Stung by the £500pw Benefit Cap, no rent being paid – Help!

Stung by the £500pw Benefit Cap, no rent being paid – Help!

17:32 PM, 6th August 2013, About 8 years ago 113

Text Size

This week I have been stung by my first experience of the benefits cap. Stung by the Benefit Cap, no rent being paid - Help

One of my tenants Housing Benefit has gone down to £30pw from £159pw.

This is the cap where the Government are limiting families to £500pw of maximum benefits and all councils will have it by Sept 2013.

My tenant now gets £310 Child Tax Credit, approx £90 Child benefit & £10 Income Support with loans taken off. With Council Tax & the £30HB, we are about £500. A lot of money I know, but when they’ve had if for years, they’re used to it.

My tenant cannot understand at all that she has to pay any rent out her own pocket – so isn’t going to – so she says.

I’ve given her notice in case things get worse, as mortgages don’t grow on trees.

I don’t want her to go and she she doesn’t want to go either!

She rang me up every week for a year to get a house off me, so we are both valued to each other.

I have contacted Shelter, MP’s, Govt, CLG, Advice Centre, the Council Housing benefit and more and none of them seem to know anything whatsoever about direct payment to a Landlord when tenant is in arrears as a result of these circumstances.

The Local Authority is now saying no provision for direct payment to Landlord when in arrears.

As we all know Universal Credit are talking about direct payment to Landlord because of the big arrears they’ve been getting in trial areas. And as we all know, direct payment when LHA was introduced in 2008 was a no no,until we all moaned enough that is. Now getting direct payment is like taking candy from a baby.

However, I’m hitting a brick wall with direct payment under this new benefit cap.

I thought I was a benefit expert until this week. I’m 99% sure they will do something eventually, when enough people get evicted and moan enough, but I and many others need something positive to happen now.

My Local Authority are not interested, they seem to think it’s  funny that supercool Landlord Mick Roberts is now only getting £30pw when he was getting £159pw and in their eyes, lapping it up.

My tenant is still allowed £159pw under 4 bed LHA rate rules, but it is the benefits cap which is limiting her housing benefit payment to £30pw. Clearly this is the first thing tenants lose when going over the £500pw threshold.

Govt needs to wake up because they haven’t got the houses for for these tenants and wherever this tenant ends up she will only get £30pw towards her rent, so will be in the same boat with any Landlord.

The big families are no longer attractive!

Jeez, I wanted this to be a quick post, but if any experts reading this know more than me and can help, it would be very much appreciated.

Regards

Mick



Comments

by Anon

23:52 PM, 6th August 2013, About 8 years ago

Reply to the comment left by "Paul Barrett" at "06/08/2013 - 23:48":

OK Paul, you've had your say, let's leave it there please. Mick requested help, for himself, his tenant and her children. He didn't request a political party broadcast from the extreme right. Let's get back to the thread and to the purpose of this website please

"to facilitate the sharing of best practice amongst UK landlords and letting agents"
.

by

4:22 AM, 7th August 2013, About 8 years ago

Mick as an experienced HB LL what is your immediate knee jerk reaction to the situation that has occurred to you.
Were you aware that this was going to happen!?
If not; why not!?
I put it down to poor advice from govt.
Effectively they didn't really want to advise LL etc or even claimants as to what was going to occur.
You will have little choice than to evict unless you wish to reduce your rent substantially; I don't think you are a charity!!?
Surely the demographic of your tenants will inevitably have to change to working tenants or will you consider moving your property investments to areas where those tenants will have to move to.
Your situation is surely representative of many HB LL and your necessary responses will surely indicate what will be an appropriate way to manage such a business.
It does seem that this benefit cap has caught out quite a few people!!
I think most HB tenants are in denial that their domestic circumstances will be drastically change.
Well the reality has now occurred.
Will LL respond by buying up cheaper property up North where the new demand will come from tenants forced to move to cheaper areas by the benefit caps?
These benefit caps will be the first major shakeup in HB tenants' domestic circumstances for decades.
I don't think these tenants fully appreciate of accept the effect of these caps; as evidenced by the peculiar response of your tenant who has determined that because her HB has been reduced then all you will receive is that.
She doesn't appear to have worked out that she can still rent from you; but at the certainty of having a substantially reduced 'lifestyle'
This is typical of your average benefit claimant who doesn't work.
She thinks she can still have it all; well she can! just NOT where she presently resides.
She will need to MOVE to a CHEAPER area
These benefit caps will be a massive wake up call for HB LL and tenants alike; essentially the gravy train is over; and about time too.

by Mark Alexander

7:23 AM, 7th August 2013, About 8 years ago

Reply to the comment left by "Anon " at "06/08/2013 - 23:52":

Well said Anon, thank you!
.

by Mick Roberts

7:51 AM, 7th August 2013, About 8 years ago

Ok, here we go:

Starting from the top, Mary (& I need u one day for advice on setting up company to pay tax, but that’s another story). To re-phrase slightly, of the £500 cap, we need to make sure the LHA element of it-the rent part-gets paid first direct to the Landlord to prevent homeless & the tenant gets the shortfall above £500 out her benefits, not the rent.

