeksto come through whilst the initial paperwork was assessed. Respondents did not distinguish betweenclaims that had been submitted incomplete, and claims that were simply subject to a protracted delay. Onelandlord mentioned a claim that was submitted in July, but where payment did not come through untilDecember. It was sometimes not possible to chase the progress of a claim because HB administrativeofficers had not always been authorised by the tenant to give details. The long delay also increased the levelof risk for many landlords of the tenant absconding with the first cheque.

The initial processing delay was usually dismissed largely as an inevitable consequence of bureaucracy. Bycontrast, the incidence of overpayment was mentioned by many landlords and letting agents in particularas unjust and damaging. For example, one letting agent had had a tenant in receipt of HB for a long period,during which time he had been working part-time. The rent was being paid directly to the letting agent bythe local authority. The HB office discovered an anomaly in the payment being made, and recovered a sumof £3,000 from the letting agents' monthly rent roll. The agent considered this action as unfairly penalisingthe other landlords on his books who had HB tenants. The situation was worsened by the tenant leaving theproperty without notice and the landlord selling the property, leaving the agent with an unrecoverable bill.Other landlords had anecdotes relating to overpayments, and in a couple of instances had begun to insiston tenants paying the rent themselves as a means of sidestepping the possibility that overpayments wouldarise.

In addition to the initial delays and overpayments, tenants' changes in circumstances also meant thatre-applications had to be made. Under the previous HB regulations, tenants would have to re-apply for thebenefit annually. Where landlords and letting agents had a large number of tenants on benefit, it becamelikely that at any one time at least one tenant's claim had been suspended pending a review, and it becamenecessary to chase them up to ensure that they re-applied. Where landlords had only one or two tenantsin receipt of HB, the work being done to support that tenancy could become disproportionate. It should benoted that the end of benefit review periods was a response to this difficulty.

Not all respondents viewed the previous system with disfavour. Some landlords and letting agentscommented that, once the claim had been processed, then the tenancies were unproblematic. Indeed, onelandlord said: 'You do DSS to make it easier for yourself, not to give yourself problems chasing money.' Inall cases, the reason why the landlord viewed the old system favourably, and indeed the only positivecomment made about the system by the majority of landlords, was that it had been possible to arrangepayments of HB to be made directly to themselves.

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The vast majority of respondents made arrangements to ensure that they received the HB from the localauthority directly. Indeed, in some instances, it was erroneously understood to be the only available option.Some landlords and letting agents had put a clause in their tenancy agreement stipulating that, where HBwas paid, it should automatically be sent to the landlord or agent. This aspect of the system was ratedextremely highly. One landlord operating in Conwy said that, despite long delays in the initial processing ofclaims, he usually took HB claimants and charged £5-£10 less rent because of the convenience of directpayments. For other landlords, there was a sense that long-standing HB tenants on direct payment tolandlord were a substantial business asset.

Responding to the 'Old' HB Regulations

There were three sets of responses evident with regard to experiences of the 'old' HB regulations,depending on the type of landlord or letting agent. First, the landlords and agents who had chosen totarget the HB market adapted their management practices to the regulations. These landlords and agentsdemonstrated a good level of understanding of the benefit system, and indeed almost educatedthemselves into the way HB was administered. One such landlord described his experience:

Once we understood the benefit system and how it worked then we were less concerned aboutwhether the tenant was working or not. We were more confident with it, and we started to acceptpeople on benefit…We gradually learned how to deal with it and basically how to work the system, howto run the system.

A similar comment was made by another landlord, operating in another Pathfinder area:

I learned how to do the system and figured out exactly what was going on. At first we realised that acorrect claim for that area was £485, you fill out the form, what I would do is wait six weeks, phone up(HB OFFICE), over a period of time I caught on it was different work groups…I actually know the guys inthat work group now.

The HB landlords and agents had been acutely aware of the vulnerabilities in the local HB administrativesystems, and where avoidable delays could be countered. The respondents in this group had beenproactive in helping their tenants complete the HB application forms, ensuring that all the requireddocumentation was enclosed, and even in some cases taking the claimant to the benefit office to ensurethat they received a dated receipt that could be used in the event of delays. In some instances, the landlordsand letting agents said that they had developed relationships with the relevant administrative officers at thelocal authority, to ensure that queries did not circle endlessly, and were dealt with promptly.

By contrast, the wider market operators were much less likely to become involved in any HB claim. In someinstances, the respondent commented that they had had tenants who had lost work, and so had appliedand been in receipt of benefit for a time, but that the landlord had not noticed any change particularly. Inmost cases, however, the experience of having a tenant on HB created notable difficulties that set thetenancy aside from the normal run of lets. The complexity of the system, the delays in payment and thepossibility of overpayment meant that – even before the introduction of the LHA – they were extremely

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reluctant to take new tenants on HB. This was even more so the case for landlords who had taken out a runof buy to let mortgages to finance their portfolio development. The delays associated with setting up HBclaims were considered to be too risky a proposition when monthly mortgage bills had to be met.

Amongst the non-strategic landlords, the experience of HB was remarkably variable. As with the otherrespondents, there were comments about delays in the initial claim processing and worries about whetherfinancial commitments could be met, with no rental income coming from the property. However, some feltthat once a claim had been sorted out, then the tenancy tended to run quite smoothly. One Lewishamlandlord commented: I always received it and finally it was very even. It was on the day it was meant to be,the 28th, and it arrived on the 28th. For a Coventry landlord, the process was similarly unproblematic: [I]found it quite easy, quite plain sailing, didn't seem to be any hiccoughs, at that time with them, it seemedto come through fairly straightforward. It didn't seem to be a horrible experience; it seemed to go quitesmoothly. As might be expected, the landlords who had had poor experiences tended to conclude thatletting to a tenant in receipt of HB was simply not worth the associated administrative difficulties. Otherrespondents retained an open mind on the matter.

Conclusions

It is important to note that the LHA was introduced into a situation where there were many establishedpreconceptions with regard to letting to people in receipt of HB. It is possible to distinguish different typesof attitude towards letting under HB. The benefit landlords became accustomed to working with theregulations and aimed to minimise the risk of delays and benefit suspensions by closely supervising andalmost 'micro-managing' HB tenancies. This approach largely continued under LHA. For the wider marketoperators, there was a degree of exasperation with administrative difficulties that led to unwillingness todeal with tenants in receipt of the benefit. Again, this view was largely unchanged by the introduction ofthe LHA. It is more difficult to generalise about the small-scale, non-strategic landlords, since theirexperiences were so variable. There was, if anything, a greater desire to give a HB recipient the benefit ofthe doubt if their 'story' struck a chord but – as with many respondents – a single poor experience couldsubstantially reduce their willingness to risk another such tenancy. For all respondents, however, the abilityto arrange direct payment of HB to the landlord comprised the most substantial advantage to the old HBregulations, and could easily override other perceived disadvantages.

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Chapter 4: Aspects of LHA Administration

Introduction

This chapter reviews aspects of LHA administration. It begins by considering the experience of landlord andletting agents transferring onto the LHA. With the exception of one or two respondents who were quitevague about the nature of the new regulations all the landlords and letting agents were aware of thechange. However, the level of understanding of the administration of LHA varied substantially according tolandlord and letting agent type.

The chapter goes on to consider two aspects of LHA administration intended to protect the landlord orletting agent against loss of rent: arrangements for the payment of the first LHA cheque at the beginningof a tenancy; and the processes relating to a shift of payment to the landlord or letting agent when thetenant is deemed vulnerable. It should be noted that the change to direct payment to landlord or lettingagent as they relate to rent arrears is dealt with in chapter six.

Introducing the LHA

The vast majority of respondents showed some awareness of the LHA, and many recalled when they firstheard about the change to the HB regulations. There was some variation depending on the landlord type.For the wider market operators, it was more likely that information came through literature or eventsarranged by the local authority. Many respondents noted specific meetings that had been set up tointroduce the LHA, where HB administrators outlined the new regulations.

For landlords and letting agents dealing principally with the HB market, it was more likely that they hadarrived at their first information on the regulations through word of mouth contacts, or through attendinglandlord association meetings. In some instances, the respondent had known for months prior to the 'go-live' date that changes were coming and had – as will be seen – introduced preparatory measures.

In a very small handful of cases, landlords only became aware of the changes because they stoppedreceiving HB payments directly from the local authority.

For the most part, the single piece of information absorbed by most landlords and letting agents about thechange was the fact that direct payments of HB from the local authority would no longer be made directlyto the landlord or letting agent.

As might be expected, the larger landlords and letting agents with higher numbers of tenants in receipt ofthe benefit were more likely to take some action to prepare themselves for the change in regulations.Preparation activity was most common amongst the benefit landlords. For example, in one area where theregulations were introduced in a phased fashion, a landlord created a chart with his tenants' 'go-live' datesindicated. Other landlords took their tenants to the HB administration offices, to sort out any necessarypaperwork. Many of the benefit landlords related having to explain the regulations to their tenants. Onelandlord was resentful of the implication that landlords should take some responsibility for explaining thechange and guiding tenants through the process, stating: we are not social workers. We are landlords.

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Overall, few landlords or letting agents reported difficulties with the actual switch from one system toanother. Many indicated that the most immediate impact felt was the cessation of direct payment and anaccrual of rent arrears for some tenants.

First Payment to Landlord

One feature of the old HB regulations was that, even where a tenant had requested that the benefit shouldbe paid to them, the local authority was able in some circumstances to pay the first HB cheque of a claim tothe tenant, but in the landlord's name. This option was viewed as a measure for protecting the landlord orletting agent against the possibility of a tenant absconding with a payment cheque that might be large ifthere had been delay in processing the claim. Under the LHA, local authorities have retained the option ofsending the first LHA cheque to the landlord or letting agent.

