Tenant claimed benefits fraudulently – Council reclaiming from us!

Tessa Shepperson says:

This is known as ‘clawback’ and is one of the big problems with getting payment of benefit direct from the Council, and is one reason why some landlords (when this was more of an option) would refuse to accept direct payments.

The best way to avoid this happening is for landlords with tenants on benefit to arrange for payment via a credit union or the Tasker payment service, rather than accept payment direct. I write about this on my blog here http://www.landlordlawblog.co.uk/2011/10/18/five-ways-for-landlords-to-ensure-payment-of-housing-benefit/

So far as Trudy’s case is concerned, I remember in the past Councils were sometimes successfully challenged if they had not used the correct paperwork. However housing benefits work is not my area of practice so I will leave it to others to comment on whether this is still an option.

Mark Alexander says:

Hi Mary

My layman’s interpretation of that is that if the landlord was not a party to the fraudulent claim and was completely unaware of the fraud then the Local Authority has no right to pursue the landlord for repayment of the fraudulently paid benefits. Is that your interpretation?

Regards

Mark

steven latham says:

you wil not have to pay this money back, if you would like to discuss how to prevent the claw back contact me directly on TEL NUMBER REMOVED BY MODERATOR or EMAIL REMOVED BY MODERATOR to find out how.

Mark Trenfield says:

Hi Trudy,
If your tenant has committed fraud (by claiming HB that they were not entitled to) AND you were not complicit in this fraud (ie: you had no way of knowing) then the Local Council should chase the tenant for the over payment – and not yourself.

However, if it can be proved that you were complicit (eg: tenant moved out 3 years ago and you knew and you failed to notify the Local Council) then legislation allows for the Local Authority to recover monies from you.

I would guess, as this is fraud, that you would not have been complicit … so you should immediately instigate the “appeals process”.

Mark

trudy.mariner says:

thank you so much everyone for you valued comments – this is very much appreciated. I shall talk to the council office tomorrow and see what they have to say. Thank you all so much again for your responses, especially on a Sunday.

Mark Alexander says:

Hi Trudy, don’t react too quickly. Give it a few days then
write to the Council to acknowledge their letter, letting them know that you are
seeking professional advice and will respond to them within 7 working days. This will show them that you are not afraid of their demands and will react professionally and will not simply roll over for them. It will also add weight to the content your next letter. Then wait a week and send the letter that John Paul recommends. John Paul is well known in the industry as “The LHA Expert”. It was interesting to see that Mary Latham sent him a tweet today asking him to comment here. I also invited John to comment by email. Great minds think alike

I will email you John’s contact information. He has very kindly emailed me to let you know that he is prepared to help you free of charge, no strings attached.

John wrote a series of articles here earlier this year. I hope to be able to consolidate the articles into an ebook for download very soon so watch this space. In the meantime, here is a link to the series of articles which John Paul’s wrote for us to share with the industry >>> http://www.property118.com/index.php/author/john-paul

Mark Alexander says:

Hi Ben

Presumably, letters such as this will come from a suite of document templates as opposed to being individually drafted, is that right?

If that’s the case, I think it makes a lot of sense for Trudy to “quote it verbatim here as that will provide you, John, Paul, Glenn and others the opportunity to help Trudy to produce the best possible response letter.

Thanks for the suggestion, I’m learning a lot from this thread and I’m sure other readers will be too

Paul Barrett says:

Whilst this might be an extreme example; this is a classic reason why LL don’t wish to rent to LHA LL.
Larger LL who have more robust finances can probably cope with the situation.
Small LL are less knowledgable about these circumstances.
They hear the scare stories and default to save a load of aggro and choose NOT to rent to LHA.
Councils should be prevented from even attempting to recover from a LL UNLESS they can PROVE beyond reasonable doubt in a court of law that the LL was complicit in a fraudulent claim.
Council housing depts complain that LL won’t take their homeless; this is a principle reason why we don’t!
For the more experienced LL like John Paul this circumstance is just a walk in the park for him..
For a little LL this is an extremely distressing situation to be faced with and they don’t have the wherewithall to cope.
Whilst advice to manage this particuar situation is proffered very helpfully by JP this is not a service he could, would or should provide to all and sundry.
The mere fact of having to defend against a £26000 demand from an official body like the council; which if successful would cause the LL MASSIVE financial detriment, is enough to put ANY LL of.
You have to be quite brave to take on a LHA claimant as a little LL knowing this risk exists.
I believe the vast majority of little LL know absolutely NOTHING about this risk.
As if they did they would NOT take LHA tenants.
This situation does NOTHING to assist HB tenants who desperately NEED accommodation, the supply of which is being drastically reduced by LL refusing to rent ot HB tenants.
It is costing councils fortunes in TA when there are perfectly acceptable rental properties that LL are refusing to let to these claimants.
Remove the risk to the LL and then it may persuade the LL back into the market.
Unles there has been complicity by the LL with the tenant to facilitate the fraud then the council should not even send a letter to the LL.
ALL communications should go to the tenant as it is NOTHING to do with the LL.
The problem is the council will rightly suspend the claim.
The LL will then have to evict as the tenant will know it will take months for an eviction to occur.
So who pays the mortgage in the meantime!?
Ans nobody.
Property will be repossessed or taken into receivership before the tenant is evicted.
Is it therefore any wonder why your average little LL refuses to rent to LHA claimants.

Neil says:

Hi Trudy
It is my understanding that they can not pursue the Land lord if the payment went to the Tennant then to you. But if the payment went to the landlord they can. Crazy I know I would argue this and ask for any evidence they have you had any knowledge of this. As someone already said If he moved out and you kept taking a payment then that would have to be paid back.
I think there is some great advice here for you. I would then ask them will they pursue the bank or building Society as you would have passed the money to them to pay the mortgage.
I can not see how they can in force this. It would be great if you could tell Mark how you got on for him to post.

gerald says:

Hmm. 2 things
1) No wonder the idea of paying to the landlord directly is being promoted then. Although having said that it might make the landlord work as a policeman if they had to think twice on initiating things.
2) Maybe this legal attack on the landlord might be justified generically – as in a landlord could have artifically created the person and situation. I guess a landlord on set up might want to copy passports and get tenants to sign something to state they really are who they say and absolve landlord of anything.
*** So good and bad reasons — but either way landlords are not policemen nor anti money laundering officials – i think they are landlords – or will landlords one day work for the council like police officers and everyone else does. Yeh, you could have a norfolklandlords, suffolklandlords, powyslandlords, westminsterlandlords sub-council companies generating profit for councils – you could be an empolyee and even get to keep a cut of your own rental income and even go round on the beat in the afternoon with a happy council hat on.