Yes, tenant has said she will live on the streets, she won’t, but that is their attitude at moment, I did warn her this would happen when I took her on approx 8 months ago.
She will be in same position if gets accepted into homeless house, because they require rent to be paid.

Thanks for the links everyone, I’ll chase up this morning, after I’ve been on my daily rounds of being abused & lied to & told the rent has been left on the bus.

I need to get on twitter, do I, or is it gonna’ take another few hours out my week? And I don't know how to ruddy use it ha ha.

I think that guidance is old notes for previous LHA problems.
Yes, know about DLA etc.
Applied for discretionary which does your head, cause tons of paperwork every 3 months.
She’s going homeless.
And I’ve told her go all these places, she’s a lazy s__t.

Yes, the 16 hours pw working for me thing, was the first thing I looked at 2 weeks ago before I went on holiday, & I even gave her to lift to Job Centre to use their free phones there, so she could ring Working Tax Credit & Child Tax Credit, just to make sure she’d be no worse off, as sometimes, the can be worse off than previous.I do have tenant working for me now which benefits us both. And I get back off holiday & find she din’t do it, ‘cause she was outside at 0930 & it din’t open till 10am.
And she don’t want to do the work thing, as all of her benefits stop for about 6 weeks while they sort it it all out-This is a very common thing on new claims, nothing for 6 weeks-It’s disgusting.

Yes, I can see B&B’s coming back in like the late 80’s. Govt has not clue on ground level. Lord Freud is waking up a bit in Universal Credit & direct payment, but is seems EVERYONE has forgot about the benefit cap coming in to some families before Universal Credit, & direct payment is just washed aside.

Worst thing is, when she goes to the Gedling LA homeless, THEY RING ME, to see if I have any houses for HER. Laughable, I know.
The thing is, she can’t afford to move anywhere, unless there is a 4 bed house of 3 bed adapted to take her 6 kids for £30pw. She’s in the same boat anywhere, unlike London £400pw rents where they tell em to move 50 miles North to take £130pw rent.
The thing is, there’s not much cheaper area than the one she’s in.
That’s the thing, she’s used to the money now, bring in caps, but not retrospectively, but for new people-If u have any more kids, we ain’t paying u any more-so then, it’s their fault, they knew beforehand.

Ha ha, no need to defend me Mark, I do know where Paul is coming from. This house is about as cheap as they come, I paid approx 21k & it’s maybe worth 70k. Nothing much cheaper really in Nottm or the Midlands.

There’s not many that work round there-Not the answer I know. And I do know some of these previous high rents have been like a birthday present & I told the Govt the same 5 years ago, when I was getting £200pw for 2 bed house that was only worth £110pw. But if they gonna’ bring these daft rules in which often hurt us, when it does benefit us, I’m gonna’ take it.
This particular house is worth £120ish pw, which I will take, I am human, but £30pw???
There’s always gonna be so many lazy s__ts, & so many workers, how it’s always been & always will be.
Problem is yes most do agree with benefit caps ‘cause they’re not living like they are, but what I can’t believe anyone has not said on the news is this: If the Govt said we are stopping u paying Tax, I can bet maybe 80% of people would vote for it, even though we know that it will screw the country up, people vote for what seems good idea & their pocket. Same with welfare, those not on it or close to it like me & maybe Jonathon etc., don’t understand fully that just like tax, WE DO NEED IT. Safety net for some & a need for the always will be lazy s__ts.

Mark, the reason why 16 hours pw removes the cap, it’s the Govt’s little way of saying look working man, we have forced them to work. Yes they have no cap now, but they have had to work for it, we are successful.

Paul is right in some ways, but as I said there will always be so many percent that won’t work, & they still need to live eat shelter, that’s why welfare state. So many disabled need wheelchairs etc. So many pensioners need care. So many bikers like me need fast hills, we all have needs.

And they din’t ruddy advise me at all.I knew it was coming, but communication beforehand whatsoever. It’s come in, in small councils approx 29 July. It’s coming in whole of UK 15 Sep or 1 Sep I think. I’ve got someone high up in Nottm HB who told me they are going for training on it next week, but as yet, they’ve not warned any Landlords. I think in Nottm, only 500 families, not enough to moan to force Govt to act. I think approx 40000 whole of UK, maybe 80000 depending on where u read. They’re a minority.