Some of the respondents were clear about the arrangements for payment of the first LHA cheque. In oneauthority it well known that where the first cheque was for over £500 or where the tenant was five week'sin arrears, then the cheque was sent to the tenant, but in the landlords' name. Other landlords and lettingagents reported that their Pathfinder authority was inconsistent in its practices. One landlord who had letto five or six new tenants after the introduction of the LHA said that it used to be the case that the firstcheque went to the landlord, then the policy was that only cheques worth £1,000 or more were sent to thelandlord, but that by the time of the interview all the cheques went to the tenant.

Few landlords or letting agents noted problems with the tenant handing over the cheque, but a couple ofbenefit landlords gave instances of theft: You get cheques for £1100 going straight to them…all you haveto do is go straight to cash generators, third party cheques, pay them £40 and you can cash that. It's insane.

Much more common was the comment that landlords and letting agents did not always receivenotification that the cheque had been sent to the tenant, and so remained uncertain that a claim had beenprocessed: Where it bites is when they're (that is, the tenants) paid the money but not paid it on and notknowing they've been paid, you have to take what they say on [trust]. It was thought that the landlord orletting agent should always be told if the tenant is receiving the benefit. Where landlords or agents wereaware that the tenant's claim had been processed, they could not start logging a 'post-processing' arrear,and so would delay making an application for direct payment to landlord.

Vulnerability Decisions

A further aspect of LHA administration is the protection afforded to landlords and letting agents whosetenants are deemed 'vulnerable' and so unable to deal with their financial affairs. The reasons why a tenantmay be vulnerable varies, and can include the extreme old age of the tenant; a mental or physical disabilityor an addiction problem. Almost all the benefit landlords had applied for a vulnerability decision for at leastone of their tenants. The applications were also widespread – but much less so – amongst the wider marketoperators: nearly half had made an application.

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A couple of landlords and letting agents had tried to claim vulnerability status for their tenants as animmediate counter to the regulations on direct payment to tenants. In one case, there was an overtelement of collusion. One landlord, on hearing of the introduction of LHA commented: I contacted bothtenants and said 'Look…I'd like you to approach them and tell them that you want the status quo, just leaveit as it is thanks very much.' One of the tenants was unsuccessful, but the other had managed to get thepayments made to the landlord. The landlord said that the tenant had written a letter. He did not knowwhat the tenant had written, but the landlord was just happy that the payment had been transferred backto him.

For other landlords and letting agents, it was evident that the local authority had already undertaken someinvestigation into particular tenants' circumstances, and payments continued to be made direct tolandlord. Indeed, one large landlord operating for the most part in the student sector had found that histwo HB tenants – both long-term disabled – had been transferred onto the LHA largely without himnoticing any change in his schedule of direct payments.

Many respondents had more direct experience in seeking a vulnerability decision, with varying levels ofunderstanding and success. One landlord was housing an elderly couple who had been quite distressed bythe change in payment arrangements. Their application had been turned down although anotherapplication he had made on behalf of a disabled tenant was accepted. There was uncertainty about thelevel of evidence required: one landlord had taken a community psychiatric nurse with him to give verbalevidence of a client's inability to cope; another landlord had simply taken his tenant, since the man'salcoholism was evident in his demeanour.

Some landlords thought that the methods available for proving vulnerability were embarrassing for thetenants. For example, a woman who was unable to read or write was told that she would have to tell thisto the local authority. In another case, the landlord assumed that in order to 'prove' his tenant's mentalillness, the council would have to arrange for her to see a psychiatrist: the tenant was understandablyreluctant to do so. Underlying all these difficulties was simple uncertainty as to the definition of'vulnerable': I…know that the determination of vulnerable is very tight. And vulnerable, they would haveto prove certain things before they were considered vulnerable. And vulnerable doesn't mean, I have justgot no money. Accompanying this uncertainty, there was in some instances distrust that the council couldbe relied on to make a valid decision: Who decides that they're vulnerable? Who down in the council says'oh yes, you're a vulnerable person?' Someone half-educated by the council, really.

In terms of administration, protracted delays in making vulnerability decisions could be costly. One landlordhad made an application because his tenant had alcohol problems. However, the council wanted to seeevidence that his problems were causing arrears. The tenant left, owing rent, before the decision wasmade. In another instance, a landlord again faced delays in decision-making. He had three tenants sharingone house:

They were all in further education but they weren't playing with the full deck if that's not too rude andweren't managing their finances well…I questioned whether it was safe for them to receive directpayments as it'd go straight into their pockets and the rent wouldn't be paid. And it did happen that wayand they got £1000 behind with the rent. They did a runner.

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Once a decision had been made that a particular tenant was 'vulnerable', it was clear that the individualcould use this information as a negotiating tool to persuade landlords to take them as tenants since the rentwould be paid direct to landlord. Some landlords and letting agents who routinely let to LHA householdssaid that people applying for properties sometimes had vulnerability 'proof' readily available. Indeed, somelandlords said that they would only let to LHA tenants if they had these proof, or could otherwisedemonstrate that the rent would be paid direct to landlord.

Conclusions

All changes to housing benefit take time to be absorbed by both the landlord and the tenant, and it istherefore not surprising that some landlords and letting agents remained uncertain about aspects of thenew regulations. However, the introduction of the LHA regulations did not appear to have createdsubstantial problems for landlords or letting agents in terms of the availability of information on the shift.

Many of the respondents placed a strong emphasis on the importance of the notification that a first chequehad been sent: indeed, in some instances the notification was considered perhaps more important than thedestination of the payment as a means of informing the landlord or letting agent that LHA payments hadstarted.

There was some variation in the experience of making a claim for the vulnerability of a tenant, which isunsurprising given the different approaches taken by Pathfinders in implementing the regulations. Twoissues emerged as being particularly important to respondents: greater clarity on the evidence needed inorder to demonstrate vulnerability; and a quicker suspension of a claim whilst a vulnerability decision wasbeing processed. There were a number of cases of claimants' arrears worsening during this period, withsome tenants absconding before a decision was finalised.

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Chapter 5: Rent Setting

Introduction

This chapter considers the impact of the introduction of the LHA on landlords' and letting agents' rentsetting principles and practices. The chapter begins by reviewing anecdotal evidence that the allowancespayable under the LHA were more generous than the support available under the old HB system. The LHAregulations also introduced the possibility that tenants may receive a level of support that exceeds the rentthey have agreed to pay. This chapter reviews landlord and agents' responses to those circumstances.Differences were evident between the three principal landlord groups.

Rent Levels and the Local Housing Allowance

Although many aspects of the LHA offer little substantive difference in comparison with the previous HBsystem, there was one substantial change. Under the LHA, tenants receive a flat-rate allowance accordingto their household's size. This allowance is paid irrespective of the rent charged by the landlord. Under theprevious HB rules, many recipients faced a shortfall between the rent charged and the level of HB payablein their particular circumstances (see, for example, Elsmore, 2000). Under the LHA the possibility of therebeing a shortfall remains, but if the rent is set at a level below the LHA rate, then the recipient is able to keepthe difference. The difference has generally been referred to as 'the excess'.

The LHA rates were set on broadly the same principles as the previous Local Reference Rents and SingleRoom Rents. In many areas the Broad Rental Market areas largely matched the previous localities that wereused as the spatial boundaries for rent assessment. However, for a number of reasons the LHA rates thatemerged tended, in many locations, to offer a higher degree of support to tenants. A possible explanationfor this situation is the termination of property-specific determinations that might reduce the amountpayable on a poor-quality property.

Awareness that the LHA rates could be more generous than the previous HB rates, or even the open marketrates, was evident amongst the respondents. Many gave examples: one respondent in Brighton & Hovesaid that a three-bed property off the Lewes Road would probably have fetched £140 a week on the openmarket, but the LHA for an appropriately-sized household would be £280. In Leeds, it was generallyconsidered that the rate of £83.50 for a single room in a shared property was excessively high, particularlyfor the less-well located HMOs, and that £60 was a more appropriate sum. Similarly, in Edinburgh, onelandlord noted that the LHA on her three-bed flats was £833, but she asked for £650 because theproperties simply did not merit the higher amount.

An important issue for the landlord stream of the LHA evaluation was to assess how landlords and lettingagents responded to the possibility that tenants may receive a level of LHA that is higher than their rentobligation. Many commentators prior to and during the LHA period expressed the belief that the majorityof landlords and agents would simply increase their rents to the LHA levels. As will be seen, rent-settingpractice prior to the introduction of the LHA varied substantially and the new regulations tended to bolsterexisting trends and behaviours.

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Setting the Rent

Landlords and letting agents set about the task of setting a rent for their properties in different ways.Indeed, a single landlord or agent might have a range of rent-setting strategies depending on theproperties in their portfolio. For the purposes of this evaluation, it is perhaps appropriate to characterisetwo different approaches: market-led rent setting, and benefit-led rent setting. As might be anticipated,the wider market operators were more likely to fall into the category of market-led rent setters, and thebenefit landlords more commonly used benefit levels as a guide to the rents to charge. The single-let, non-strategic landlords could fall into either category.

'Market' Rent Setting

For landlords and letting agents operating in the wider rental market, the dominant tendency was to set therent at what was commonly referred to as 'the market level'. Landlords new to a particular market mightperhaps review the property pages of the local press to get an idea of the rents of equivalent houses or flatsnear their property. Some respondents asked the advice of letting or estate agents. It was clear thatlandlords who had been in the market for some time were more able to be flexible about the rent being set,since their properties were largely mortgage-free.

For landlords who had entered the market more recently and who had buy to let mortgages on one or moreof their properties, the need for monthly rental income to match or exceed their regular mortgagepayments was obviously of paramount importance. The longer-term landlords often commented thatthere was tension in the buy to let market, with some new landlords having mortgages that were too highlygeared: their debt was high compared with the capital value of their properties. This meant that theselandlords had to set their rents at top whack. Many buy to let landlords commented that they had monthlyrental figures that they knew they had to achieve in order to meet their mortgage commitments. Thelandlords had come to let with those fixed figures already in place, and were not always in a position to beflexible.

