30th Percentile Estimates for April 2011

Below are the estimates based on the new weekly rates of housing benefit by each local authority.  Named by the government as the 30th Shadow percentile they are a benchmark for the new lower rate of LHA to be introduced this April for new tenancies.  The 30th percentile rule will affect existing tenancies in January 2012, when they will be applied to all existing claimants of housing benefit.

Benefit claimants will no longer be able to keep the £15 excess limit on housing benefit and the single room living allowance will be raised from 25-year olds and under to 35-year olds.   Legal 4 Landlords researchers have been corresponding with local authorities on behalf of their landlords and affiliated letting agents regarding the impact of the cuts.  As a result, it’s impossible to illicit any outcome with certainty, but the Legal 4 landlord team believe the estimated loss of £600 per year, per average property may be a lesser amount when compared with the cost of eviction.

To issue a notice 8, a tenant must be at least 8 weeks in arrears if paid monthly, to issue a notice 21, the tenant must have come to the length of the term on their tenancy and 2 months notice is given to the tenant regarding eviction.  After this time, you may apply for a possession hearing, but even if granted, if the tenant has not yet vacated, you must again apply to the courts for a bailiff warrant.

If the tenant is receiving LHA payments direct and they are faced with a notice 21 or 8, there is every chance that a landlord will not receive the rent, with a lengthy eviction process, legal costs and impending county court closures causing longer hearing times, the cost for a landlord could potentially run into thousands, and this is without rental voids while awaiting a new tenant or any redecoration.

While ministers for the DWP are offering incentives to landlords to lower rent for housing benefit claimants in exchange for direct payments, it may be worth asking your local authority if the 30th percentile cap applies and if the landlord complies with this cap, will it comply with the direct payment incentive.  Obviously this advice may be of benefit to landlords with one or a few properties, but for those with a large portfolio and a high rate of tenants in receipt of housing benefit the consequences could be devastating.  Whichever route landlords decide, it’s of significant importance to weigh up all the options first.

Click Here For Local Authority Calculations