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Housing Benefit (LHA) Overpayments – Stop council recovery abuse!

RLA
Written by RLA

The following testimony is taken from RLA housing benefit, consultant, and trainer Bill Irvine. Bill runs training courses for RLA members and private landlords who are looking to stay abreast of best practice when it comes to housing benefit tenants. The following exposition provides insight into ideal ways of approaching local councils regarding tenants overpaying landlords with housing allowances…

The following testimony is taken from RLA housing benefit, consultant, and trainer Bill Irvine. Bill runs training courses for RLA members and private landlords who are looking to stay abreast of best practice when it comes to housing benefit tenants. The following exposition provides insight into ideal ways of approaching local councils regarding tenants overpaying landlords with housing allowances.

Bill says:

“Every week my e-mail folder is full of landlord queries relating to a wide range of Local Housing Allowance (LHA) issues, including direct payments, suspensions, cancellations and overpayments. None of this is exactly new, but one issue currently stands out more than the rest; the number of overpayment cases where councils are seeking large recoveries direct from landlords, instead of pursuing the tenants, who invariably cause the overpayment in the first case!

So why should this be the case?

In earlier articles, I have alluded to how councils receive a 40% “subsidy incentive” on all overpayment recoveries from the DWP, and how this acts as a perverse incentive, undoubtedly influencing council Decision Maker’s attitude towards who should repay the LHA overpayment. For example, a £1000 or £10,000 recovery would attract a £400 or £4000 bonus respectively for council coffers.

Landlords are clearly viewed as a soft touch, unlikely to challenge attempts at recovery. In the past week, I dealt with 4 separate overpayment cases, where the landlords, assisted by me, all decided to challenge the decisions. Each was successful in having the recovery action set aside. In two of the cases, the landlords had already had the sums of £7,000 and £6,200 recovered through what the DWP calls the “blameless tenant” method i.e. monies due to other tenants were offset and deducted from landlord schedules, producing immediate recovery, with little effort, before the period of 1 month appeal had actually elapsed. Each will now be suitably reimbursed. In the other two cases, £2500 and £1700 the councils suspended recovery action following receipt of an appeal.

All four cases involved tenants vacating their tenancy without advising either the council or landlord. My clients all accepted “occupation of the home” as a requirement of entitlement and that HB/LHA could not be paid where the tenant is no longer resident at the address, even though the tenant’s rental liability to them continued until the tenancy was formally ended. However, they each maintained there was no reason to question the tenant’s continued occupation of the dwelling.  In one case, the Council found out via the DWP’s IT system, the tenant had secured another social housing tenancy 17 months earlier, in another district.

I reminded the councils, and subsequently two tribunals, that it’s the obligation of the HB/LHA claimant to notify the council, in writing, of any relevant change in his circumstances. He signed a statement to this effect before submitting his application form for HB/LHA. Clearly, this did not happen; otherwise, we wouldn’t have been dealing with this type of dispute. As well as notifying the council, the tenant was also under an obligation to provide his landlord with a month’s notice, in writing, to conform to the requirements of the AST agreement he had signed. He clearly failed to do this and also failed to return the keys to his landlord. In most cases, the tenant’s personal belongings remained in the property, reinforcing the impression he was still occupying.

With £1.3 Billion in Overpayments a year, relating to HB, it’s perhaps not surprising the issue has attracted many appeals and an associated body of caselaw. Whilst there are many examples to draw on, you really need to be careful and illustrate the decision’s relevance to the case you’re disputing. However, in cases like these, the UT Judges agree, the key to dealing with overpayments of this nature is to focus on what actually caused the HB/LHA overpayment and who actually caused this?

In each of my client’s cases, the cause of the Overpayment was clearly the tenant’s failure to report the change in his circumstances. Had he notified the Council there would, in all likelihood, been no overpayment. Interestingly, each council justified its position on the question of landlord culpability by claiming my clients could each have “reasonably have known” their tenant had vacated the property and had continued to accept payment even though they knew LHA was no longer legally payable. How and when exactly they were expected to have reached this conclusion was never properly explained.

