Other Landlords experiences of successfully getting Rent arrears from evicted HB tenants

Other Landlords experiences of successfully getting Rent arrears from evicted HB tenants

10:47 AM, 12th August 2014, About 7 years ago 83

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Hi fellow members, Other Landlords experiences of successfully getting Rent arrears from evicted HB tenants

Love to hear your thoughts/experiences:

I’m going through the eviction process on two properties which are let to tenants claiming Housing Benefits. They have a combined arrears of over £6,000!

Is it worth the emotional stress (as well as time and costs) to go on a not so fruitful expedition of getting these arrears back after they have been evicted?

Yours  – a very frustrated landlord!

Sanjay



Comments

by chris wright

12:12 PM, 2nd October 2014, About 7 years ago

I note LL's in the same situations are simply writing it off and adjusting their tax bill, not sure if you can carry it forward if the loss is greater than the profit for the same year - others are seeking out RGI policies to cover them from any future losses.

The court system on civil recovery is weak and those with very little and or no stable job etc can walk away - the CCJ holds limited fear for them.

by Robert Mellors

20:01 PM, 2nd October 2014, About 7 years ago

Reply to the comment left by "Arran Pritchard" at "02/10/2014 - 10:24":

Hi Arran

I don't do self-contained rooms. When I talk about self-contained properties I mean flats and houses which are let out (on ASTs) as a whole, not as separate rooms. Most of these are let to families, I only have four that are let to single people. These self-contained single person properties are let to people over 35 years old.

Not sure what you are talking about when you say that your local authority will only pay third party deductions for service charges after 8 weeks arrears, the third party deductions are deductions from the resident's Jobseekers Allowance or ESA so they come from the DWP, NOT from the local authority!

I apply for the third party deductions from the resident's JSA/ESA within a few days of them becoming a resident. They sign a form asking the DWP to do this (a form I have created), and that is sent to the DWP along with a third party payments request letter (that also contains the relevant DWP form). Altogether, this letter (and attachments) comprise 4 pages, but it seems to be effective as I now get the service charges deducted from the resident's JSA/ESA very early in their residency. This helps to protect the resident from getting into arrears and being evicted, and residents themselves prefer this method of paying the service charge (as 99% of them freely admit that if it goes into their bank then they will spend it instead of paying their service charge).

I don't offer ASTs to residents of rooms in HMOs, I only give them a (weekly) licence to occupy. I used to do ASTs for rooms, but found it almost impossible to evict bad residents, and they knew it, so they stopped paying and trashed the houses etc, so now I avoid that by only giving licence agreements. I still have to abide by the Protection from Eviction Act, but now I don't have to wait the usual 6 months or more before starting proceedings.

There are some exceptions to the single room rent rate of LHA, so it is worthwhile learning what these are, as in some cases the HB can cover the service charge as well as the room rent!!!

by Robert Mellors

20:09 PM, 2nd October 2014, About 7 years ago

Reply to the comment left by "chris wright" at "02/10/2014 - 12:12":

Hi Chris

Yes, losses from one year can be carried forward and set against profits in future years.

There are very few RGI policies that will cater for HMO landlords letting to DSS residents, unless you also take deposits and have rent guarantors etc, in which case there is less need for the RGI anyway!

I agree that the law is very weak in terms of enforcing CCJs against debtors on welfare benefits, so you have to weigh up what enforcement action would be effective (but stay within the law!!!!).

by Arran Pritchard

22:09 PM, 2nd October 2014, About 7 years ago

Reply to the comment left by "Robert Mellors" at "02/10/2014 - 20:01":

Hello Robert,

I came off the phone today with my contact at the local Job Centre Plus, ( its a new process for me, and still I'm doing alot of reading, I think Job Centre Plus is part of or an extension to Department for Work and Pensions ).

My contact explained to receive Third Party Deductions the following has to be met:

a) arrears exceed 8 weeks gross weekly rent (gross meaning service charge + rent)
b) arrears must have been existing for at least 8 weeks
c) the tenant must be in receipt of housing benefit

Are you faced with these same conditions ?

by Arran Pritchard

22:15 PM, 2nd October 2014, About 7 years ago

Reply to the comment left by "Arran Pritchard" at "02/10/2014 - 22:09":

Are you faced with these same conditions ? what is needed to bypass these so deductions can be paid direct to landlord before the tenant has accrued 8 weeks gross rent arrears.

Maybe its just I don't have the correct forms ? Currently I only provide them the rent schedule.

by Robert Mellors

22:37 PM, 2nd October 2014, About 7 years ago

Reply to the comment left by "Arran Pritchard" at "02/10/2014 - 22:09":

Hi Arran

Most JobCentre Plus staff have never heard of Third Party Payments (TPP) and those that have heard of TPP will know very little about how the system works, so you are lucky to have found someone that knows something about them.

Your contact is partly correct. For getting TPP for rent arrears, then the criteria is normally as you have been told, at least as far as points A and C are concerned, though I have never been told of point B so not sure if that is 100% right. However, that only relates to the set TPP amount of £3.65 pw off the rent arrears, IT DOES NOT relate to the ongoing service charges. Furthermore, the DWP has discretion to grant TPP for rent arrears even if the resident does not have 8 wks arrears, if they believe it is in the resident's best interests, e.g. to avoid eviction, so again this could come down to making the same vulnerability arguments as you used for getting HB paid direct to you without there being 8 weeks arrears.

