A council has moved to relax the rules regarding direct rent payments in order to cut the number of evictions for rent arrears.
Since the introduction of the Local Housing Allowance (LHA) system of paying Housing Benefit (HB) on 7th April 2008, private sector rent payments have been made direct to tenants, who were expected to pass the money on to their landlords.
Only under exceptional circumstances have rent payments be allowed to be made direct to landlords, and the system is set to continue similar under the Universal Credit where claimants receive all their benefits in one single payment. In addition, social landlords (local councils and housing associations) will come under the same regime where rents must be paid to the tenant.
However, in the years since the system was introduced many private landlords have complained that rent arrears have become an issue. With HB payments to tenants, there is some evidence to show that increased arrears are leading to landlords refusing to take on HB tenants and evictions have risen.
This, it appears, is leading to some degree of relaxation in the rules by some councils by them agreeing to pay rents direct to landlords, where this has been made a condition in the letting agreement.
A spokesperson for the DWP has said on the matter: “Although the Department for Work and Pensions has overall responsibility for the scope and structure of the Housing Benefit scheme, local authorities have full statutory responsibility for its day-to-day administration.
“This department cannot give an authoritative interpretation of the regulations; that is a matter for authorities to decide subject to any legal ruling and dependent on the circumstances of each individual case.”
Private landlords in South Tyneside have been in discussions with the council in a move to relax these rules to try to cut the number of evictions in the borough. Landlords have argued that a rule change would result in a substantial cut in the number of evictions in South Tyneside and make the landlords hundreds of pounds a year better off.
One local landlord – Colin Campbell – contacted the Department for Work and Pensions (DWP) earlier in the year to raise his concerns and was told it was up to the leadership of individual local authority benefit offices on how Housing Benefit was administered.
The outcome is that last week, Dawn Dennison, revenue and benefits manager at South Tyneside Council, introduced a new rule change to HB payments at a meeting of borough landlords in South Shields’ Littlehaven Hotel.
In welcoming the council’s approach to this, Mr Campbell, has said:
“From this week it will be possible for private landlords to be paid the Housing Benefit directly if they make it a specific condition of the lease.”
The council’s move appears to be in response to evidence that thousands of tenants nationally are being evicted because they were paid the Housing Benefit but chose to spend the money instead of passing it on to their landlords.
A council spokesperson has said: “We are working closely with landlords to make them aware of flexibility which exists within current legislation regarding payment of Housing Benefit.”
Where landlords agree to take payments direct, and as this rule says, this must be a condition of the rental agreement, landlords must consider the following:
– Councils or the tenants can cancel the arrangement to pay direct.
– Councils do not assume any responsibilities for the tenant by making payments direct to the landlord.
– Landlords must inform the council immediately in writing if the tenant moves out or becomes aware of any reasons which affect the tenant’s benefit entitlement.
– Landlords will be responsible for the repayment of any overpayments.
From enquiries we have made with Housing Benefit Specialist, Bill Irving, it would appear that this council is unusual in the stance it has taken on this matter and it is thought most councils will still insist on payments to tenants in the first instance:
However, the HB regulations do provide for redirection to the landlord under special circumstance:
a) Statutory 8 weeks rule; where 8 weeks or more rent must be outstanding and/or
b) Discretionary provisions, including where tenants meet the “vulnerability” (mental health, drugs, alcohol misuse etc) and/or “delinquency” (repeated rent “arrearist”) criteria.
c) Again under discretionary; where Landlords agree to REDUCE their normal rent to the equivalent of the LHA level for that area.
Most UK councils apply the above approach, rather than the broad brush approach referred to in the article.
Universal Credit, in contrast, will be dealt with by DWP and will therefore operate in a different way.
The rules are not as defined, as yet, and will be mainly based on “guidance” rather than regulation.
Neither the tenant nor landlord will have a right of appeal. This represents a major shift from the Housing Benefit system.
More information for landlords on Universal Credit:
HB Advice & Advocacy &
Universal Credit Advice
Council relaxes Housing Benefit payment rules to cut the number of evictions for rent arrears. http://t.co/KjAp6aEVew
— LandlordZONE (@LandlordZONE) October 7, 2014