DSS Over-payments – Readers Advice Request

Hi Eve,
From a LHA/Housing Benefit perspective then an overpayment has been made as you received Housing Benefit / rent for a period of time that your DSS tenant was no longer living at the property ie. The month following the tenant leaving.

So - the Housing Benefit department want their money back because your tenant's new landlord would also have received Housing Benefit / rent for the same period of time as you did - and the benefit is not due to you (because your tenant has moved elsewhere).

I sympathise with the fact that the rent is due for the entire tenancy and that you should be able to gain some form of compensation but this is not a Housing Benefit issue - this is a breach of contract by your tenant!

You are free to pursue your tenant for the outstanding rent but this does not change the fact that benefit has been overpaid to you and you MUST return it - or end up being sued by the Benefit Office.

If it was me, I would return the overpayment money immediately and probably not accept DSS tenants in the future. There is little point taking the tenant to Court as they probably have very few assets (which is why they are entitled to benefits in the first place) and when you win the Court action you are still unlikely to see any of your outstanding rent.

Good luck

Mark

Eve, In my opinion you will not get your rent from the local authority. The benefits that are paid are paid to tenants, even when they are paid directly to the landlord this money is the tenants benefit not the landlords rent according to LHA regulations. There is a regulation that if the landlord could not reasonably have been expected to know that the tenant was not entitled to the benefits the money cannot be recoved from the landlord but in this case it would seem that you did know that the tenant had left the property and therefore this regulation would not apply.
Another regulation allows a local authority to pay LHA to two landlords if the tenants move without notice was unavoidable - this usually only happens when a tenant is moved into a local authority or RSL property and is not given time to give notice to the exisitng landlord- is this the case here? If it is I would ask for the overpayment to be written off under this regulation.
In my opinion if the situation above does not apply your only option would be to take legal action against the tenant to recover your lost rent but I am guessing that this tenant has no assets and therefore you are likley to spend money and time and may even get a judgement in your favour but you will probably get a few pence a week from future benefits if anything at all. You will also need to repay the "overpayment" unless someone more knowledgable than I am can give you a better option?
I am really sorry that you are in this situation and this is one of the many reasons that landlords are walking away from tenants on LHA, it may be one of the few benefits of the coming Univesal Credit because when the LHA is paid to the tenant and collected through a Credit Union Account by the landlord recovery of overpayments will fall on the tenant.

Mark's reply is completely correct. The only time you can put forward an argument against an overpayment is when you are unaware that a tenant has gone.

Hi there Mark,

Thanks for your advice, I must admit that I was quite shocked at the advice given by the RLA and suspected it was incorrect, although it does make a farce of the tenancy agreement as it is clearly a one way street and not a "contract" at all as far as the Housing Benefit is concerned. I understand that contract is with the tenant, but when signing up the Housing benefit stipulate it cannot be for any less than a year, so they are dictating the terms of the contract?

Thanks for your post Mary, I am now even more informed, albeit out of pocket!

Hi Eve, I too was shocked by the advice you said you had received from the RLA and that was one of my reasons for wanting to post the question here, just in case i was missing something. You have received some responses from some of the most experienced landlords in the UK here though so I think it's now safe for us to conclude that the RLA gave you incorrect advice on this occasion.

Think its all been covered but since you knew the tenant had left then the overpayment will still stand. An overpayment can be "beaten" if you can prove the tenant did a runner without your knowledge

Fortunately I sit directly opposite our team’s housing benefit assessor and I just popped the
question to him (Your question I mean…..I didn’t ask him to marry me or anything)

His answer was an emphatic “No”! The claim is attached to the person, not the property. If the
tenant breaches their contract that is between the landlord and the tenant not the council.

Don’t take this on a personal level try to think of it procedurally. HB is a benefit that a person
is entitled to irrespective of the relationship between the landlord and the tenant. Even if the landlord knocks ten bells out of the tenant HB will still get paid because the fact that the landlord is criminal is nothing to do the HB.

Similarly if the tenant chooses to break their contract, that is nothing to do with HB either. All HB
do is assess entitlement and pay out if the applicant is eligible.

If the tenant finds another place they will need HB on that and if HB were paying the missing rent
on the previous tenancy they would be paying twice. Any amounts owing due to a breach cant be the responsibility of the council.

Don’t confuse benefit laws and contract laws, they are 2 entirely different areas of legislation.
Misunderstanding this basic principle is what gives rise to the common cry of “Fraud”, when the tenant doesn’t pass over their LHA. It isn’t fraud because they are entitled to it. What they do with it once its in their account is again, between the landlord and the tenant.

HB teams are not the police, they aren’t there to solve a landlord or a tenant’s problems, they
simply assess entitlement to benefit. That’s all they do.

Eve, you said
" I understand that contract is with the tenant, but when signing up the Housing benefit stipulate it cannot be for any less than a year, so they are dictating the terms of the contract?"
Do you mean that you are signed up to provide properties to this authority? Many authorities now have this type of scheme and if you are contracted to them and they are insisting on a 12 months AST in order to dicharge their obligations to a homeless tenant you need to go back and have a discussion with them. Local authorities cannot have it both ways, they need landlords to agree to a minimum 12 months AST to get them off the hook and many landlords will not agree to this, if you did agree to this and they have broken the terms of your contract with them this needs to be discussed. The Housing Benefit regulations cannot be changed but neither can the terms of a contract and they should speak to their Benefits department and explain that they have an obligation to you and perhaps that they should write off this overpayment.
I may have misunderstood what you said but if you are under contract to the local authority I would be very intested to hear what they have to say.

Don't forget to take into account that tenants rent is normally paid in advance but HB is normally paid in arrears.