Whereas these families were once attractive, I’ll now be looking for smaller families, but yesterday, this gal has been asking me for 2 years for house, she has SIX kids (another family), 4 under 16, one is disabled, so benefit cap problem solved. 2 over 18, one is gal who has kid who wants to stay with Mum, & 21 year old lad who epilepsy. So this is family I would take because no cap. AAahhh I hear some of u screaming, yes I know not all that many should be living in 4-5bed house, BUT if they want to live together & will eventually get big enough house somewhere, who am I to refuse them? I’ll give them what they want, yes I’ll make good dough out them, but only because that’s what they want ‘cause the ruddy Govt han’t got ‘ote for ‘em.

Me, I only buy houses within 5 mins drive of me.
Yes, she smokes £70 a week fags.
I can take Pauls comments, because a lot of it is true, but I know some who can’t, but that’s what forums are for, so u lot stop picking on Paul now ha ha.
Anyway, keep this spread going if u like, no real solution yet unless some MP raises it & it gets changed just like LHA does, thanks for advice so far everyone, & again Jonathon u think like me ha ha. 1st ruddy thing I thought of, I’ll employ her 16hrs pw.

I’ve got even worse problem Sept, couple & 8 kids, 2 have left home-living in my houses, so 6 now & they will get NO HB zero, because couples get less HB.
There is quite a good simplified thing on it here: http://speye.wordpress.com/2013/06/17/you-though-the-bedroom-tax-was-bad-the-much-worse-benefit-cap-starts-in-4-weeks/

by Bill irvine

8:26 AM, 7th August 2013, About 8 years ago

Hi Mick/Mark,

Having read the various posts, epecially Adam's, there's not much more I can add to what's already been said.

The cap in this instance is doing what the Government intended; forcing the tenant to reassess their housing situation and the landlord to apply pressure to ensure this happens.

Councils are applying the cap on behalf of the Sec of State (DWP). The calculation is actually verified by the DWP's team based in Belfast who instruct the council on how much DWP and HMRC benefits the person receives. The council adds to this the amount of housing costs and compares the total with the £350 or £500 weekly ceilings. As in this case, where the amount exceeds the level housing benefit (LHA) takes the hit.

First thing to do is contact a local welfare rights officer (WRO) or Money Advisor (MA) both of whom specialise in benefit related issues and can often assist tenants. The WRO/MA should firstly check to ensure the cap has been properly applied and that the DWP/Council has not overlooked any exemptions that might apply. Disability Living Allowance/PIP, as Adam suggests, are critically important as these carry exemption status. If the tenant was recently employed there is also a 39 week grace period. To find out more about the Cap have a look at HB A15/2013 http://www.dwp.gov.uk/local-authority-staff/housing-benefit/hb-whats-new/

For a local WRO/MA or alternative Advisor see http://advicefinder.turn2us.org.uk/

As to direct payments there's nothing much I can add, other than to say, DWP will not deduct anything from the person's DWP/HMRC benefits to hand over to the landlord in such circumstances. Currently, there are limits to how much can be deducted from DWP benefits to make payments to "third parties" for arrears of rent, council Tax, fines etc. At the moment, that figure is based on 15% of the Single Person's JSA rate (£71 circa) i.e. around £11 per week. The limit is designed to ensure that the claimant's income still covers daily living expenses but this doesn't include the rent. Universal Credit will almost certainly have limits so in similar type cases the "direct payment" facility will also be seriously undermined.

Short term the best thing to do is make application for a DHP payment. £65M was injected into the Discretionary Housing Payments budget for 2013/14 to assist claimants affected by the Cap. The problem with this is the budget is insufficient. I call it the "loaves and fishes" fund because Councils will have to produce a miracle to make the budget stretch enough to meet demand. This again, is where the WRO/MA can make an impact. They can help the tenant construct their application to make it stand out from the crowd. The route to success is demonstrating the case is exceptional in some way.

Follow Adam's advice about applying to the council for a house and seeking the assistance of Social Services Child Protection Team. Their support could prove very important to the tenant.

As to Mick, I'm afraid you're to some extent dependent on your tenant making the effort to seek out the support we've alluded to if she's to receive help short term. Longer term, you're just going to have to face up to the fact that taking on LHA tenants, especially those with 3 or more kids is almost certainly going to cause a repeat of these unfortunate circumstances.

Bill Irvine
HB & UC Advice
http://www.ucadvice.co.uk

by Vanessa Warwick

8:27 AM, 7th August 2013, About 8 years ago

This thread has thoroughly depressed me.

I think I am going to give everything up and go and live on benefits.

by Mick Roberts

8:36 AM, 7th August 2013, About 8 years ago

Reply to the comment left by "Vanessa Warwick" at "07/08/2013 - 08:27":

Ha ha u wouldn't, because what the Govt won't tell u is, that u never have anywhere safe to live-Would the likes of u, me, Mark etc. like having the chance of being forced to move every 6 months? Not in my houses no, but some Landlords do this.
Never being able to choose your own kitchen? Although hypocritically, I do let me tenants choose their colour.
And then when u become 45 or whatever, working & buying, your mortgage may be paid off, but benefit tenants never have NO proper home for life. Seems attractive sometimes, but not overall over the years, no proper 100% security. Generally slightly not as good area's, sometimes not so good neighbours move in, whereas if u do do well for yourselves, generally, & I am talking law of averages here, before some may slate me, generally, the better u do, the better house u buy, the better area u live in, the better the neighbours.
Build your own extension or swimming pool. Not generally detached houses, although I have approx. 5 benefit tenants in detached (hypocrite again I know), so no noisy love making at night because terraced houses, neighbours may moan.

Not as good as it may seem, great short term if u want a rest & lay in bed till 10am, but then u have the queues & humiliation of job centre, forced to wait for money sometimes-Hmm, that sounds like work too, dun'it.

by Mark Alexander

8:49 AM, 7th August 2013, About 8 years ago

Reply to the comment left by "Bill Irvine" at "07/08/2013 - 08:26":

Welcome to Property118 Bill and sorry it's taken me a while to get around to approving your first post. You are now white listed so unless you post tons of links your posts will appear immediately on the forum threads.

Given that housing is arguably THE most important of basic human needs, what I can't understand is why Housing Benefit is the first to be reduced as a result of the Benefits Cap. Can you explain that?

I concur with Mick's logic, i.e. pay the landlord first, then pay the reduced balance to the tenant. Unless I'm missing something that's far more logical.

To me it's obvious that landlords like Mick who provide accommodation to benefits claimants will do exactly what Mick is doing. This may take the heat off the Government for a few months whilst landlords evict tenants and restructure their business models but what will the real cost to Society be? Will these newly homeless tenants turn to crime, suicides, pressure on the welfare state, I shudder to think it through too far as some of the potential outcomes are horrific! Is the UK ready to deal with the fallout of this? 40,000 to 80,000 people might be a minority but all of those people will have friends family and other supporters and those numbers can form a formidable army.
.

by Bill irvine

9:22 AM, 7th August 2013, About 8 years ago

Mark,

The rising cost of Housing Benefit, now approximately £26 Billion, is one of the principal reasons for the Welfare Reforms.

As you know, levels of HB/LHA previously being paid in the greater London areas, were bypassing the £2000 per week mark, albeit there wasn't that many. Nevertheless, cases like this were highlighted, giving the impression everyone was getting the same. Whereas nationally, the average LHA payment amounts to £108 PW.

The Government, anxious to bring the bill down, introduced changes in 2011 designed to curb expenditure, particularly in the high rental areas, again London. But these changes didn't have the desired impact. Hence the further changes like the Bedroom Tax and Benefits Cap which were forced through by George Osborne as Budgetary measures, rather than Welfare Reforms.

The Benefits Cap has attracted probably more support than any of the other measures because it's seen as targeting the high renters and for that reason alone it's seen as good policy. Applying the cut, first to HB/LHA, is designed to achieve the Policy Objective of bringing down the LHA bill. The Cap itself might well do just that but other measures like the Bedroom Tax are forcing claimants to move from the Social to PRS market-place in droves and this is adding to the LHA bill. Overall, the various measures, taken as a whole, will cost, rather than save on the budget.

Everybody knows the Government's attempts to resolve the benefit issues are flawed but Parliament has approved these measures and under Universal Credit, the situation, as far as a landlords are concerned, is likely to become worse, certainly in the short term, a repeat of April 2008. As time passes however, I expect the situation should improve as it did after 2011.

Bill Irvine
HB & UC Advice & Advocacy
http://www.ucadvice.co.uk

by Vanessa Warwick

10:25 AM, 7th August 2013, About 8 years ago

Mark,

If you or P118 members would like to know more about Bill and what he does for landlords, I have created a "Spotlight" feature on him on Property Tribes:

http://www.propertytribes.com/in-the-spotlight-bill-irvine-t-8706.html

Bill is a great addition to anyone's property network.


Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

BECOME A MEMBER