Letting expert reveals inadequacies of LHA could be good news for London landlords

Letting expert David Lawrenson reveals that the Local Housing Allowance (LHA) is throwing up some interesting anomalies that can be good news for London landlords.

This is because the Rent Service who have responsibility for setting rents under the LHA identifies a series of Broad Rental Market Areas (BRMA). For each BRMA there is a single rent payable for property within these areas depending on the type of rental accommodation. The exact figures payable are now available online through the Rent Service's LHA DIRECT website meaning that landlords can identify how much rent they would get in letting out a buy-to-let property to a tenant on benefit.

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David highlights in a recent blog post that some savvy London landlords are exploiting the fact that the Broad Rental Market Areas do not always make sense in property valuation terms. He highlights the case of a landlord in Acton who is making hay having bought a property in Acton for £1.2 million and letting for £144,000 a year - all rent paid for by the LHA. This represents a yield of 12%.

This is a good example of the daftness of the way the Rent Service sets LHA rates.
Here it is a high rate because it is worked out on the BMRA rate for the whole of Westminster, a considerably more expensive area overall than Acton.

Clearly this is probably not the only anomaly likely to be out there and no doubt there are some London landlords and landlords across the UK that exploiting the discrepancies in BMRA rates within their local areas.

There are as we have reported many downsides for landlords of the LHA.

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