HB/LHA Overpayment Liability

[tom999]

If a landlord's (LL) property is fully managed by a letting agent (LA) and LA gets HB/LHA paid direct to them, and council wants to recover overpayment, who is liable: LL or LA?

HB/LHA overpayments are usually as a result of tenant’s circumstances changing. Problem with direct HB/LHA payments to LA is that LA must inform the Housing Benefits dept in writing of any changes in the tenant’s circumstances, as soon as they are aware of them, e.g. if tenant moved to another address, rent changed, tenant’s income has changed, number of children/adults living with the tenant has changed?

So what does housing benefit law say that deals with overpayments?:
Housing Benefit Regulations 2006 (http://www.opsi.gov.uk/si/si2006/uksi_20060213_en.pdf) [page 84].
para 95 "(and in this regulation the “landlord” includes a person to whom rent is payable by the person entitled to that allowance)—"

"Person from whom recovery may be sought"
para "101.—(1) For the purposes of section 75(3)(a) of the Administration Act(a) (prescribed circumstances in which an amount recoverable shall not be recovered from the person to whom it was paid)..."
"(3) For the purposes of paragraph (1), “landlord” shall have the same meaning as it has for the purposes of regulation 95."

The above 'could' be interpreted as the LA is liable as they are receiving HB payments.

Does anyone have a definitive answer? ;)

[jta]

The above 'could' be interpreted as the LA is liable as they are receiving HB payments.

Does anyone have a definitive answer?

Betcha they're not though. :p

[tom999]

This maybe true!

...or maybe not. :)

Looking at it from another angle...

If HB reg.'s state that whoever receives HB/LHA (i.e. "the landlord" who in this case is the LA) is liable for overpayments, and:

If LA contract with LL has terms which say that LL is liable for overpayments, even if property fully managed and direct payments made to LA, would these terms be seen as 'unfair' if they were deemed to contravene HB reg.'s?
If HB dept. state that LL (not LA) is liable, could they be challenged?



BTW: I am posting the above query as someone messaged me with it, and thought it may be of interest to the wider forum, as I couldn't give an accurate answer.

Hopefully the legal experts and people with similar experiences can offer advice...

[susanne]

my personal view is that the agent is but an agent - and that in law all legal duties and responsibilities are those of the landlord

i came across this lately

under the Housing Benefit (General) Amendment (no.2) Regulations 2001, payments cannot be reclaimed from landlords who have been paid direct if the landlord has cooperated with the benefit office in reporting a suspected overpayment or the tenants changed circumstances.

[tom999]

"my personal view is that the agent is but an agent - and that in law all legal duties and responsibilities are those of the landlord"

Thanks for your personal opinion.

"under the Housing Benefit (General) Amendment (no.2) Regulations 2001, payments cannot be reclaimed from landlords who have been paid direct if the landlord has cooperated with the benefit office in reporting a suspected overpayment or the tenants changed circumstances."

Yes, this is part of 2006 HB Regs (http://www.opsi.gov.uk/si/si2006/uksi_20060213_en.pdf) [page 86, para 101].

Any legal experts?

[Emma1973]

Everything I have read suggests that the LA can also be asked to pay the HB back in th event of the HB being made direct. But I have asked some Welfare bods to see if they can come up with some guidance or legal stuff.

I've also seen it in some LA agreements with the LL that the LL will be responsible for any monies taken back for overpayments, which suggests that LA are aware they will be asked for overpayments. And lastly Landlord Zone themselves recommend that the following clause is put into the letting terms and conditions;


Should a tenant be or become eligible for Housing Benefit, and that benefit is paid directly to the Landlord or Landlord's Agent, it is hereby agreed that the Landlord indemnifies the Agent against any claw back" made by the local authority's Housing Benefit Department.

My own guide book, with respect to overpayments caused by official error and therefore not recoverable talks about 'no relevant person' caused the official error to be made. It then goes on to describe a relevant person as:

*A person to whom the payment was made, including a different person acting on the HB claimant's behalf or a landlord'

Its my belief that a 'relevant person' would also be someone from whom overpayments can be claimed. therefore they should also be informing the Local Authority should they be aware of any changes of circumstances. Look again at those Housing Benefit Regs 2006, and page 94 where it makes specific mention of an 'agent'
Now I'm going back to bed, its too early on a Sunday to be reading Housing Benefits Regs!

[jeffrey]

Agent (A) merely receives rent on L's behalf. It's only L who is lawfully entitled to receive rent, no matter whether T pays L direct or via A.

[tom999]

Thanks Emma and Jeffrey. :)

Just to clarify, as L is lawfully entitled to receive rent (directly or via A), then L is liable for overpayments.

Whether property is fully managed by A or A/L contract terms have no relevance.

Deciphering HB Reg.'s is always fun!

[Emma1973]

Right, I did say I would try and find some guidance or legalish stuff and I did! From a fellow freelance HB Advisor, he succintly put it as:

In very simple terms, an overpayment will (normally) be recoverable from the agent only in the case of a change of address, or if they fail to notify the Council of information that might affect benefit. HBRs 88 & 101 apply - working age regs.

He directed me to R(H) 10/07, a case taken to Tribunal and the Secretary of State. Heres the link: http://www.administrativeappeals.tribunals.gov.uk/aspx/view.aspx?id=2148 which summarises it, an actual copy can be downloaded if you feel like punishing yourself :D But for those who dont fancy it, the important bits seem to be:


The Secretary of State argued that section 75(3)(a) of the Social Security Administration Act 1992 should not be read as being subject to the law of agency, following R(IS) 3/07, because the overpayment provisions in the legislation disapplied the law of agency

Held, allowing the appeal, that:
1. the secondary legislation (the Housing Benefit (General) Regulations 1987 and the Housing Benefit (Recovery of Overpayments) Regulations 1997) demonstrates a clear intention to include an agent within the definition of landlord, effectively without distinction (paragraph 20);

2. the reference to “person” in section 75(3) must be taken as being wide enough to encompass both a natural person and an incorporated company (Schedule 1 to the Interpretation Act 1978) and both a landlord and an agent, and therefore the secondary legislation is intra vires and entitled to treat the landlord and his agent interchangeably by virtue of the primary legislation (paragraphs 22 to 24);

3. the overpayment was therefore recoverable from the agent notwithstanding that it might have accounted to its principal, the landlord, for such sum or part of it (paragraphs 1 and 24).

So, it appears in certain circumstances it can indeed be claimed from the agent

[David Lawrenson]

I would agree with the view that the administering body for Local Housing Allowance can only claim back overpayment from a landlord if it could be shown that the landlord knew that the tenant had become not entitled to the payment but the landlord then chose not to notify the paying authority.
This was also the opinion of the National Landlords Association on this when I asked them.
I would say, however, that landlords letting to LHA tenants and who are being paid direct (perhaps because the tenants' arrears merited direct payment or because the tenant was deemed vulnerable so payments were made to the landlord in the first place) should make sure they stay up to date with the latest rulings on claw back. See my article: http://www.lettingfocus.com/pages/myarticles_Local_Housing_Allowance.html
for more on this.
Hope this contribution helps.
David Lawrenson
www.LettingFocus.com
Topic Expert

[mind the gap]

Well...I suppose the Topic Expert arriving three months after the discussion ended is ...better late than never? :rolleyes: