Why are local authorities Paying Housing Benefit directly to tenants?

by Readers Question

16:49 PM, 23rd January 2014
About 5 years ago

Why are local authorities Paying Housing Benefit directly to tenants?

Make Text Bigger
Why are local authorities Paying Housing Benefit directly to tenants?

I have recently written to Wellingborough Council as follows and would be interested in the views of other landlords (in particular those with a detailed understanding of the relevant legislation):

Why are local authorities Paying Housing Benefit directly to tenants?

It has recently come to light that Wellingborough Borough Council has been paying housing benefits directly to my tenant without my knowledge. The tenant has spent the housing benefits money and now owes me in excess of £3000 in rent arrears and court fees. Despite the fact that the tenant has fraudulently squandered the housing benefit that was due to me Wellingborough Borough Council are unwilling to cooperate even in providing me information about the payments that have been made or any new address for the tenant that will enable me to pursue the debt through the courts. This is a wholly unacceptable state of affairs.

The Legal entitlement to housing benefit is for the sole purpose of subsidising rent for a tenant who lacks the means to pay rent. The sole legal beneficiary of the money allocated for this purpose is the tenant’s landlord.

Your staff have stated to me that:

1. The council is not obliged to inform the landlord that housing benefit is being paid to the tenant. The council will however inform the landlord under some circumstances.

2. The tenant is not obliged to pay housing benefit on to the landlord. The council will however pay the housing benefit directly to the landlord if the account is 8 weeks or more in arrears but (implicitly) only then on the basis that the landlord is aware that housing benefits are being paid.

3. The council will not provide details of the tenant’s new address to the landlord under circumstances where the tenant has deliberately failed to inform the landlord of an award of housing benefits and failed to pay the awarded sum to the landlord.

The stated reason for withholding information from the landlord is to avoid breaching the data protection Act. Since the tenant has provided the landlord’s details to the council it follows that the landlord is aware of the tenant’s details and vice versa. By informing the landlord of the housing benefit award the only new information provided to the landlord is the fact of the housing benefit. How can it be a breach of the data protection Act to inform the landlord that he is to be the legal beneficiary of a sum of money via a housing benefit award whether or not the sum is paid directly to the landlord? Conversely it could be considered to be a breach of the data protection Act to hold the details of the landlord without the knowledge or permission of the landlord.

Moreover the council has a duty of care to confirm the validity of the rental agreement supporting the claim which would necessitate contacting the landlord. In any event by paying housing benefit directly to landlords under particular circumstances such as 8 weeks of arrears the council is implicitly acknowledging that the imparting of information about a housing benefit award to the landlord does not constitute a breach of the data protection act.

By deliberately withholding the tenant’s new address from the landlord under circumstances where the tenant is fraudulently concealing and withholding the housing benefits from the landlord the council is complicit in that fraud and the further perpetration of fraud onto the next unsuspecting landlord. The effect of this policy is to force landlords to subsidise housing needs that are the responsibility of the council.

It follows from the above that Wellingborough Council is knowingly exposing the landlord to losses.

Wellingborough council owes a duty of care to both the landlord and the taxpayer to ensure that housing benefit is received by the landlord to whom it is owed.

By definition tenants receiving housing benefit will be short of money which will inevitably result in many tenants electing to illicitly withhold some or all of this money from their landlord.

The implementation of a policy to pay housing benefits directly to tenants is a demonstrably reckless abandonment of the local authority’s duty of care to landlords and the taxpayer. The breach of duty of care is worsened by failing to inform the landlord about the payment of housing benefits.

The effect of this ill conceived, short sighted and borderline lunatic policy is entirely counter productive:

1. Tax payer’s money is illicitly squandered by tenants

2. Landlords are faced with unnecessary financial stress

3. Landlords will refuse to rent to tenants receiving housing benefits reducing the available housing stock further and leading to more cost for the tax payer to house such tenants in Bed and Breakfast accommodation.

What are the intended benefits of this policy (and to whom)?

Please can you urgently review your policy and respond to me with your intended course of action. I have copied this letter to the member of parliament for Wellingborough.