In a limited number of instances, buy to let landlords were setting their rents at higher-than-market rates.The landlord would invest more heavily in a property's décor in the hope of attracting 'better quality'tenants.

This approach contrasted with the majority of the wider-market, longer-term landlords, amongst whomthe accepted wisdom appeared to be to slightly undercut the market, to minimise void periods and ensurethat their property was always in demand. It was thought that where rents were set slightly lower, thentenants were likely to stay longer. Indeed, over all respondents, strategies to encourage good tenants tostay for longer periods played a large part in landlords' rent-setting decisions. For example, tenants whopaid their rent on time and evidently took good care of the property could expect minimal or even no rentincreases over a protracted period. One landlord had been letting to the same tenant for six years withoutonce increasing the rent.

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In instances where wider market operators had let or were letting to people in receipt of HB/LHA, then itwas rarely the case that the level of benefit payable influenced the rent that was set. In some instances, thelandlord might accept that 'DSS lets' generally netted a below-market rent compared with what wereoften termed 'private' lets. The difference could be £5 to £20 a week or more, depending on the property.However, despite the possibility of getting a lower rent, some landlords still occasionally acceptedunemployed households, partially – as has been seen above – because of the appeal of their story, orbecause the property's condition or location meant that it would be difficult to let to any other group.

Not all wider market operators had differential practices with regard to their HB/LHA tenants. Some wereinflexible with regard to rent levels, and did not make any reduction if the tenant was in receipt of LHA.These respondents were adamant that the tenant had accepted their obligation to pay the rent, and it wastheir business how they managed to meet that obligation. The landlord or agent would either be unawareof the possibility of a shortfall between the LHA payment and the rent, or be aware of the shortfall but stillcollect the payment regularly and count any falling behind with the payment as a rent arrear.

Benefit-led Rent Setting

Some rent setting strategies were much more closely tied to the levels of HB and LHA that tenants received,and this trend was most common amongst the benefit landlords. This was not a new development: manybenefit landlords letting prior to the introduction of the LHA had simply used the reference rent as astandard: sufficient experience letting to HB tenants meant that there's usually a rent that you know.Another landlord had asked around other benefit landlords to find out the rent charged in his area: I said,'What do you get' and he said 'We seem to be getting around 485' but I thought as long as I get roughlythat figure then that sounds fine to us.

In some instances, little thought had been given to actually setting a rent: the rent was simply whatever waspaid by the local authority. For one non-strategic landlord, talking about their single tenant, He just paysover whatever they give him. He pays exactly the LHA, there is no shortfall as we haven't set the rent. Thispractice is technically illegal, and demonstrates the largely informal nature of letting in parts of the sector.

There was an inextricable relationship between rent-setting strategy and attitude towards shortfalls. Formany benefit landlords, there was little point in setting a rent that would not be fully covered by HB/LHA,since it was unlikely that claimants would be able to pay the difference from their other benefit income.Indeed, the effort that had to be put into collecting any shortfall was simply not worth the amounts thatwere collected. So, landlords who did not set out with the intention of using the HB/LHA level to set the rentended up doing so by default: one landlord said that he used to ask for a certain amount, and if the HB/LHApayment was less, he would simply reduce the rent to that figure. However, it should be noted that in bothBlackpool and in North East Lincolnshire, it was standard practice for landlords to set rents at market levelsand collect the shortfalls or 'top ups'. It may be that in these areas, the Local Reference Rent rates wereconsidered by landlords to be artificially low. In Blackpool it was observed that a one-bed property under HBhad generally fetched £68-70 a week, but the LHA for that property size was £75. This rate was considereda truer reflection of the market value for that property type.

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Following on from practice that had become established under HB, the majority of benefit landlordsindicated that rents for properties that became available after the introduction of the LHA were set to theallowance rates. One landlord commented: I do use the LHA as a guide. So a three-bed house I would lookto get that rent back for a three-bed house whether the tenant would get that or not. It was often arguedthat, for a long time, shortfalls had not been collected from tenants who had not received HB that fullycovered their rent liability. Setting rents at the LHA levels was seen as a means of offsetting a long periodof accepting below-market rents under the HB regulations.

Dealing with the Excess

Not all the respondents knew that the LHA may mean that some tenants may get an excess payment, orthat any of their tenants were in that position. For the most part, these landlords were wider marketoperators who had set their rent without regard to the LHA levels. The majority were of the view that, if atenant got more, then that was their business. The feeling was that, if a tenant received an excess, then theywere more likely to stay in the property for longer and treat the property well so that they could continueto gain: where the tenants are getting a £20, £30 more each month, so maybe they're more zealous inmaintaining the claim, looking after the place and paying rent so as not to lose that.

However, other respondents were disgruntled that the sum may not come to them. One landlord wascharging £105 a week for a property that they thought was in good condition and in a good location. Thiswas thought to be a good rent, slightly below the market average. The tenant received £130 a week. Thelandlord commented: So he has £25 in his pocket a week and that is not fair to me or the taxpayer. Anotherlandlord, who had only recently become aware of the possibility of an excess payment, was moreforthright:

My thoughts were, if they were getting £1,000 then I'm wanting £1,000. My flat's renting for £500.Doesn't matter, I'm wanting the £1,000…If I go to the council and say right, I'm wanting to let it out toDSS I would want to know, whoever was getting it, what rent they'd get and that's what the rent wouldbe.

Some landlords indicated that the fact that an existing tenant received an excess payment influenced therent for which they now asked. Where a landlord had in the past always received the full amount of HB –specifically, where they set the rent at the HB level – then they continued to ask for all the LHA that thetenant received. For one non-strategic landlord, the LHA was double the previous HB payment but theycontinued to ask for the full amount without appreciating that this measure comprised a substantial rentincrease. Another was left confused by the increase: I was never 100 per cent certain how much I wassupposed to get and whether they'd put the money up.

Many landlords were routinely introducing rent increases in order to absorb any excesses their tenantsreceived. One landlord said that some of his tenants had, in the past, had excesses but I think now we'veclawed that back, the rents have adjusted where they're now at benefit levels. Another landlord reportedhow he had dealt with the higher LHA rates. His tenant had received £500 in HB, and he had accepted thisas the full rent figure. Under the LHA, the amount of support the tenant received went up to £563. The

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landlord drew up a new lease that said the rent was now £600 and he wrote to the local authority to thateffect. He also wrote a covering letter saying that he would be accepting the LHA rate and not ask for anyshortfall. His rationale was that if the LHA rate increased any further, he could ask the tenant for whateverallowance she was paid, without formally increasing the rent. At the time of the interview, the LHA payablehad increased to £578 and the landlord was asking for that amount.

Another landlord, who had pursued a similar strategy, found that one tenant refused. He was getting anextra £25 a week in LHA, and said that he would move out if the landlord increased the rent. In the end, thelandlord let him stay: At the end of the day, he said, a good tenant the landlord doesn't want to lose. Thisrationale was also evident in the practice of another benefit landlord. Although his new tenancies werebeing let at rents in line with the LHA, the majority of his existing tenants received an excess. He oftenreceived the cheques and cashed them using third party cheque arrangements, giving back to the tenantsthe excess as a cash payment.

In a couple of instances, landlords reported exceptionally high excesses. Often this situation reflected largehousehold sizes. In Lewisham, one landlord reported a family with four children paying a rent £700-800 amonth, but whose LHA rate was £2,400 a month. In what another landlord termed oddball cases of veryhigh excess, the decision was taken to let the tenant pocket the difference, since the amount paid under theLHA was simply ridiculous and could never be justified as a rent level.

Excesses and Arrears

Where landlords and letting agents have tenants in arrears and where the payments are no longer sent tothe tenant, then it is possible that any excess payment can be used to reduce the owed rent. Some landlordswere aware of this provision, and had tenancies where this step had been taken. In one complex instance,however, one landlord was using the excess payment to offset rent owed, where the owed rent was causedby the LHA always being paid a month in arrears. He persuaded tenants to use the excess for this purposeso that at the end of their tenancy the final LHA cheque would be theirs, perhaps to use as a deposit for theirnext tenancy. The rent account was set accordingly, so that once the tenant gave notice their final month'srent had already been paid. In another case, the landlord did not increase the rent to the LHA level so that,if the tenant fell into arrears, the excess could be used to pay off owed rent.

Conclusions

In broad summation, there are two contrasting pictures with regard to rent setting under the LHA. Thewider market operators had rent setting strategies that were unaffected by benefit levels. For many ofthese landlords, the LHA has had minimal impact on their rent-setting behaviour, and the tenantsconcerned may have benefited from either a reduced shortfall or an excess. Where landlords and lettingagents are routinely letting in the benefit market, then the LHA has had a substantial impact on the rentsbeing charged, and there is evidence of rent increases to match LHA levels. Although some existing tenantsmay receive excess payments, rent increases were often either in the process of being implemented or werebeing planned in order to absorb the extra income.

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Chapter 6: Rent Arrears and Dealing with Loss of Rentunder the LHA

Introduction

Prior to the introduction of the LHA in the Pathfinder areas, on average 55 per cent of HB payments weregoing from the local authority directly to the landlord or letting agent. At the final evaluation visit, theaverage was 15 per cent (Walker, 2004; Walker 2006). One expected outcome of the shift away from directpayment of LHA to landlord and agent was the possibility that some tenants could fall into arrears with theirrental payments. This chapter reviews the experience of rental arrears amongst the respondents, andconsiders the steps that were taken in the event of arrears occurring. First, however, the chapter considersthe varying ways in which respondents actually defined 'arrear.' It is important to unpick these definitionsof arrears, in order to understand the varying practices that were instituted by landlords and agents in orderto deal with an arrear, or to mitigate the risk of an arrear occurring.

