LHA has been reduced so going to struggle - what's my best option?

ElleWoods

I work part time and receive some Local Housing Allowance (LHA) to help pay my rent. I currently pay £500 per month to rent a 3 bed terrace privately, and as there is only myself and my 4yo son (plus cat!) living there, I only get the 2 bed rate of LHA, which is fair enough. My LHA has just been reduced by £12.23 per week, which means I now need to find an extra £53 per month. It’s really frustrating as I was just getting back on an even keel financially by making lots of cut backs, shopping at Aldi, changing utilities etc., and there’s not much else I can cut out to make up the extra £53. I'm really going to struggle to find the extra money.

So, I need to make a decision. My tenancy agreement is for 24 months and ends in August this year, when it will move on to a rolling contract with one month’s notice from either party. I have a fantastic landlord and really like the house but I can’t really afford to stay where I am given the decrease in my LHA payments. It seems I have the following options:

1. Discuss the situation with my landlord, and hope he will offer to reduce the rent slightly in order to keep a decent tenant in the property. However, obviously I’ll need to report the change in rent and will be reassessed, which may well mean that my LHA will drop even further as I’d be paying less rent, if that makes sense. I’d also still be on the 2 bed LHA rate in a 3 bed house.

2. I look for a 2 bed property in the same area and move. This would be cheaper to rent by around £25-50 per month, and I’d then get the 2 bed rate of LHA. However I will incur removal fees and may have to pay agency fees if I rent via an agency next time (I currently rent direct from the landlord, so no agency involved), so would have to bear that in mind. I’ve also heard some horror stories about letting agencies but realistically I expect it depends on the agency/branch.

3. I try to get a council property. I’d say this is the least realistic option as in my area the waiting list is huge. I only joined the waiting list last May so by the time my tenancy ends in August I’ll only have 15 months’ waiting time, which won’t be enough waiting time for most of the properties that are advertised. They are also let via a bidding system so I’d have to fight with dozens, possibly hundreds, of other people for each property as so few properties come up.

I need to stay in the same area as my son is settled at a localschool and my parents (who do the school run on days I work) live nearby. So what would you say is the most financially-savvy option? Are there any other options I haven’t considered that I could look at? All advice greatly appreciated.

ElleWoods

Excuse the different font size of the last para - it won't let me change it. That'll teach me to write in Word then copy and paste!

RAS

What is the LHA allowance for a 2 bedroom house? That is the maximum you will get and if the LL reduces the rent but it is still above the LHA, your benefit will not change.

CloudCuckooLand

Hopefully option 1 will work. If not;

4. Get a lodger ?
5. Boost your hours when son starts school ?
6. Get assistance from the father ?

Jowo_2

I know you've already cut back but do have one more sweep through the site for ultra thrifty/frugal tips. Download the MSE budget planner and see if you can shave off that £53 quid with more belt tightening.

I know that the withdrawal rate of benefits when it is replaced by earned income is steep and often hard to fathom but that £53 per month represents around 16 hours of income on the National Minimum Wage. You can model the impact of employment income on your benefits on the Turn2us online benefit calculator.

There's Up Your Income sections on both the forum and general site.

You can apply for Discretionary Housing benefit but obviously that's not something that you can count on. When does the LHA reduction take effect?

http://www.moneysavingexpert.com/family/housing-benefit

Doozergirl

I'd speak to the landlord. Don't wait for him to offer - ask. Even if you
Can compromise halfway, remind him that it costs a lot
Of money to find a new tenant and it's possible that he'll lose rent with
It being empty. Reducing the rent slightly could easily cost less than finding new tenants. Offer to sign a new long term agreement now, perhaps, for his security. Sorry for funny writing, on my phone!

ElleWoods

Thanks everyone, it's interesting to see that no-one has suggested I go with moving! I was surprised as I thought most would say to move to a 2 bed house. The reduction takes effect immediately. I can't get a lodger as it's a rented property and I can't sub-let. My job is set hours so I can't increase them, in fact there have been lots of redundancies over the past couple of years so I'm a bit worried about it, but we'll see what happens there - no point panicking until necessary. My son's 'father' pays only £12.50 per month but that's another thread. He never bothers with my son - has never even seen him - so he's hardly likely to cough up more. It took the CSA 3 years to get that out of him.

I'll look again at ways to reduce my outgoings but I'm throwing any spare cash at the last debt I have to clear - only £1500 to go (was over £7500 a few years back so I've done well considering my income is low) - once that is cleared I'll have some spare cash but it will be about another year before that's cleared.

I'll definitely ask the landlord about the possibility of reducing the rent. Not sure how that will go as I negotiated to get it reduced from £580 before I first moved in. I've got a few months to discuss it with him and if he says no, I can look again at my options.

Thanks again everyone.

Jowo_2

Cuba_Cat wrote: »

...
I'll look again at ways to reduce my outgoings but I'm throwing any spare cash at the last debt I have to clear - only £1500 to go (was over £7500 a few years back so I've done well considering my income is low) - once that is cleared I'll have some spare cash but it will be about another year before that's cleared.

.

Go the Debt free wanabee board and they'll review your situation to advise how to manage it. You are saying that you struggle to find the £50 loss of LHA each month but you are paying more than twice that to service a historic debt. Perhaps your creditor will accept lower repayment? Or perhaps there is another way to handle the debt. The DFW members will advise.

dancingfairy

If your debt busting has to stop so you can afford a roof over your head then so be it - you may need to consider a dmp with one of the debt charities or if on a dmp then reduce the payments - not much fun but better than having problems with housing.
I don't know what the status is with the debts but if you are already on a dmp then you estcould consider making full and final settlements. If you credit rating is semi-decent then maybe try getting a 0% deal or life of balance deal.
Best of Luck
df

ElleWoods

I only have £1500 left to pay so is there any point doing a DMP? I don't think they'll accept me anyway - I thought they were for people with major debt (over ten thousand)? I can make a lower payment to my credit card but to be honest I want to get rid of the debt ASAP, as it's been hanging over my head for long enough (4.5 years), so I chuck as much as I can at it, however it's a good idea to reduce the payments if I need to in order to get the £53 back. The CC is already on a 6.5% life of balance deal. I don't have the credit rating to get a 0% card, I tried last year and was rejected.

Blacksheep1979

different/other/additional job? Deliver free newspapers?