Please now provide with the following information which I trust you will cease to withhold:

1. The date the application for housing benefit was made
2. The date the housing benefit was awarded
3. The date and amounts of all housing benefits paid to date
4. Any/all new address details that you have/will have for the tenant

I hold Wellingborough Council liable for my losses and costs in this matter. Please can you now compensate me for my losses and costs:

Rent arrears £3,295.00
Court fees £ 190.00

Kind regards
Jonathan



Comments

Gary Nock

20:13 PM, 23rd January 2014
About 5 years ago

Jonathan I see no one as yet has replied to your post. I do not have that much experience of benefits tenants but this forum on various threads contains concerns about paying benefits tenants their money direct without paying it to the landlord. I indeed had a benefits tenant once. And that was it. The local authority would not speak to me when the rent stopped coming in and then did my legs by saying I must have known she was working and docked £1200 of rent I was owed.

They hide behind data protection. It is unfortunately the law though and they will not disclose any details to allow you to trace the tenant. You can try tracing companies but if the tenant is on benefits they will not pay and you have to write the money off. Facebook is as good a place as any to try and find them.

The direct payment to tenants has led to increasing amounts of landlords withdrawing from the benefit tenant market. Read the thread on 200 benefits tenants served notice by Kent landlord to see the strength of feeling. This started when some smart a**e in government decided it was a good idea to give tenants more responsibility by trusting them with YOUR money. In the rose tinted garden of Eden in which the great and good reside where the human spirit is able to be saved by showing them compassion and kindness nobody is beyond redemption.

Yeah. Right. Welcome to the real world. Watch Benefits Street for a clue as to how some peoples budgeting and social skills match up to the norm. It's TV I know but I tell you I have seen James Turner St in the flesh, and many others like it and it's pretty bang on.

I know this is closing the stable door after the horse has bolted but many landlords now insist on 2 months rent up front, a sizeable deposit, a guarantor, and rent insurance guarantee. And not many benefits tenants can do that.

In conclusion Jonathan the landlords and I on this forum feel your pain and frustration. You are dealing with a local authority where Jobsworths and bureaucracy are in charge and the universe is a parallel reality. However hard it is you may just have to write it off and put it down to a very bad and expensive experience.

Sally T

22:13 PM, 23rd January 2014
About 5 years ago

We've currently started working with our local council to take people on benefits into our bedsits. We only agree to do it on the grounds that the rent is paid directly to us, this is only possible if the tenant qualifies for rent assist. The council are now so desperate they will do what they can to work with us, it's got us 2 new tenants, we'll see how it goes.
We use the data protection argument when the council want information off us when chasing tenants for council tax, I find it highly amusing 🙂

Gary Nock

22:49 PM, 23rd January 2014
About 5 years ago

Hi Sally I have used the data protection argument when the LA asks if a previous tenant paid their rent on time etc. I make them get the tenants agreement on a signed form and stipulate what grounds under the data protection act they are applying under and how they are going to use it in such a way that it does not infringe the tenants "human rights"

Great fun. They whinge and moan about bureaucracy and take about 6 weeks to respond. Then I tell them that to comply with dp I have destroyed the records.

Sauce for the goose I say.......

Colin Childs

0:17 AM, 24th January 2014
About 5 years ago

All part of the switch to Universal Credit where a claimant receives one single payment.
People need to learn to manage their own finances. Somewhere along the line the skills of personal financial management have been lost.

Jeremy Smith

1:02 AM, 24th January 2014
About 5 years ago

Reply to the comment left by "Colin Childs" at "24/01/2014 - 00:17":

A letting agent in Lancashire told me that when they move in a HB claimant, they stipulate a 2 month deposit, which the tenant cannot always provide, therefore allowing them to apply to the LHA for direct payment for the HB immediately, this means the letting agent gets the HB directly and immediately, and helps the tenant to acquire a place to live, a roof over their head, and means that they never get into arrears with the rent...
..a win..win in my books.
...It was suggested to them by the lady at the Housing Benefit Department !!

This LHA has obviously found a way of circumventing the UC system even before it comes in, since they realise the importance of keeping their residents in housing.