Defining Rent Arrears

The research indicated that definitions of arrears could differ substantially, a fact that contributes someexplanation to variation in the conclusions on arrears drawn in different parts of the LHA evaluation. Whenthe LHA was introduced, there was concern about increases in a very specific type of rental arrears:incidences where a tenant, whose LHA had been processed and which was now regularly paid to thetenant, did not then go on to pay the landlord or letting agent the agreed amount of rent. For the majorityof respondents, an arrear began to be counted when a tenant missed one month's payment. However, forsome respondents, arrears could also include the initial delay where a tenant's LHA claim was beingprocessed. One landlord said that when one of his tenants had become unemployed, it had taken sixmonths to organise the HB and in fact he had asked her to leave because of the arrears before the claim wasfinally processed.

The fact that LHA is itself paid in arrears was also noted by landlords. In the open rental market, landlordscommonly ask for an initial rent in advance payment, and for rent continued to be paid in advance. Thispractice has not been replicated by either HB or LHA. Thus, when asked if any of their LHA tenants were inarrears, some commented that all of them were and had been in arrears automatically from the point thattheir claim started. For one agent: Officially they are in arrears the day they walk in the door because theyhaven't paid. Some landlords encouraged their tenants to give some additional money on top of the renteach month, to reduce this initial arrear. In addition, some respondents also counted as being in arrears anytenants who had fallen behind with the payment of any shortfall between the LHA and the contractualrent. Only one or two respondents defined an arrear as not passing the LHA on or being erratic in doing so.

Thus, being in arrears is largely integral to the process of claiming LHA, with the causes not always lying witha tenant's inability to organise handing over their rental payment. Landlords and agents were vociferous intheir dislike of this aspect of the regulations. The fact that LHA tenants were paid in arrears required a

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different way of managing the tenancy's rent account. Letting agents said that they found it difficultexplaining arrears in a HB/LHA rental account to landlords, which was one of the reasons why landlordsoften refused to take tenants in receipt of benefit.

Experience of Rent Arrears

Leaving to one side the 'technical' arrears caused by the way in which benefit regulations work, landlordsand agents had variable experience with regard to tenants' ability to hand over their rent in full and on time.There was a general agreement that arrears difficulties were not confined to LHA recipients, and thatworking tenants also fell behind with their rent on occasion: some people could manage their money betterthan others. Some landlords were pleasantly surprised by the fact that, for them, very little changed withthe LHA with regard to arrears: As a landlord I am surprised that our fears haven't been founded. However,many more respondents had tenants on LHA who had been in arrears, or who were currently havingdifficulty paying their rent.

Problems were reported by all types of landlord. Often the tenancy had started well with the tenant havinggood intentions but then a crisis occurred or the regularity was somehow disrupted. For example, morethan one landlord reported tenants missing their rental payment at Christmas time. It was not alwayspossible for these tenants to make up the missed month. For other tenants, there were problems withmarrying paying the rent and trying to get into work. One landlord described what happened with one ofhis tenants:

She went away, and got a job. I explained to her, if you get a job, you get £80 a week, then she getsWorking Tax Credits of £40 – so she gets £120 – and I said out of that you have to set aside £60 for mebecause they will reduce your housing benefit by £200. They never understand it. Now she's £702 inarrears.

The difficulties of living on low income were acknowledged by many landlords as being the problem. Thetenants were juggling the bills, and the LHA became part of the household income: if their child is ill andthey take them to the doctor's they will do whatever is necessary to get them better and if that meansrobbing Peter to pay Paul by using rent they will.

As might be expected, experiences were more marked amongst the benefit landlords. It was common forthe benefit landlords to say that the majority of their tenants had fallen into arrears at some time. Forexample, one landlord had a six-bed house in multiple occupation: I have the records there on it and thelevel [of arrears], it's hit £6,000 within the year and it's still going up. All separate flats, all on HousingAllowance, where the council are paying them. However, some landlords dealing with a large number ofclaimants on LHA said that rent arrears were not a difficulty since problem tenants who had tended to fallbehind with payments now had their LHA paid to the landlord by the local authority because of the eight-week regulations.

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Managing Rent Arrears

There were a number of ways in which landlords and agents chose to manage arrears once they hadoccurred. There were three broad strategies: approaches that utilised the appropriate legal frameworks;strategies that absorbed and adapted the safeguards for landlords that were available within the LHAregulations; and a more passive 'wait it out' approach. The legal responses tended to be taken most oftenby the wider market operators, although not exclusively. Benefit landlords were most likely to work withthe LHA regulations although some frequently took court action. Single-property, non-strategic landlordsoften left the situation to resolve itself, which most often happened through the tenant absconding.

Legal Responses to Rent Arrears

For all landlords faced with rent arrears, there are two basic issues at stake: a tenant's persistent failure topay the rent and the amount of owed rent that has accrued. Most landlords would, ideally, like both an endto the tenancy and a means by which back-rent could be recouped. However, many respondents werepragmatic, and the majority viewed court action simply as a means of regaining possession of theirproperty, believing that there was little point in attempting to force the tenant to repay arrears. Onelandlord who had succeeded in bringing action against a tenant for owed rent found that she was orderedto repay in such small amounts that fully recouping the cost would take sixteen years. Other landlordsreported successfully having evicted tenants who were in arrears due to the LHA.

However, some landlords were uncertain whether taking court action would yield results: You hear aboutthese stories of taking tenants to court and them suing you for harassment. Indeed, few landlords weresatisfied with the outcome of court cases they had brought. One landlord commented: we've been to courton five or six occasions and they find something stupid and the court believes the tenant for God knowsreasons why. Should look at them: half of them are drunk or druggie or whatever and they think we are thenasty people.

Landlords and letting agents often weighed up the financial benefits of pursuing this route. There werereports of instances where tenants – when faced with the possibility of court action – simply stoppedpaying the rent altogether and waited to be evicted. For one landlord, the inability of the courts to deal withthe problem of rent arrears meant that there was only one solution: the courts are so bad that the old bigbloke and a baseball bat days are coming back. It's not right but it is, simply because there is no other wayof doing it.

The LHA Eight-Week Rule

It is uncertain whether the previously-quoted and, it should be stressed, unusually extreme respondent wasaware of the LHA regulations regarding rent arrears and direct payment. The rules state that, once a tenanthas fallen eight weeks into arrears, then the landlord can apply to the local authority to suspend the claim.Once the matter has been investigated, the local authority can choose to transfer payments to the landlordfor the period of time taken for the rent account to balance. Although a small handful of landlords and

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letting agents clearly did not understand this rule, the majority were aware of the regulation. Indeed, forsome, the regulation framed their response to arrears: Got to wait eight weeks anyway but once you seethat date arrive go straight to the council. Another landlord took similar action: Once someone goes in Icount the weeks and as I see it coming up to the eighth week, regardless, I send the letters straight off tothe council.

The issue then remained of waiting for the council to arrive at a decision. According to one landlord: If yousend a letter to the council you literally cross your fingers and hope that they'll answer you. Council delaysin responding to requests for decisions could add to lost rent, since many landlords commented that missedpayments were never fully recouped even if payments were diverted to the landlord.

For some landlords whose business was primarily dealing with benefit tenants, particular responses toarrears had begun to emerge. For these landlords, who had let mainly to HB tenants prior to theintroduction of the LHA, the majority of their tenants had fallen into difficulty when the new allowancebegan to be paid to the tenant. Rather than dealing with the tenant directly on the matter, the respondentsimply let the rental account fall into arrears. The rent records were then presented to the LHA office, andthe payment was shifted to the landlord. Often it was claimed that the tenants were happy with this courseof action and had preferred the payment to be made to the landlord, since the tenants themselves wereaware that they were poor money managers. Some of these respondents said that they were quite happywith the LHA once they had instituted this arrangement, since it dealt with all the problematic tenants.Indeed, one landlord noted that he never instituted eviction proceedings against tenants for rent arrears,because he was so certain that the LHA would be paid to him if the arrears were persistent. His view wasthat it cost more money to evict the tenant, re-paint a property and wait for it to be re-let than the rent thatmight be lost by a tenant falling into arrears and waiting for the eight week rule to come into play.

Very few respondents – no more than two or three – mentioned the 'unlikely to pay' regulations. Underthese rules, LHA payments can be made directly from the local authority to landlords and agents if thetenant had a chronic history of missed rent payments. One landlord was only aware of the rule because ithad been mentioned in the landlord quantitative survey. He took this information to his local landlordforum. He narrated the council response: The council says that if that was the case then all landlords wouldsay our tenants were unlikely to pay. A lack of clarity from Pathfinders on the existence or operation of theunlikely-to-pay category perhaps explains why many respondents did not make recourse to theseregulations.

Waiting it Out

Some of the landlords took little action in the event of rent arrears occurring. Where the landlord had aclose relationship with the tenant, they were more likely to let arrears ride, or try to find alternativesolutions. One landlord of a single property said that his tenant had fallen into multiple debt problems. Thelandlord had tried to sort his tenant's finances out, and had referred him to the Citizens Advice Bureau anda debt advice line. Most landlords in this kind of relationship with tenants simply hoped that their tenantswould find their feet again. One landlord had tolerated poor payment for over four years before finallygoing to court; another had a tenant who had paid erratically for ten years. The landlords in these cases hadbeen unwilling to take action against a family, or had been persuaded to be tolerant by a tenant full of readyexcuses.

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For some landlords who had anticipated difficulty when the new regulations came in, it was found thattenants themselves took action: The ones we knew were on benefit and would be problems were all gonewithin a short time because they didn't pay. Other landlords simply encouraged the tenant to find otherproperty, and wrote off the outstanding debt.

