LandlordZONE Newsletter – April 2009 – Claims for Housing Benefit

Claims for Hosuing Benefit – help your tenants to pay the rent

Editorial:

Following one of the UK’s longest periods of sustained economic growth, encouraging too much borrowing, it seems ironic that our government is hell bent on record borrowing (£175 billion this year) to try and get us out of this mess.

Faced with a shrinking economy, severely reduced earnings from the City and falling tax revenues the Chancellor this week set out a course which would appear to penalise the very people likely who create wealth—the only true way to get us out of debt.

The general consensus seems to be that his future growth forecasts, upon which he has based his budget, are overly optimistic, and despite the revenge taxation of the rich being popular with some, it seems likely the burden of extra taxation will fall heavily on us all—after the election!

The big danger is that a government, with such astronomical debt, will be faced with the prospect of massive cuts in public spending (too politically sensitive?) or to print more and more money, inflating its way out of debt.

This would undoubtedly result in inflation in double figures again and dramatic devaluation of sterling, with particular long-term implications for investors.

In the meantime, rent arrears and tenant default are issues that landlords and agents are having to deal with right now.

Although many landlords wish to avoid that part of the lettings market which deals with Housing Benefit tenants, sometimes they don’t have a choice—a tenant that’s been made redundant or losses a large part of their income may have no option but to consider a claim for HB.

This month’s LandlordZONE Newsletter tackles the thorny and complex issue of claims for HB.
Despite the problems, HB can be a life saver for both landlord and tenant. There will inevitably be delays when you embark on the process but patience and a little expertise will often pay off, and a successful claim can prove a very satisfactory outcome.

When claims are rejected, and Councils now facing a 25% increase in such claims may be tempted to do this, it’s not the end of the road—very often there’s a good change of overturning this on appeal if you know how to go about it.

Here, Michael Clayton explains how his expertise in these matters can help landlords through the system.

Tom Entwistle

This Month’s Topic: Claims for Housing Benefit

Housing Benefit claims now come under the new regime of the Local Housing Allowance (LHA)
This is a new way of calculating Housing Benefit for tenants renting accommodation from private landlords. It was introduced nationally on 7 April 2008.

The main change for landlords is that the payment of LHA will be made directly to the tenants who will be responsible for paying the rent themselves.

What most landlords object to is the seemingly inequitable and downright unfair way the government has imposed this on privates landlords, whilst exempting local authority and Housing Association social landlords—the latter on the government accepted principle that it could seriously affect their cash-flow.

At a time when landlords are likely to find themselves with tenants who need to rely on HB payments, often through no fault of their own—they may have been made redundant—these rule changes present something of a challenge to any landlord looking to remain solvent themselves.

However, rules are rules and private landlords will have to come to terms with them.

In fact there’s probably more you can do than you thought to increase your chances of success with HB claims and rent payments, though a certain amount of expertise is needed.

Local authorities will consider paying the landlord directly where there is evidence to suggest that the tenant is unlikely to pay their rent and “making direct payments would be in the interests of the tenant.”
Where arrears of benefit have reached 8 weeks, the local authority will arrange to make payments direct to the landlord “unless it is not in the tenant’s overriding interests to do so.” However, landlords should not wait for the 8 week period to be reached before contacting the local authority.

Michael Clayton (Associates), a specialist Housing Benefit & LHA advisor, has produced the content for this newsletter.

Michael can be reached on michaelclaytonassociates@live.com
Telephone: 01274 629315

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