In 2008 we introduced a service for both tenants and landlords to bring greater certainty to the payment of rent for those in receipt of Local Housing Allowance (LHA).
The advent of LHA payable to tenants rather than direct to landlords introduced a degree of uncertainty for landlords. For some tenants, it also gave them additional responsibilities and concerns that they did not wish to manage. Mixing LHA payments in tenants’ general bank accounts means that there is a risk of inadequate funds being available for rent payments on the due day. Often there are other pressures and claims on their funds (sometimes outside their control) that reduce bank balances below the required level.
How does the Scheme Work?
The tenant becomes a member of the Credit Union and opens a specific “LHA” account. Their LHA is paid direct into this account.
From details given by the tenant, we then pay (via BACS) the appropriate rent to the landlord, generally within 1 working day of receipt. The “LHA” account is specifically for that purpose and, whilst the tenant is always entitled to withdraw money before rent is paid, in practice this is difficult to do before the rent money has been paid out. Additionally, because of the personal service we offer, tenants always have to speak to a staff member before making a withdrawal .
If a planned withdrawal would prevent a rental payment, we strongly advise against it.
If a tenant’s LHA does not cover their rent they are given a Paypoint card to enable them to make the necessary top up.
If a top up is not made the landlord will receive the LHA monies in the tenant’s account.
If LHA exceeds the agreed rent then the tenant can withdraw the excess after rent has been paid.
In some circumstances tenants may have access to a property on the understanding that they save for deposit during occupancy. Our scheme provides a vehicle for tenants to do this. Sums saved are automatically paid over to landlords at agreed dates.
We are a community-based organisation and part of the global credit union movement which promotes responsible money management. We have over 1100 members in the Hastings & Rother area and process over £1.0 million of community funds every year.
Credit Unions in the UK are subject to regulation and monitoring by the Prudential Regulatory Authority (PRA) and the Financial Conduct Authority (FCA).
We were a national trailblazer with this scheme, which has now been operating for over five years. We have made many thousands of individual payments to landlords. Many Credit Unions across the UK have now adopted the scheme.
By closely monitoring fortnightly LHA payments, we have averted many potential difficulties between tenants and landlords when there have been sudden (sometimes temporary) changes in benefit levels. Landlords know they can trust us to pay over
benefits. Tenants know they do not have to worry about the rent being paid.
What is the cost of the Scheme?
We are a “not for profit” community organisation but have to make a charge for providing this service to cover our costs. This is £7 per month per tenant which
covers up to two rental payments per month. This is borne by the landlord as a deduction from rent payable.
What do Landlords say about us?
“Thank you for your help. Every landlord should use your service”
“Many thanks for all your assistance over the past year”
“I insist all my tenants join the Credit Union scheme”
“Thank you for the excellent feedback. Compared to the potential cost of an
eviction the cost of the service is a drop in the bucket”
“I recently took on a new property and tenant. I knew immediately that your scheme
would help protect my interests”
The information on this page is available as a leaflet here.