Conclusions

Landlords and letting agents tended not to view LHA claimants falling into arrears as somehow inevitable.Tenants could be good, reliable payers or be consistently in debt, and being in receipt of LHA was notnecessarily a determining factor. However, the benefit landlords in particular noted that arrears wereendemic amongst their LHA tenants, and many of the wider market operators had a anecdotal evidence ofarrears.

Landlords and letting agents generally chose one of two approaches to dealing with rent arrears. Somedealt with the matter by instituting court proceedings, and in seeking eviction either under S18 or S21simply aimed at repossessing their property. Few took any steps to recoup outstanding rent payments. Forother landlords and letting agents, rent arrears strategy was more squarely based on the LHA eight-weekrule. Indeed, some landlords were happy for their tenants to accrue two months' arrears in order to effecta switch in LHA payment from tenant to landlord.

In response to the experience of arrears, many landlords and agents introduced policies to mitigate the riskof arrears accruing. These policies will be discussed in the next chapter.

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Chapter 7: Dealing with the Risk of Arrears

Introduction

The previous chapter considered respondents' experiences in dealing with arrears that had arisen followingthe switch in payments by the local authority from the landlord to the tenant. This chapter reviews in moredetail the practices that were undertaken by landlords and letting agents in order to mitigate the risk ofarrears occurring in the first place. For example, it had been thought that in some cases landlords andagents might increase the advance payments required from a prospective tenant, so that these sums couldoffset any failure on the tenants' part to pay the rent. In addition, it was anticipated that landlords andletting agents would review their rent collection practices.

This chapter focuses on three aspects of management practice that were likely to be modified in the lightof the new payment regulations: requirements for advance payments; methods for collecting the rent; andstrategies for choosing tenants. In addition, the chapter considers whether any of these methods broughtsubstantial change to landlords' and letting agents' patterns of working. One concern relating to theimpact of the LHA was that dealing with the regulations would increase landlords' and letting agents'management costs.

Overall, three generalised approaches were evident in responses from landlords and letting agents: riskavoidance, risk mitigation and risk absorption. The majority of the wider market operators were 'riskavoiders', and simply refused to take on LHA claimants as tenants. The benefit landlords, on the otherhand, were more likely to institute practices that either reduced the possibility that arrears might occur, orthat reduced their financial impact. The non-strategic landlords tended simply to absorb the risk, and fewnoted any changes to their practices in response to the LHA.

'Risk Avoidance' and the Wider Market Operators

Before discussing the nature of 'risk avoidance' amongst this group of landlords and letting agents, it isuseful to characterise their general working practices, since there were some distinctive differencescompared with benefit landlord behaviours. The wider market operators tended to operate according toestablished principles that were applied with little flexibility, and which changed only slightly with theintroduction of the LHA.

First, the majority of landlords and letting agents in this group tended to avoid letting to groups that werein certain categories. These often included young people and particularly young men, single parents, andeven couples with children. A favoured tenant household type was a childless professional couple. Peoplein receipt of housing benefit were very clearly in the 'risky' category. Prior to the new regulations, manylimited the number of lets they made to claimants in receipt of HB, but the LHA meant that many nowabsolutely refused to let to such tenants. According to one landlord, If you're asking me if I would benonchalant about taking people on benefit as in the past I don't think the answer is yes. Indeed, some notedthat they would rather have a void than let to someone in receipt of LHA. One landlord said that, if a

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working tenant lost their job and needed to apply for LHA, he would terminate their tenancy. Agents weremuch more likely to advise their landlords – and to say that they had been advised by landlords – not toaccept benefit claimants as tenants.

The regulations mean that it is possible for some landlords and letting agents to be unaware that a tenantis in receipt of benefit once they have begun a tenancy, but it was still thought unlikely by the respondentsthat a claimant could hide their status when seeking new accommodation. The majority of the widermarket operators noted that they completed extensive checks on prospective tenants, that might includeviewing bank statements, calling employers and contacting previous landlords. One landlord evenreviewed prospective tenants' income using a formula to see if they could afford the rent.

To some degree, these landlords and letting agents filtered out applications from claimants, not only byadvertising 'No DSS', but by insisting on the payment of both rent in advance and deposits. The majority ofthe wider market operators indicated that they asked for some money in advance on the principle that thepayment indicated the financial standing of the tenant, and gave the tenant a stake in the property.According to one respondent: If someone rings up and says 'I'm interested and hopefully I'll get you thebond next' I say 'Terribly sorry, that's not how I do business.' If they're already scrabbling around for £25,£50 you know that's going to be the standard.

In some instances, landlords and letting agents said that they did take claimants, but only if they couldname a guarantor. The guarantor would themselves be subject to financial checks, and would be requiredto pay the rent for the claimant for the months they were unable to meet it themselves, for example, duringthe initial delay whilst the claim was being processed. This practice has perhaps transferred across from thestudent housing market, where it is commonplace for landlords and agents to ask parents to stand asguarantors for student tenants.

In terms of rent collection, many of the wider market operators had begun to move towards introducingautomated banking methods for rental payment, and instituted this system for all their tenants. For others,a variety of methods was evident depending on the tenancy and the tenant concerned, and many still weresent cheques, were paid in cash, or simply went to pick up the rent. It generally held that, the fewer theproperties owned by the landlord, the less formal the rent collection became.

The end of direct payment to landlords and agents meant that in some circumstances, wider marketoperators became involved in setting up bank accounts for LHA claimants. This was generally the casewhen the landlord had perhaps a long-standing tenant who had been on benefit for some time. Although– according to one landlord – this process was smooth in 80 per cent of cases, there were some difficulties.One landlord noted that he accommodated an elderly couple who had been refused a bank account in theonly bank in their village, and who had in the end secured a Credit Union account. However, the CreditUnion did not issue regular statements, which had left the couple in arrears since they could not trackpayments in and out of their account. He was also in the process of evicting another tenant who, similarly,could only secure a Credit Union account, and whose difficulties with that account had left him insubstantial debt to the landlord.

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Few of the wider market operators noted any substantial change overall to their management practices interms of increasing some aspects of management in comparison with another. For the majority ofrespondents in this group, their principal tasks continued to revolve around repairs and maintenance as hadbeen the case under the old HB system. Two respondents mentioned a reduced LHA administrationworkload, and two respondents mentioned increased LHA administration workload. For many of therespondents in this group, the number of LHA claimants they dealt with was perhaps too small for a changein the regulations to have substantial management impact on the landlord or letting agent.

'Risk Mitigation' and the Benefit Landlords

Benefit landlords letting practices were distinctive. In general terms, respondents in this group were morelikely to own houses in multiple occupation where occupancy had a high turnover; to be dealing withtenants who were either in and out of low-paid work, or who had been in receipt of benefit for longperiods; had properties in areas where few tenants would actively choose to live; and who were routinelydealing with HB/LHA administration. In response, styles of management with regard to benefit landlordismcould be markedly flexible particularly in comparison with letting in the wider rental market.

Flexibility was most evident with regard to the requirements that tenants would have to fulfil in order tosecure property. It was unlikely that the landlord would pursue references, and often some people weretaken simply on the recommendation of existing tenants. It was unlikely for the landlords and letting agentsin this group to ask for both deposit and rent in advance before a tenant moved into a property. Indeed, onelandlord only asked for £20 'key money'. Another said that if he could charge a deposit, he would, butmany of his tenants just come with a bin bag, and could offer at best perhaps five pounds a week which wastoo much trouble to collect.

In contrast to the wider market operators, the benefit landlords sometimes noted that dealing with HBadministration took much of their time: I could be on the phone all afternoon to the council. It's an ongoingthing. Sometimes it takes so long for a claim to come through and then all of a sudden it stops and you'vegot to find out and it starts up all over again.

The introduction of the LHA regulations on the payment of rent had some consequences with regard to theflexibility of practice. In some cases, landlords tightened up their procedures, and began to review areaswhere risk was disproportionately high. One landlord introduced a guarantor system as a consequence ofthe LHA: Some people are put out by this. I had one chap said 'I'm 42, I don't need a guarantor.' Really upsetby it. Someone else walked away and thought it was quite rude to ask her for one, but we didn't let to her.Where landlords did charge a deposit previously, they might increase the amount: one had added £100 tothe figure, because of the amount of people that have been pocketing it (that is, the rent).

There was an evident shift in favour of automated systems for collecting the rent, and many landlords andletting agents reported that they were encouraging more of their tenants to open bank accounts and setup standing orders or direct debits. A previous system of having one payment coming in from the localauthority for all tenants had been replaced by a more varied combination of standing orders, cashcollection, cheques and the cashing of cheques as a third party. However, the general consensus did not

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appear to be that the shift had substantially increased their rent collection times. Many had collectedshortfalls from tenants under the old HB system, and so the new regulations offered little difference. Inaddition, it was not always the case that the landlords viewed the personal collection of rent with disfavour:some saw it as a means of keeping in touch with the tenant and the property.

Perhaps the most marked difference in practice following the introduction of the LHA was with regard totenant choice. A limited number of respondents in this group said that they had stopped letting to peoplein receipt of LHA, and had found an alternative demand group for their lettings. More discussion of thistrend is given in chapter eight. Other landlords said that they would continue to accept LHA tenants, butwere more cautious in their choices and perhaps would be more likely to institute 'filtering' devices such asasking for rent in advance or deposits.

A third group mitigated the risk of rent arrears by re-targeting their letting at the more vulnerable tenantsin the LHA market. These were tenants where it would be guaranteed that the rent would be paid direct tothe landlord or agent, because of the vulnerability of the claimant. In this regard, the landlords and agentssought to work with housing associations, charitable organisations or local authorities who were'sponsoring' households and supporting them through the process of securing a PRS tenancy. Theseschemes are discussed in more detail in chapter eight.

'Risk Absorption' and the Non-Strategic Landlords

The non-strategic landlords each had just one letting and so the time taken in landlord activity was limited.This was particularly the case where the landlord had a long-term tenant, or where they used a letting agentto set up the tenancy. One consequence was that the respondents in this group had not always hadsufficient landlord experience to be able to comment on their common management practice, or toformulate routine strategies for dealing with problems that might arise. For the most part, they simplyresponded to the issues that a particular tenant might bring.

