If the tenant has a low wage or is claiming benefits he or she can get help from the Council will all or part of the rent under the Housing Benefit Scheme. It is useful for you to check with the tenant to see if he or she is entitled to claim. There are three things you need to clarify –
* will the Housing Benefit meet the rent charged
* how long will it be before the first payment is made
* can Housing Benefit be paid directly to you as landlord and landlady
How much rent will Housing Benefit cover
The rules on how much Housing Benefit will pay are extremely complicated.
Once a tenant has made a Housing Benefit claim, the property will be inspected by an independent Rent Officer Service. The service will tell the Council whether the rent charged is an appropriate market rent for the property.
Factors Affecting Potential Housing Benefit Claimants
A person in receipt of housing benefit may live in any size dwelling he/she chooses. However, there is a limit to the number of rooms that the Rent Officer must take into account when determining rents for housing benefit subsidy purposes.
A couple is entitled to one bedroom
Two children of the same sex, under the age of 16, are entitled to one bedroom.
Two children of either sex, under the age of 10 years are entitled to one bedroom.
If the Rent Officer decides that the premises are larger than the size criteria allowed, he will assess a notional rent. It is possible for the Rent Officer to determine that a dwelling exceed the size criteria but not to assess a notional rent. This would be because the contractual rent is low, and would be acceptable for the appropriate size notional accommodation.
Exceptionally High Rent
A level of rent which the Rent Officer decides is appropriate for a property where both the asking rent and the lowest of his other determinations is exceptionally high.
The exceptionally high test is made by comparing with premises in a wide locality with the same number of rooms as the referred dwelling, or with the number permitted by the size criteria.
Local Reference Rent (LRR)
The local reference rent represents the general level of rents in a broad locality for dwellings with the same number of rooms. It is not based on property type but on number of rooms (bedrooms and rooms suitable for living). The Rent Officer will indicate the local reference rent to the local authority when it is lower than any of his determinations
Single Room Rent (SRR)
The maximum rent used in the calculation of housing benefit for single young individuals under the age of 25 years with no children is the Single Room Rent. Single Room Rents are based on a similar formula to Local Reference Rents, but relate to a single room without use of any additional shared rooms, and assuming that the toilet AND kitchen facilities (if any) are shared. A Single Room Rent is only notified to the local authority if it is lower than any of the determinations (other than LRR) made by the Rent Officer
The amount of the SRR will vary month to month as market rents change in the area.
You should contact the local Rent Office to find out the current SRR at the time of enquiry
Pre-Tenancy Determinations (PTD)
A Determination made by the Rent Officer prior to a proposed tenancy being taken up or renewed. The application must be directed via the local authority and the Rent Officer will issue the decision within 5 day of its receipt. A PTD application should only be made where there is a clear intention to create rental liability in the future.
Unfortunately neither the Housing Benefit Office nor the Rent Officer can indicate how much Housing Benefit will be actually be allowed on the property UNTIL the tenant has moved in and made a claim. However, this process gives some guidance on the sort of maximum levels that would be paid.. This does not imply that the Housing Benefit will pay at this level.
Claim Related Rent
From 3rd April 2000 a new Claim-Related Rent determination replaces the decisions the Rent Officer sends to local authorities. The Rent Officer will still carry out all usual determinations but the lowest valuation will become the Claim-Related Rent. The Claim-Related Rent will be the net of all ineligible
Service charges except meals and it will not include water or sewage charges. The Rent Officer will notify the local authority of the total valuation of all ineligible services, water and sewage charges, which will be excluded from the Claim-Related Rent.
If the Council has paid Housing Benefit to a tenant that he or she is not entitled to. Then they will stop the benefit until the overpayment has been “Clawed Back”. Similarly, if the Council has paid Housing Benefit direct to the landlord or agent, that the tenant is not entitled, any overpayment will have to be paid back to the Council and then, of course, this amount would have to be recovered from the tenant.
A tenant who is on a low income may not be able to afford this. Hence the caution over Housing Benefit claims.
If you are a landlord of a number of properties, and are being paid housing benefit on some or all of them (including houses in flats). The council can claw back the rent from any of the payments you receive.
A word of warning – make sure that you have a suitable clause in your letting terms and conditions to cover claw backs
A suggested clause would be:
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.
It can take several weeks before the first payment of Housing Benefit is made. Some councils time delay can be anything up to 12 weeks!. It is therefore advisable to obtain at least some monies from the tenant until the Benefit is paid. This will help keep any shortfall to a minimum.
Tenants that move from one property to another will have to make a fresh Housing Benefit claim, and therefore may not be entitled to the same level of Benefit claimed previously. This even includes moving from one bedsit to another in the same house!
Remember the tenant is responsible at all times for the payment of rent. The council may assist the tenant to pay the rent through the Housing Benefit Scheme, but the Council is not itself responsible to you.
This article attempts to summarise these specific areas of property management. They do not set out to provide definitive answers or requirements to any one situation. It is strongly recommended that you seek local information regarding Housing Benefit.
Robert J. Lewis FNAEA
MICHAEL G. LEWIS & SON
Property Managers & Letting Agents
54 Mansel Street
Swansea SA1 5TE
Tel: +44 (0)1792 651166