Jeremy Smith

1:08 AM, 24th January 2014
About 5 years ago

In my opinion, if the LHA do not make payments directly to the landlord, there will be alot of landlords with arrears which they will find hard to recover,
and ultimately,
there will be a huge number of ex-tenants with nowhere to go and no landlords who will take them....

sharon underwood

6:54 AM, 24th January 2014
About 5 years ago

Reply to the comment left by "Jeremy Smith" at "24/01/2014 - 01:02":

Hi new to this forum but over last few wks I have had untold grief with HB tenants & council forcing me to nearly give it all up, however I put clause in my tenancy that any HB goes to me direct & there is nothing they can do as tenant has signed contract, I have also been dealing with council staff advising tenants on legal matter & have gone as far a getting 1 lady in particular suspended.
I have then told the council I will NOT be paying any overpayment back as THEY advised tenant that "legally" I could NOT gain entry to property as council had advised THEM that despite the fact they have gone I still need to go thru all legal requirements which is fine by me & my MP has now taken up the case.
These people at the council think they are god & they can make & change the rules as they see fit so I would urge ANYBODY & EVERYBODY to write to their MPs & get them to start fighting for OUR rights & the rights of our other tenants, this is very easy to do I will put up a link you simply put in your postcode & send them an email IF they get enough complaints from landlords we may actually get some rights

http://www.writetothem.com

I have had the worst experience in 12yrs of letting & I now have to take on another council re my HMO so may need some expert advice from people on here

Sarah Pajger

7:27 AM, 24th January 2014
About 5 years ago

You seem angry and fustrated and I dont blame you!
When one of my HB tenants absconded, I went thru her 50 bags of rubbish that she left behind for the rats to devour and I found a letter from her daughters school. I then turned into a temporary "bunny boiler" and sat outside the school gates waiting for her to drop her daughter off. I followed her back to her new house which didn't have 50 bags of rotting rubbish in the garden. I now had her address! I decided it was pointless to chase her for the money she owed me so I covered the back of my car and filled the boot with her rubbish......suddenly her garden did now have almost 50 bags of rubbish sat in it,. After I emptied my boot.. It was like a scene out of Eastenders. Although no money retrieved I feel you can't put a price on revenge!

Sally T

8:06 AM, 24th January 2014
About 5 years ago

Reply to the comment left by "Sarah Pajger" at "24/01/2014 - 07:27":

Well done, wish I'd of done this a couple of times 🙂

Jim Parsler

16:18 PM, 24th January 2014
About 5 years ago

When we first started with LHA tenants we had similar issues, but it is important to have a clause in the AST stating that the tenant allows you to talk to the council about their claim. You may also have to complete the council's own form as well but this at least means that they are obliged to speak to you. if you cannot get direct payment it is important at the time of the first missed payment to call the council to confirm that payment was indeed made, if payment was made ask for the claim to be suspended immediately until the tenant goes in to explain why they did not use their LHA to pay their rent. The council will NOT treat this as fraud, so tell them that if they continue to make payments to the tenant they will be compounding the existing breach of contract. Councils will not double pay for the same period so by suspending the claim you should only lose 2 weeks of LHA, and if you are willing to sit out the next 6 weeks you can then get a direct payment made.

More recently our local council realising that fewer landlords will deal with LHA have been willing to agree to direct payment as a condition of tenancy up front provided that the rental is in line with LHA, ie do not expect to get a top up. We will also only accept a LHA tenant with a guaarantor who has to pass a credit check. You can get these done through the NLA for £25 and we charge the tenant this as an admin fee, so if they mess you about you are not out of pocket.

At the other end of the tenancy, if the tenat bunks off without giving due notice and the council tries to claim back the LHA overpayment from you because it is the easy option, then you do have to get a bit anal retentive. Failure to give due notice is a breach of contract and also against the housing act, and so a breach of statute. Also the councils own benefit regulations state that the overpayment should be recovered from the party that should have notified the council, which is always the tenant. If you quote this last one at them then tend to go away, though I have never hear of them actually trying to recover the money from the tenant.

We found out that our local council will not even record a bad debt on one of their own tenants unless it is in excess of £2.5k, so my advice is to always get a guarantor even if it means a couple of extra weeks void. Each time we relaxed our selection criteria we have been screwed over.

1 2

Leave Comments

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

Forgotten your password?

OR

BECOME A MEMBER

38 Degrees have a petition to pause UC rollout

The Landlords Union

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents

Learn More