The non-strategic landlords operated largely informally. Where deposits and rent in advance were beingasked for, this usually was a reflection of the intervention of a letting agent. Indeed, some landlordscommented that they disagreed with their agents asking for these payments, if the prospective tenantsmight otherwise be viewed as 'good' or 'respectable'. The choice of tenant was more often than not basedon 'gut reaction' or in response to their story. One respondent was typical: If I pick someone up I know thempersonally. [I] don't get references. I don't believe in references. If you had fourteen houses that would bedifferent.

The non-strategic landlords often agreed with their tenants a convenient method for rent collection: forexample, where the landlord lived locally, they might go and collect the money on a given day in the month.There was some use of automated bank transactions, but many of the respondents reported difficultieswith these, for both themselves and for the tenant. One landlord complained that where there was amismatch in the timing of the LHA going in and the rent going out, then the tenant accrued bank charges;another said that their tenant had an overdraft, which swallowed the LHA each month and meant they hadto find another method for paying the rent; and another landlord was unhappy that the bank seemedunable to fix on a regular date for the standing order to go out.

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It is perhaps unsurprising that most landlords in this group were managing any arrears difficulties by'waiting it out' (see Chapter 6), and most said that their problems in this regard had usually somehowresolved themselves. It can perhaps be conjectured that this attitude might reflect the fact that manylandlords in this category were not confident about their role as landlord and were generally unaware oftheir rights and responsibilities; or were not highly geared in terms of mortgage payments or indeed ownedtheir rental property outright.

Conclusions

The respondents dealt with the risk of rent arrears in different ways, which very generally followed thelandlord or agent type. Wider market operators – which already instituted a broad set of risk-reducingstrategies – were more likely to reduce or halt their letting to LHA claimants. Benefit landlords and agentseither introduced less flexible practices, such as asking for advance payments, or shifted their focus ontogroups where direct payments to landlords would be guaranteed. The non-strategic landlords simplyabsorbed any arrears and tended not to change their practices.

The next chapter picks up some of the underlying themes in this and the previous three chapters, andconsiders the impacts of LHA on letting practice in the context of other factors influencing landlord andagent behaviour immediately before and during the evaluation period.

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Chapter 8: The Impact of the LHA on the Supply ofProperty to Benefit Claimants

Introduction

Chapter seven indicated that, for some landlords and agents, the most effective way of dealing with therisks attached to letting under the LHA was to withdraw from letting to LHA tenants. This chapter reviewsthe supply of property to benefit tenants in more detail, and considers some of the broader housingcontexts in which decisions were being made by the respondents. It should be noted that this chapter doesnot comprise a full review of housing and labour market developments during the evaluation period.Rather, the chapter reflects respondents' comments on the local market issues that were affecting theirletting decisions. Underlying the discussion is an assessment of how far the LHA per se has impacted onproperty availability to benefit-reliant tenants, and how far other factors may have been influential.

This chapter will review evidence from all the respondents taken together, but will indicate where viewsand opinions might be more evident in a particular landlord or agent type.

The Reduction in Letting to LHA Tenants

A principal concern in relation to the introduction of the LHA regulations is that the regulations wouldmean a reduction in the supply of properties available to tenants in receipt of the benefit. Certainly one ofthe principal findings emerging from the qualitative interviews is that many landlords and letting agentswere reducing their lettings to this group. However, it should be made clear that many of the respondentshad never had any intention to let to people in receipt of benefit, and where such letting had occurred it hadbeen largely unintentional (see chapter three). The introduction of the LHA regulations had had limited orno impact on this practice. However, it was clear that a complex bundle of often interwoven factors wascontributing towards a reduction in the supply of lettings available to benefit recipients.

The LHA Regulations

For a number of respondents, including both wider market operators, and those more firmly in the benefitmarket, the new regulations had undermined their willingness to let to LHA tenants. Much of this reporthas outlined difficulties relating principally to the end of direct payment of LHA from the local authoritiesto landlords and agents and consequent arrears, and the repetition of these experiences is not necessaryhere.

However, it is appropriate to stress that in many cases, these landlords did continue to let to existing tenantsin receipt of the benefit, especially when the tenancy was of long duration. The respondents might oftenmention that their long-standing benefit tenants were trustworthy, looked after the property well, andwere in control of their financial affairs. If the switch over from HB to LHA was relatively smooth, then theLHA alone was not considered a sufficient reason to serve notice in those circumstances. However, themajority of these landlords and agents stressed that they would be highly unlikely to take on new tenantsthat they knew would have to apply for LHA.

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A Movement Away From Multiple-Occupation Lets

In addition, supply was also restricted because of changes that many landlords were making to theirproperty portfolios. There was a definite shift away from the ownership of HMOs. A cluster of factors fedinto this shift. First and most marked was apprehension relating to regulations on HMO regulations, andthe belief that the amount of money required to get properties up to standard would make such lettinguneconomic. Second, there was a widespread understanding that although yields on these propertiescould be good – particularly on a property that met the new registration standards – they were'uneconomic' in terms of the required management time. Some landlords and agents attempted to reducethe difficulties attached to HMO management by only letting such properties to single men over the age offorty. However, for the most part, demand groups for HMO lets were considered to be chaotic, unreliable,unlikely to stay for long periods and problematic in terms of the attention needed to keep a HB/LHA claimon track. Some benefit landlords who had operated HMOs for some time had begun to use profits from thesale of these properties to purchase better quality flats and houses that were more firmly placed in themiddle market PRS, and where the letting could be to nicer tenants.

This gradual shift up-market meant that fewer lets might be available for LHA tenants seeking sharedproperties. Where landlords and agents were able to comment on the purchasers of HMOs, three commonthemes emerged: that HMOs were bought by relatively inexperienced landlords, who were unaware of thehigh management cost of such properties; that the HMOs were being converted into better quality self-contained flats; and that the properties were being re-converted to family homes for sale on the owneroccupied market.

Growth in Demand for Rental Property

The introduction of the LHA regulations certainly increased the general unwillingness to let to benefitclaimants, but this situation was to some degree 'enabled' by the growing numbers of alternative rentersin the Pathfinder areas. Only two of the respondents who said that they were decreasing their LHA letscommented that alternative tenants were hard to find. One of these was in Coventry, in a location wherefew other tenants would choose to live: Working people don't want to live round here, so there's alwaysa place for housing benefit tenants. Similarly, a respondent from North East Lincolnshire made the pointthat house prices in the area were so low that working tenants could invariably afford to buy, leaving therental market almost wholly comprising benefit claimants.

However, in the majority of areas, a combination of economic upturn and house price increases had led toa growing demand for rental property from working tenants and, in some areas, from migrant workersparticularly from Eastern Europe. One landlord letting in a poor area in Leeds said that If I wanted to, I couldget rid of all my benefit claimants and go on to working tenants. The rents in the area were low, and thatsuited the migrant workers. Another landlord said that, despite getting perhaps £10 a week less on eachproperty from the migrant workers in rental income, they were regular payers, and so were much lessproblematic than benefit claimants.

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Limitation in the Supply of Affordable Property to Let

A second, associated, trend was the reduction in supply of properties that came about through increasesin house prices, fed in part by demand for properties from buy to let investors. For benefit landlords inparticular, there was a clear financial equation linking the rental yield that could be accrued from a LHAletting and the value of the property being let to the tenant. For many landlords who had been in the lettingbusiness for some years, there was no clear link in this way, since the mortgages had long been paid.However, where benefit landlords were looking to increase the properties they were letting in the LHAmarket, increasing house prices had effectively curtailed expansion plans. In Edinburgh, for example, onelandlord considered that the monthly LHA income for the properties he generally dealt with was around£570. This monthly income would support the mortgage on a property value of up to £130,000. However,in Edinburgh at that time, it was virtually impossible to buy properties at that price. Even two or three yearspreviously, he had been able to purchase properties for let to LHA claimants at £85,000, which had, to usethe phrase most common amongst the landlords and agents, stacked up nicely. Thus landlords and agentswho were more than willing to continue letting to LHA tenants, and who generally recognised a gooddemand for property from that group, were largely unable to meet that demand because house priceswere too expensive to make the exercise cost-effective.

The Sponsorship of Vulnerable LHA Tenants

A third, more complex, development also reduced the supply of property to the wider pool of LHAclaimants. In more than one of the Pathfinders, specific initiatives or schemes were in operation thatencouraged landlords and agents to remove properties from the 'open' LHA letting market, and restricttheir use to agencies seeking to accommodate particular vulnerable groups. There were perhaps three orfour examples of this type of initiative that were mentioned by landlords and agents. First, some landlordscited various charitable bond schemes that aimed to accommodate homeless families by offering aguarantee in lieu of a deposit, and where the landlord or agent was assured that it could be so arranged thatthe tenant's LHA would be paid direct to the landlord or agent by the local authority for a period of perhapssix months or a year. Second, a scheme operating in Leeds and mentioned by respondents in that areaaimed to accommodate homeless households in temporary accommodation. The scheme again couldarrange rent to be paid direct to the landlord or agent, and guaranteed the rent to the landlord for a 12-month period. In addition, landlords and agents also mentioned arrangements that had been made withsocial services to accommodate vulnerable young people leaving care, and asylum seekers.