In response, I cited some of the pertinent regulations & caselaw. One such case involved an Upper-tier decision CH/3165/2011 where UT Judge Marks ruled in favour of the landlord. He said:

1. Regulation 101(2)(a)(i) of the Housing Benefit Regulations 2006, as it stood between 10 April 2006 and 6 April 2009 provides that the prescribed person from whom recovery should be sought shall be “in a case where an overpayment arose in consequence of a misrepresentation or a failure to disclose a material fact (in either case whether fraudulently or otherwise) by or on behalf of the claimant or any other person to whom housing benefit has been paid, the person who misrepresented or failed to disclose that material fact instead of, if different, the person to whom the payment was made”.

2. It is plain in this case that the overpayment, at least until September 2008, arose because of the failure of the tenant to disclose the material fact that she had stopped living in the property. It is from her and not from TPM (landlord’s agent) that repayment must be sought of any repayments made up to then.

I put it to both the councils and tribunals that the facts and law relating to this UT case was very similar to the situation faced by my clients, and if they agreed with this, they should simply set aside the Council’s decision to pursue my client for recovery.

In each case, we could demonstrate:

  • The tenant failed in his obligations to notify both council and landlord by not putting in writing his intention to vacate and terminate his tenancy.
  • He had retained his keys to the property;
  • Most, if not all of his personal belongings, remained in the property;
  • The landlord could demonstrate having complied with the terms of the tenancy agreement by previously carrying out repairs/improvements to the property
  • The landlord had not infringed the tenant’s right to privacy and “peaceful enjoyment”.

As well as the general points above, each case had its own particular unique set of circumstances, which I alluded to. But I concluded each submission along the similar lines:

“Applying Judge Mark’s approach, liability for this overpayment should rest entirely with the tenant. He failed in his obligations to both council and landlord by not reporting his “relevant” change in circumstances. Clearly, he was the person who caused the overpayment and must be deemed culpable. In contrast, my clients fulfilled their obligations to the tenant by responding to requests for repairs/maintenance, and by not harassing the tenant and/or infringing his right to peaceful enjoyment. My clients maintain, had they known of his vacation they would have reported this matter immediately, and most probably re-let the property within days. Consequently, there was no financial incentive to withhold information. Equally, the onus is on the council to prove its case and this it has failed to do. It hasn’t produced any credible evidence to support its contention that my client could “reasonably have expected to know” of the tenant’s vacation. Consequently, my landlord client cannot be held culpable, should be exonerated from any blame, and relieved of having to repay the overpayment”.

If any landlord/agent experiences any attempt by a council to recoup an LHA overpayment, caused mainly by the tenant’s negligence – challenge the decision. Doing so is a relatively straightforward process, as long as you comply with the prescribed timescales. In one of my cases (17 month vacation) the landlord had simply accepted the need to repay, so delayed appealing by 10 months. In that case, we had to overcome the “late appeal” stage of seeking permission from the District Judge. Where the overpayment is less than £500 or £1000 you might wish to simply lodge an appeal and deal with the case yourself. Above that figure, I’d recommend you seek professional help.”

Bill Irvine

HB Advice & Advocacy

About the author

RLA

RLA

The Residential Landlords Association (RLA) represents the interests of landlords in the private rented sector (PRS) across England and Wales. With over 23,000 subscribing members, and an additional 16,000 registered guests who engage regularly with the association, we are the leading voice of private landlords. Combined, they manage almost half a million properties.

1 Comment

  • Local Authorities are not good for private landlords, they feel they can do payments in arrears, claw back due to the tenants actions etc. They are instrumental in using the law to their full advantage and running up private landlords costs (such as insisting tenants run the full course to possession orders). Is it any wonder most landlords and agents avoid tenants on benefits? This is regrettable as some of these tenants are good people (and make good tenants) that can often be in their situations as a result of unfortunate circumstances beyond their control. Councils are the architects of their own failings in my personal view. This article highlight this.

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