Landlords in Doncaster are celebrating after tenants successfully challenged the council in a row over the level of benefit paid to landlords providing homes to common households. Here Bill Irvine, the RLA’S UC adviser and trainer who represented the tenants at the hearing explains what happened. He said:
“Two landlords operating in Doncaster helped their tenants successfully argue that the local council can’t restrict the amount they can claim in housing benefit for common households.
Common Households are households made up of close family members, choosing to live together in one home, and sharing the costs of living and household tasks. They do this typically to save money as they would struggle to manage the costs of a tenancy and household bills etc on their own.
Such tenancies don’t require tenants to pay a deposit or provide a guarantor, and as such are much higher risk for landlords.
As a result of this, and the fact benefits are being paid to fund one, rather than several households, they are entitled to higher housing benefit payments, something which is built into housing benefit regulations.
The cases were heard at Doncaster Crown Court before a First-tier tribunal and ended a longstanding dispute between the council and the 10 tenants involved in what, in effect, was a test case on the potential use of Regulation 12 B (6) of the HB regulations 2006.
The council wanted to use the rule, which allows housing benefit payment to be capped if the amounts are considered ‘excessive’ when compared to rents charged for similar properties in the area, saying landlords were making too much of a return.
This is despite the fact the amount being claimed was no more than the prescribed Local Housing Allowance (LHA) rate.
I argued that, while the council looked at rental costs of properties in the area of a similar size, they had not looked at whether the landlords would be willing to let these homes to benefit tenants – many won’t – or whether they would require a deposit or guarantor.
I said that Parliament had sought to differentiate these type of claims, by making special provision in the housing benefit regulations, and, the landlords were doing no more than simply making best use of the opportunities the scheme offered, whilst at the same time providing good accommodation to people who would otherwise struggle to secure somewhere to live.
The First-tier Judge said: “I think 12 B (6) has no bearing on the calculation of the maximum rent (LHA) and cannot be utilised by the Respondent (Council) as a fall-back mechanism for restricting rent in circumstances where it thinks it is too high”.
He acknowledged, in part, the council’s position by stating – “I fully understand the Respondent’s dislike of the fact that a calculation of eligible rent and maximum rent (LHA) ………………gives rise to an amount payable by way of housing benefit which is greater than the landlord might otherwise achieve on the open market”.
However he added: “As Mr Irvine points out, these landlords are not operating in an open market. They cater for a distinct class of tenant whose occupation and payment of rent depends on entitlement to Housing Benefit. What these landlords are doing is simply maximising their revenue from the letting of these properties, something which they are perfectly entitled to do, and something which, to my mind, the regulations enable them to do.”
In addition to the 10 appeals listed, the council has agreed to apply the ruling to all other cases where a cap has been applied, including those of other landlords/agents, where that’s appropriate, so some tenants and/or their landlords, could be in a for something of a housing benefit windfall.
If any RLA member has encountered similar problems with LHA being capped, in this way, and would like to find out more about this appeal and its implications to, with call the RLA’s Landlord Advice Team on 03330 142 998 or via live chat, or write direct to Bill Irvine directly at email@example.com.