The impact of these schemes on property availability to the wider benefit market was most marked inEdinburgh. Here, the council was operating a scheme that used a solicitor's office to arrange five-yearleases with private sector landlords, to secure properties that could be used by the city council'shomelessness section to accommodate households in housing need. Three respondents mentioned thescheme, all from slightly differing perspectives. One benefit landlord, who generally let her property tobenefit claimants and often used the Cyrenians' Rent Deposit scheme, had let three of her fourteenproperties through the local authority's scheme and would probably let more if it proved successful.Another non-strategic, single-let landlord had decided to purchase a property purely in response to thescheme, and had come to an agreement with a bank that a mortgage would be made available if he found

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a property at the right value to make the deal stack up. He had, incidentally, arrived at the erroneous viewthat the scheme would pay £100 above market value for properties that were leased to the council andclaimed the initiative too good to be true. Finally, a wider market operator, who was also a propertyinvestment consultant, noted that he had advised his clients to purchase property to be offered to thecouncil. In his view, you hand over your flat and forget about it for five years. In discussion about thepossible impact of the scheme on the local housing market, the view was taken that it would absorb ex-council lets, or properties in less desirable areas of the city and reduce the supply of properties to benefittenants who were not 'sponsored' by the leasing scheme.

In some senses, the operation of the schemes had had the unintended consequence of creating additionalcompetition for properties at the bottom end of the sector, with statutorily homeless households, acceptedonto various schemes, competing with other LHA-dependent households for a dwindling supply of rentalproperty. The LHA regulations meant that the 'sponsored' tenants carried the edge, since their sponsoringagencies were in a position to arrange direct payment of benefit to landlords.

Conclusions

This chapter indicates that the LHA regulations were just one of a number of factors that contributed to areduction in the supply of properties that might be available to tenants in receipt of the benefit. It shouldbe stressed that the research method did not allow for contact to be made with 'new' landlords or agentswho might be entering the market purely to let to this group. Anecdotal evidence exists of individualentrepreneurs entering the market to purchase properties to let at the higher LHA rates.

It might be argued that, overall, a general upturn in the rental sector was as influential as the LHAregulations in prompting landlords and agents to seek tenants outside the benefit market. Even propertieslocated in 'undesirable' neighbourhoods had new demand groups in low-paid migrant workers looking forcheaper rents. A perhaps more worrying trend was the use of the vulnerability clauses in the LHAregulations to give some advantages to homelessness tenants seeking privately rented property. As oneagent commented, he was evicting tenants for rent arrears, but they were returning to him as homelesscases, but under guaranteed rent. Had the LHA not been in operation, the tenant may not have fallen intorent arrears, and so experienced the stress of having to declare themselves homeless.

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Chapter 9: Conclusions

Introduction

The LHA carried the intention of changing the relationship between the tenant and their landlord or lettingagent. Under the previous HB system, it was possible for the tenant to be unaware of the level of rent thatwas being paid on their behalf by the local authority, which sent the payment directly to the landlord oragent. The regulations were thought to have 'disempowered' the tenant, who tended to be sidelined in arelationship dominated by interaction between the local authority and the landlord or agent. Thisdisempowerment meant that HB tenants were not in control of their principal negotiation tool, that is, therent.

In response, the LHA introduced two new measures. First, that the tenant is more fully aware of the levelof support they will receive, through the institution of standard allowances for household types, payablewhatever the contractual rent being charged by the landlord or agent; and second, that in normalcircumstances, the tenant will be expected to take responsibility for paying the rent themselves.

This final chapter offers a summary review of landlords' and agents' responses to the new regulations, andindicates that the impact of the LHA has not been uniform across the whole rental market.

Letting to Benefit Claimants

It is perhaps worth stressing even at this stage that the introduction of the LHA has been hardly noticed bymany landlords, operating at a small scale in either a non-commercial or non-strategic fashion. Theselandlords constitute a large part of the rental sector, but generally operate without clear or routine lettingpreferences, and generally respond to benefit legislation in an ad hoc fashion, depending on thecircumstances of the tenant they have at the time. The LHA has neither encouraged nor diminished thedesire of these landlords to continue letting to benefit claimants.

However, in the more firmly commercial letting market, landlords and agents are generally unwilling to letto people in receipt of benefit: this attitude generally predates the introduction of the LHA. There is a broad– but not universal – presumption amongst landlords and agents that a household in receipt of benefits issomehow intrinsically flawed, and lacks the ability properly to organise their affairs. Even where thispresumption is not made, there remains a widespread dissatisfaction with the administration of thefinancial support given to low-income families to pay the rent. As a consequence, benefit claimants areoften in a marginal position in the wider rental market.

There are two circumstances in which landlords and agents let to tenants. Even landlords and agents whowould be highly unlikely to take on a benefit claimant as a tenant often find themselves in a situation wherean existing tenant's change of circumstances means that they have to apply for benefits. Often, experienceof difficulties with benefit administration at that point underlines the general unwillingness to becomeinvolved in this kind of letting. The LHA has had no positive impact on this situation. Under the previous HB

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regulations, it was possible for tenants to arrange for the benefit to be paid to the landlord or agent, andthe majority of the wider market operators saw this regulation as the only advantage to be drawn from atenant's change of circumstances. The loss of work coupled with an inability to guarantee a rent paymentdirect to the landlord by the local authority was generally more likely to mean that the wider marketlandlords would seek repossession of the property if the tenant got into difficult with arranging rentpayments.

Letting to claimants also takes place in the context of landlords and agents developing portfolios largely tocater for that market. For landlords and agents dealing with benefit claimants routinely, the LHA has againhad little positive impact. Benefit landlords are adept at understanding regulations and accommodatingchanges within their general management practices. The change with regard to direct payments meantthat some landlords and agents altered their rent collection methods, with little reported difficulty.However, in order further to mitigate the risk of arrears occurring, the benefit landlords were often lookingto let to fewer benefit claimants, and sought to alter their portfolios in order to increase their holdings ofbetter-quality lets for working tenants.

There was a general awareness that the reduction of lettings to LHA claimants was beginning to reduceclaimant choice in the PRS. It was commented that some claimants were staying longer in tenancies, sinceit was not always likely that they would be able to secure any alternative accommodation. Providing thetenant continued to pay the rent on time, landlords and agents were happy for the tenants to stay and, insome instances, for the tenant to continue to receive any excess payment that might accrue.

Rent Setting

The introduction of a flat-rate payment has had the most substantial impact amongst landlords and agentswho routinely let to benefit recipients. Wider market operators were much more likely to set their rents atmarket levels, and to be unaffected by the level of support a low-income tenant was likely to receive fromthe local authority. Benefit landlords, on the other hand, were generally aware of the benefit levels payableon particular properties or, following the introduction of the LHA, for given household types. Rents werebeing pegged at the LHA levels in many instances, and existing tenants could find that their rents werebeing increased. However, there remained within the benefit market an unwillingness to charge the fullLHA rate for property that was deemed simply not worth the payment either because of its condition, sizeor location.

The Market Contexts

The small number of interviews that were completed in each Pathfinder area means that it is not possibleto offer any direct comment on the impact of the LHA in each area. However, it is clear that a general upturnin the housing market has influenced all the Pathfinder areas, and even in benefit-dominated markets,some landlords and agents are increasingly able to find working tenants. Often, demand for low-costrental is evident from migrant workers from Eastern Europe. Landlords and agents who are willing and ableto stay in the benefit market report difficulties in expanding the size of their portfolio, because increasedhouse prices have also increased the rental yield required to meet the mortgage costs, and the LHA rateswere no longer sufficient to make the deals economic.

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Appendix 1: The Landlord and Letting Agent QualitativeTopic Guide

Local Housing AllowanceQualitative exit interview with landlords/letting agents

STRESS that the interview is confidential and no-one outside the evaluation team will see notes from theinterview, or know that the interview has taken place. All reporting will be anonymised.

Lettings History

This section aims to understand how the landlord/letting agent came to be letting: was it accidental,intentional or a situation that simply developed without the recipient actively seeking to become a landlord.Time taken in this section will vary substantially, depending on respondent's experience in the sector, butallow no more than ten minutes on this section.

How did you come to be letting property originally?

- in what year did they start letting?

- was it intentional (eg made an active decision to let property); or accidental (eg throughinheritance).

How many properties did you start with?

How did that develop, over time?

- has the portfolio generally expanded, and was that a while ago or more recently, andwhat facts fed into that expansion

- explore intent (for example, was it to become a full-time landlord; to have the propertiesticking over and make money through property value increases; to accrue additionalincome?)

How many properties do you have now?

Do you have lettings outside this local authority area?

NOTE: We will have details on the landlords' portfolio from the qualitative surveys, but you need toask about portfolio size in order to gauge the scale on which they operate and so tailor questionsaccordingly. If they have lettings outside the Pathfinder area, allow them to give comparison onexperience where it seems appropriate.

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History of Dealing with Housing Benefit

This section explores the respondent's dealings with housing benefit prior to the introduction of LHA.

Can you recall your first experience with letting to someone on Housing Benefit?

- when was that – year

- the circumstances (eg set out to target that market; bought a property with HB tenant;an existing tenant shifting onto Housing Benefit; taking on someone who said they wouldbe applying for Housing Benefit?)

Do you recall that it introduced any new difficulties, or was it pretty much the same as yournormal letting practice?

How did you then view letting to other people on Housing Benefit?

Can you describe how you found working with Housing Benefit, before the LHA came in (eg fairlystraightforward, once you know the ropes; always difficult; some difficult cases depending on the tenant)

IF NOT MENTIONED

Was it your practice always to have the Housing Benefit paid direct to you?

- explore their response in either case

Did you make any exceptions, in either case?

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Current Dealing with LHA

This section reviews the respondents' current dealings with LHA, and assesses the extent of their directexperience of the new regulations.

Thinking now about the LHA, do you recall when you first heard about it? And what did youthink about it?

- check: where did they get information from

When did you first have direct experience of dealing with LHA yourself?

- explore circumstances: was it an existing tenant shifting over, or a new tenant?

What was, to you, the most immediately different thing – if anything at all – about the newregulations? (eg absence of RO referrals, fixed allowance, speed of decision making, change to directpayments)

With hindsight, would you say your initial conception of the LHA was accurate?