Thus, (not counting the discretion) you have two scenarios:

1. All residents. Apply for TPP for ongoing service charges for gas, electricity, water, as soon as possible. You are entitled to request this even if the resident has no rent or service charge arrears.

2. Residents with 8 wks arrears. Apply for TPP for both the ongoing service charge AND the standard TPP for rent arrears.

In my properties the service charge is £22 pw, so for some residents I get £22 pw, and for others I get £25.65 pw (i.e. £22 for service charge + £3.65 off their rent arrears). This is paid direct into my bank by the DWP every 4 weeks in arrears, and it currently amounts to approx £1500 every 4 weeks. I estimate that about 90% of this would not be paid to me if it was not done this way, and I would have to evict more people, (with the added cost of eviction, void periods, re-letting, etc), so getting the TPP is probably saving me nearly as much again as what I actually receive in TPP payments. - There is of course some admin costs, and hassle, to factor in though in making all these TPP applications, but probably not as much as would be involved in the necessary evictions if this did not happen.

by Arran Pritchard

22:47 PM, 2nd October 2014, About 7 years ago

Reply to the comment left by "Robert Mellors" at "02/10/2014 - 22:37":

Thank you Robert,

May I see your forms, it would me help draft my own,

I understand the message that is pivotal and I need to be sending my local contact and DWP is the risk of the tenant loosing their tenancy.

my email is arranpritchard@yahoo.co.uk

For each Third Party Deduction, I understand the application has to be either:

a) posted to Wrexham Benefits Centre, Post Handling Site B, Wolverhampton, WV99 1FX ( your address would still be Wolverhampton but a different team ? )

or

b) faxed to my local job centre

Regarding the amount, my contact informed a maximum of 25% can be deducted after that they have to ask the tenants permission. She stated the normal benefit rate is £72 therefore the maximum that can be deducted is £18. Any idea as to the discrepancy ? Maybe the benefit rate in your area is higher than £72 per week ? or again my local contact is behind the learning curve a little.

Regards
Arran

by Robert Mellors

23:17 PM, 2nd October 2014, About 7 years ago

Reply to the comment left by "Arran Pritchard" at "02/10/2014 - 22:47":

Hi Arran

Yes, I can share the forms/letters with you.

Your contact is getting a little confused, or is not explaining very clearly.

The amount of benefit can vary depending on the person's age, so for JSA the amount for over 25s is £72 pw, but under 25s get much less. The rates for ESA can be different depending on which ESA "group" the person is in. Also, there can be additions if the person also receives certain disability benefits. The JSA/ESA benefit rates are national figures, they do not vary from one area to another.

In relation to the % of the person's benefit which can be deducted, the 25% rule applies (and again there are exceptions) when there is a multitude of different TPPs going out to different organisations, e.g. court fines, water company, gas company, electricity company, social fund loans, previous benefit overpayments etc, and in this type of situation the maximum total amount is normally capped at 25%. In this scenario there is a hierarchy of payments specified in the legislation, so those creditors with top priority will get their TPP but those further down the hierarchy will have to wait until some of the debts to other creditors have been paid off. - Thankfully, debts (rent arrears) to current landlords is high up in the hierarchy.

However, the resident (as part of the occupancy sign up process) will be signing a form to request TPP for ongoing service charges, so that overrides the 25% rule, as the tenant is requesting it (so is giving permission). Also, the purpose of the 25% rule is to leave the claimant with enough benefit to live on (pay ongoing utility bills), and as paying ongoing utility bills is the purpose of the TPP for service charges, then it does not deprive them of those utilities (i.e. it won't result in them having no heating or hot water etc).

by Arran Pritchard

23:25 PM, 2nd October 2014, About 7 years ago

Reply to the comment left by "Robert Mellors" at "02/10/2014 - 23:17":

understood, 25% is for service charge arrears ( creditors ), the balance ( with the tenants permission ) is for ongoing service charges.

Therefore I need to draft a form for each tenant to sign that gives DWP permission to make the ongoing deductions.

Much obliged to see your forms, it will assist me to form mine.

Thank you very much Robert, you advice has fast tracked my position saving me time and money.

by Robert Mellors

23:39 PM, 2nd October 2014, About 7 years ago

Reply to the comment left by "Arran Pritchard" at "02/10/2014 - 23:25":

25% for creditors generally (not necessarily service charge arrears or utility debts). Most common examples are magistrates court fines, and social fund loans.

If your ongoing service charge (for gas, water, electricity) is more than 25% of the person's JSA/ESA, then (I think) the TPP for other debts, e.g. Social Fund loans, have to wait until the person's income increases to the point where there is part of the 25% available to pay towards this. This can occur for example when a person's benefit goes up when they reach the age of 25, then the proportion being deducted (for service charges paid to you) becomes a smaller % of the total, and that may then let in one of the other creditors to be paid via TPP.


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