Housing benefit expert Bill Irvine takes a look at what the future holds for housing benefit payments…
Much of the media focus just now is on Universal Credit with laser precision. Based on the recent Guardian revelations it’s looking ever more likely, the planned national rollout will be delayed until after the 2015 General Election. By that date, it’s anticipated no more than 25,000 of the simplest Jobseekers’ Allowance cases will have been transferred via the Pathfinders, compared to the initial target of 12 million by 2017. To date just over 2,000 have claimed Universal Credit, whereas the Coalition first estimated one million in year one.
Pushing back the date in this way, and considering the complete lack of confidence in the ability of the Department for Work and Pensions (DWP) to deliver, it appears housing benefit will continue to be a critical source of revenue for housing associations and private landlords, way beyond its planned abolition date of 2017 – good news for a change!
Currently, housing benefit accounts for some £16 billion in revenue for association tenants, producing between 40-65 per cent of rental income, with 95 per cent of payments going direct to associations – the preferred method by tenants. Similarly, £8 billion is paid to private tenants with around 30 per cent nationally paid direct to landlords.
The likelihood of all this continuing beyond 2017 should be viewed as great news, as it will guarantee inter alia the four weekly housing benefit schedule of payments from councils, associated housing benefit award letters at the point of claim and end of tenancy, and the annual rent increase exercise will continue to follow the current automatic process thus avoiding the possibility of benefit loss (a concern arising from Universal Credit plans).
On the downside, housing benefit administration across the UK is poorer now than ever before; as cash-strapped councils cut back on staffing levels, critical training, use ‘call centres’, and significantly increase the rate of claw-back from associations’ housing benefit awards through over-zealous recovery of housing benefit overpayments. These claw-backs currently account for £1.3 billion in potential recoveries every year, usually at the expense of landlords; and, because there’s a clear correlation between housing benefit payments and rent arrears, all of this adversely impacts on private rented sector landlords and housing associations’ cash-flows and rent arrears levels.
In the past few weeks I’ve successfully represented landlords in a number of housing benefit overpayment appeal cases involving £23, 000, £11,000, and £7,000. In each case, I was able to repel the attempt by the council to recover the housing benefit overpayment caused by claimants as the law and case law (upper-tier judgements) support the position of landlords in these situations.
So why are councils being over-zealous?
Quite simply, doing so invariably ensures immediate payment, either in a lump sum or via deductions from ‘blameless tenants’. Councils employ ‘landlord indemnity’ statements and require private landlords and housing associations to agree to repay: “If they are paid too much housing benefit for any tenant they may have repay it and that the council can take the amount of overpaid benefit from the benefit they get for any other tenants.”
What most private and housing association landlords don’t appreciate is, councils also receive a 40 per cent bonus from the DWP from making such recoveries. The 40 per cent comes in the form of a ‘subsidy incentive’, designed to offset much of the costs of recovering from tenants, rather than landlords, as doing so can take years. But the ‘incentive’ is perceived by some council finance directors as an opportunity to generate much needed cash for the administering council, so they target the landlord instead. Councils will deny it, but as an ex-Government advisor, and CIH’s trainer, on this topic, for too many years, I can attest to what happens at the coal face.
Quite apart from the problems caused by overpayments, housing benefit sections are frequently slow to progress claims; often taking six, eight, or 12-or-more weeks to process claims (instead of two weeks) and are guilty of making schoolboy errors on ‘bread and butter’ issues such as:
- Who apart from the tenant (partner or non-dependant) can actually claim;
- Payment not being made from the date of liability, particularly in ‘passported’ claims (JSA, Income Support, Employment Support claims);
- Demanding to see evidence of income/capital when, in some cases (2passported”), this is not required;
- How ‘prescribed rules’ relaxing claiming times and reporting changes in circumstance are being overlooked or misunderstood; and,
- How claims are sometimes being suspended and cancelled unnecessarily, causing rent arrears;
As many social and private landlords may rely on 40-65 per cent of their rental income from housing benefit (higher in some cases) it’s critically important they make sure staff are properly trained on how best to maximise housing benefit (LHA) income, minimise the chance of tenants accruing rent arrears, comply with pre-action protocols/requirements, and avoid the significant costs of legal action for recovery.
I offer courses via the RLA and in-house. I can also mediate on your behalf and that of your neighbouring landlords and associations, with councils, especially where the main problem lies in the length of time it’s taking to process claims. The statutory period is two weeks, whilst the norm can be, as mentioned above, six-12 weeks. Acting on behalf of private rented sector landlords and associations, I have a track record of effectively reducing council processing times; and, through this, rent arrears levels.
Bill Irvine is a housing benefit expert and an RLA training adviser. A landlord himself, Bill was head of benefits and revenues at one of the UK’s largest councils. For more information visit http://www.hbadvice.co.uk/ or http://www.ucadvice.co.uk/. Alternatively, contact Bill by email at email@example.com, or by phone on 01698 424301 or 07733 080 389.