How many of your tenants would you now say are on LHA?

And how many of your tenancies would you say have begun and ended under the LHA?

- check here how many complete tenancies have begun and ended under the LHAregulations (they may have had just one or two tenants making new applications andtherefore limited experience of the whole process)

What usually happens with the first LHA cheque? How would you prefer the first cheque to bepaid?

We'll talk about arrears in a moment, but have you ever tried to arrange to have LHA paid to youbecause any of your tenants have been deemed vulnerable?

IF YES: Could you tell me about it?

- check: circumstances of vulnerability; what the landlord actually did in demonstratingvulnerability; how the local authority handled the application; the outcome; satisfactionwith the process and the outcome.

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LHA and Management Practices

We know very little about landlords' actual management practices with regard to what they do on a day-to-day basis, and which elements of their work absorbs the most time.

How much time in a week, say, would you spend on landlord-related activity?

- nb: if they are a sideline landlord, the respondent might not spend much time at all onletting activity, ditto if they use an agent

In that time that you spend as a landlord, what activities take up most of your time?1

Would you say this is different to how you spent your time prior to the LHA?

- invite the respondent to explain any differences, and reasons for these

1 A 'showcard' is appended at the end of the topic guide. If we don't give them a list, they'll probably forget to consider some things – inparticular, landlords often forget general business administration. Let them quickly talk through how long they take on each of the things listed.

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Choosing Tenants and Setting up Tenancies

Under the LHA it is now more likely that landlords letting to LHA-reliant tenants will look to minimise the riskof rent arrears, perhaps by choosing tenants more carefully. It's also the case that tenants are now moreable to 'hide' that they are in receipt of the benefit.

Would you attempt to find out if a prospective tenant is on LHA before deciding whether to let to them?

Do you think you have to be more careful, choosing a tenant who is on LHA, or is it pretty muchthe same as under the old regulations?

Do you think it's now easier for a tenant to hide the fact that they get LHA?

- has this ever happened to you? What happened? (eg, did they ask the tenant to leave?Had no problems with the tenancy)

Have you made any changes to the way you deal with deposits (also called bonds)?

- what change have you made to your usual way of dealing with deposits? (eg check ifcharges more or less than before; or more likely to charge a deposit than before)

Have you made any changes to the way you deal with rent in advance?

- what changes have been made (eg if they charge this now but didn't before; or whetherthey now more than a month in advance)

Are you flexible on either of those payment?

- in what circumstances would they waive the payment?

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Rent Setting and Rent Collection

This section reviews the way landlords set the rent for their properties, and explores how far LHA rates playa role. It also examines practices with regard to shortfalls and excesses, and any changes to rent collectionmethods.

When you decide to set the rent for your properties, what principles do you generally work on?

- (eg, setting a 'market' rent; ensuring that costs are met; setting at the LHA rate)

Do you set the rent differently, if you know a prospective tenant is on LHA?

- in what way?

Prior to the LHA, what was your practice with regard to any shortfall between the rent you set,and the housing benefit the tenant received?

- (eg collected it every month, collected it sporadically, generally waived it)

- was that always the case, or did it depend on the tenant?

Has your practice with regard to any shortfall changed, with the introduction of the LHA?

Do you know if you have any tenants receiving excess payments of LHA, over and above the rentyou charge?

How do you generally view that excess payment?

- (eg, is it the tenants', or should it all go to the landlord?)

- have you come to any agreements with tenants about the excess payment?

Have you made any changes to your rent collection methods?

- reasons for change

- shift from and to which methods

- any increased cost in new methods (eg extra staff, use of an agent)

- any increased time required in managing the new methods

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Rent Arrears Under LHA

An increased experience of rent arrears was indicated in the interim survey. In order to understand morefully respondents' experiences, this section deals specifically with the issue.

Thinking now specifically about LHA, one fear with the regulations has been that increasing theincidence of payments to tenants will lead to arrears. What is your view on the matter?

- this question elicits general opinion on the issue, which you can then probe in moredetail:

MUST CHECK all the following:

- how they define arrears themselves

(NB some landlords or letting agents may count a LHA processing delay as an arrear; some may also includenon-payment of shortfall as arrears. In order to get a common definition, ask them here specifically aboutcases where tenants – once LHA has been paid to them – have failed to hand over the rent.)

- how many tenants (if any) have you had with arrears who you know were in receipt ofLHA

- roughly, what proportion of your current LHA tenants is in arrears?

- what is the worst level of arrears you've experienced with a LHA tenant?

- what action do you take when arrears first occur?

- have you ever contacted the local authority about it?

if no: why not? And what other course of action do you take?

if yes: what happened? (eg were they advised they could have the payment transferredto them? Was any excess made over to reduce the arrears? What happened then?)

- have you ever asked a tenant to leave because of the arrears?

- what happened? (eg was the tenant evicted; was a particular piece of legislation used?;do they know what happened to the tenant?; did they let the property again to anotherLHA tenant?)

What would you say, from your point of view, is the best course of action for a landlord or lettingagent faced with arrears?

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LHA and Letting Preferences

This section explores how far LHA has actually influenced letting preferences, the ability to 'operationalise'preference and any consequent portfolio changes.

Have you changed your letting preferences or letting practices with regard to who you let tosince the introduction of the LHA?

- particularly are they letting to more or fewer LHA tenants?

IF LETTING TO MORE LHA TENANTS:

- why is that the case? (eg more of that kind of tenant around; more transparent system;more generous allowance)

- have you taken on more properties as a consequence?

- have you taken on more properties for any other reason?

- what kind of properties have you taken on?

- do you know if they were previously let to Housing Benefit tenants?

IF LETTING TO FEWER LHA TENANTS:

- why is that the case? (eg difficulties with LHA administration; other tenants available)

- have the new kinds of tenants changed the way you manage your properties? (eg needto 'upgrade' properties and deal with repairs; other ways of collecting the rent; differentmethods for advertising properties)

- have you sold any properties since the LHA was introduced? Was the LHA the reason?

- have you any feel for the kind of person who bought the property (eg, is it now in theowner occupied sector, still in the private rented sector, and do they know if they it's stillbeing let to LHA tenants?)

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Future Intentions

This last, wind-up section invites respondents to consider if the LHA will change the way they will deal withtheir property in the future.

In the future – perhaps over the next two years or so – how do you think your lettings practicewill develop?


- any (further) changes to management practice

- portfolio size

- property type

- tenants.

Do you think your motivations for being a landlord will change?

- (eg, will look to capital gains rather than rental income).

Are there any wider changes that are likely to influence your lettings and property investmentdecisions over the next two years?


- anticipated shifts in the rental market

- introduction of licensing regime

- other local housing policies

END

Is there anything you would like to add?

THANK very much for their time, for this and their responses to the qualitative survey

NB: A copy of the final summary findings will be available, and will be sent to them. If they wantany further details about the research, I'm happy for you to give them my name, number andemail:

Julie Rugg, 01904 321484 or [email protected]

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Show Card: Landlord Activities

Finding tenants and arranging new tenancies

Dealing with queries and repairs in existing tenancies

Rent collection

Dealing with Housing Benefit administration

Ending tenancies – eg inventories and paying back deposits

General business administration – tax returns etc

Portfolio development – eg looking for new properties/selling existing properties

Other – please specify

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Appendix 2: LHA Evaluation Reports Published to October2006

1. Evaluating the Local Housing Allowance Pathfinders.

2. The nine Local Housing Allowance Pathfinder areas: a summary of the baseline position before theintroduction of the Local Housing Allowance.

3. Claiming Housing Benefit in the Private Rented Sector: the baseline experience of claimants in thenine Local Housing Allowance Pathfinder areas.

4. Landlords and agents in the private rented sector: the baseline experience in the Local HousingAllowance Pathfinders.

5. Delivering the Local Housing Allowance: a summary of the early experiences of implementing theLocal Housing Allowance in the nine Pathfinder areas.

6. Receiving the LHA: claimants' early experiences of the Local Housing Allowance in the nine Pathfinderareas.

7. Working with the Local Housing Allowance: landlord and agents' early experiences of the LocalHousing Allowance in the nine Pathfinder areas.

8. Fifteen months on: an interim evaluation of running the Local Housing Allowance in the ninePathfinder areas.

9. Living with the Local Housing Allowance: claimants experiences after fifteen months of the LocalHousing Allowance in the nine Pathfinder areas.

10. Local Housing Allowance final evaluation: implementation and delivery in the nine Pathfinder areas.

11. Local Housing Allowance final evaluation: the survey evidence of landlord and agents experiencein the nine Pathfinder areas.

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References

Crook, A. D. H. and Kemp, P. A. (1996) Private Landlords in England, London: HMSO.

Elsmore, K. (2000) Market of desperation: housing benefit shortfall and private tenants in Brent,unpublished report by London Housing Unit: London.

Office of the Deputy Prime Minister (2000) Quality and Choice: A Decent Home for All, London: ODPM.

Rhodes and Rugg (2005a) Landlords and Agents in the Private Rented Sector, London: Department forWork and Pensions.

Rhodes and Rugg (2005b) Working with the LHA: Landlord and Agents' Experiences of the LHA in the NinePathfinder Areas, London: Department for Work and Pensions.

Thomas, A. and Snape, D. (1995) In from the Cold: Working with the Private Landlord: London: HMSO.

Walker, B. (2005) Delivering the LHA: A Summary of the Early Experiences of Implementing the LHA in theNine Pathfinder Areas, London: Department for Work and Pensions.

Walker, B. (2006) Delivering the Local Housing Allowance in the Local Authority Pathfinders: AnEvaluation, London: Department for Work and Pensions.

Walker, B. (2004) The Nine LHA Pathfinder Areas: A Summary of the Baseline Position Before theIntroduction of the LHA, London: Department for Work and Pensions.

local housing allowance final evaluation: the qualitative ...housing benefit in payment – this is...

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