1) You would use the indicative rent level appropriate to the claimant’s needs or the size of the house, [b:326d3a1534]whichever is lower[/b:326d3a1534]. So, in the example given you would use 2. But if a family of 7 were in a property with two bedrooms and one living room, you would use the indicative rent level for a property with three rooms.
2) The requirement to use IRL comes from Reg. 93
[quote:326d3a1534] 93. Payment on account of a rent allowance
(1) Where it is impracticable for the relevant authority to make a decision on a claim for a rent allowance within 14 days of the claim for it having been made and that impracticability does not arise out of the failure of the claimant, without good cause, to furnish such information, certificates, documents or evidence as the authority reasonably requires and has requested or which has been requested by the Secretary of State, the authority shall make a payment on account of any entitlement to a rent allowance of such amount as it considers reasonable having regard to—
(a) such information which may at the time be available to it concerning the claimant´s circumstances; and
(b) any relevant determination made by a rent officer in exercise of the Housing Act functions.
[/quote:326d3a1534]
Basically, if a claimant has provided all the information required to assess the claim and you don’t have a valid rent officer decision at that time, there is a requirement to assess the claim on an IRL rather than making the claimant wait a number of weeks for the r/o determination.