LHA - Guidance ammended on Direct Payment to Landlords

We are winning, we are winning!!

As you all know, for our tenants that claim LHA, we have to wait until they were actually over 8 weeks in arrears - including time served - as they used to say in the council. This meant usually a 3 month arrears situation for most landlords.

You may also recall that there was a Tribunal ruling in Oct 2009, where the Judge ruled against Coventry Council and stated that the guidance to local authorities that rent was not in arrears until the time had been served was wrong. Landmark ruling, which seems to have turned things around.
This is the statement the Judge made at the time:

Rent is in arrears once the contractual date for payment has passed irrespective of whether rent is due in advance or in arrear. Regulation 95 of the 2006 Regulations refers to a liability to pay rent and the liability in this case is to pay rent in advance

Thanks Judge CJ Jones, for bringing sanity into back into the matter.

The government seems to have taken heed of that ruling - Hallelujah!! Sanity has finally prevailed.


The Department of Work and Pensions now agrees that, when a tenant has already skipped payment of one month’s rent, the landlord can claim the arrears on the day after the second monthly payment is missed.

The DWP issued a revised Guidance Manual in Dec09, and the guidance manual now states: "

4.40 If the tenant builds up rent arrears of eight weeks or more, the landlord may commence action to evict them. Once arrears have reached eight weeks, you will be required to make direct payments to the landlord under the general provisions in Regulation 95 (1)(b) unless it is in the overriding interests of the claimant not to do so (see Fit and proper test earlier in this chapter).

4.41 Rent is in arrears once the date it is due to be paid has passed regardless of whether it is due to be paid in advance or in arrears.

then goes on to give two examples.

Example 1: Rent paid monthly in advance
John is due to pay his rent monthly in advance on the first day of the month. He pays rent on 1st August but loses his job on 28th August. He claims HB on 28th August 2009. His rent is due on 1st September but he fails to pay his rent on that day.

The local authority decides to pay his HB two weekly in arrears and makes two payments equivalent to four weeks rent during September. The tenant does not pass any of his benefit to his landlord.

He fails to pay another month’s rent when it is due on 1st October. On the 2nd October he is in arrears by two months’ rent. The landlord advises the local authority. The authority should make payments direct to the landlord from that point.

Example 2: Rent paid weekly in advance
Suki pays her rent weekly in advance but gets into difficulty when she stops work. She claims HB on 30th October 2009 and fails to pay her rent on the 2nd and the 9th November.

She gets her first fortnightly payment of HB in week commencing 16th November but
fails to pay any rent to her landlord. The local authority is unaware of the situation until the landlord contacts them on 22nd December to say that she has missed eight weeks’ payments.

The local authority makes direct payments to the landlord from that date.

The guidance also says that:

4.42 In both these examples the local authority must pay the HB to the landlord because the tenant is in arrears by eight weeks unless it is in the tenant’s overriding interests not to do so. However,if the local authority becomes aware that the tenant is failing to pay their rent before eight weeks worth of payments have been missed it should consider direct payment under the safeguards. Additionally, if there is already a history of non-payment it would be prudent to make direct payments to the landlord for a maximum period of eight weeks while a decision is being reached.

So folks, don't let the Ts get away with any more than they have to.

Shelter Report on implementation of LHA

Shelter has released a report on its findings on a study monitoring the implementation of local housing allowance. I like the report title - For Whose Benefit. Very apt question indeed. There is a summary report for those who don't have the time or inclination to read the whole thing.
Having read the report, I would say that this gofmint had better read it and take not of its findings, use them its recently announced public consultation on housing benefit. Or be damned.

The report says what we Landlords have known all along. OK, bear with me and I'll give you the jist...

1. Most claimants would prefer to have the LHA paid directly to the landlord. Did you hear that, gofmint. In your consultation paper, section 6.8, you make assertion that direct payment is an important component of reforms to the system, providing your customers with the responsibility for handling benefit payments and paying their rent which they will need when moving into work. You assume that (i) all claimants want to work and (ii) all claimants can manage money. Both assumptions are wrong, okay. And I can prove it to you.

2. Claimants were finding it hard to find landlords willing to rent to LHA claimants or affordable homes. Why would we want to open ourselves to legalised fraud? Yes, dear gofmint, you have legalised daylight robbery aimed directly at private landlords - the very ones that you claim in 6.4 of your consultation paper "play a crucial role in providing flexible housing choices for people who cannot afford or choose not to buy their own homes". If we play such a crucial role, stop treating us with such contempt and put your money where your mouth is!!

3. Need for top up payments was a problem, which means LHA award is not sufficient, hasn't and isn't being calculated properly. This basing the rent on a Broad Market Rental Areas thing needs a revamp.  The amount of time I spend chasing topups.... its reduced now I use DD to collect rents and top ups.

4. 95% of claimants they surveyed were finding it difficult to manage their finances. doh! I could have told them that ... people who have not been taught money management or ever learnt it or worked for it, can't suddenly become responsible money managers can they??. Its not their money is it? easy come ... easy go. But the gofmint claims in section 6.8 of its document that" many customers now operate bank accounts successfully, in may cases for the first time, as a result of this reponsibility". Many have also defrauded the tax payer and not paid the benefit to the landlord-but gofmint does not see that as fraud, does it?

5. LHA payment cycles of 2/4 weeks causing problems with rent arrears - not aligned with monthly rent dates that landlords require. The very nature of the system encourages LHA claimants to breach their tenancy agreements. from the get go. LHA is paid 4 weekly in arrears - so the service is already provided before the rent is paid. And if some bod at the benefit office decides that the claimant was not entitled to it, then they don't pay it. And who has lost money? dear old trodden-upon landlord!! Do they care, these bods, no sir, they don't .... afterall they will tell you "we are just following gofmint guidelines"... yeah, right!! Bet they wouldn't be so complacent if they had shortfalls in their paypackets because they were deemed not to have done their jobs properly during the month!

6. Reduction in LHA when people move into work is a disincentive to work ... eh, yes, common sense tells us that, doesn't it? why not find a way of easing the transition period, or better still set the LHA rates to better reflect the going rents?

7. Claimants felt that the administrative process of the LHA was a problem ... LOL, ROF, ha ha ha, ho ho ho .... excuse me, but I had to laugh at that one. Don't we just know it. As a landlord, I am the one at the receiving end of the cockups, sorry, administrative errors, that the councils make in administering the scheme.

Thank you Shelter, for that incisive and unbiased report. I will most certainly be putting in my input into the consultation process - bet I will. Question to other landlords is "will you participate??" I really really hope so.

Local Housing Allowance - Government Consultation Document released

Well, well, well, looks like this gofmint is finally listening. Not a very strong point of theirs, one must admit. But, lets give them credit, at least in taking the first steps toward putting right, this travesty of a regulation.

The gofmint has now released a Consultation Document to look at how the LHA is being implemented, amongst other things. You can read or download the whole Consultation Document, just so you have something to look at later or use as firelighter when you get the bbq out next summer.

Let's have a look at a few points made in the summary, shall we:
1. The Local Housing Allowance introduced last year has already brought in a fairer way of calculating Housing Benefit for tenants who live in private rented accommodation. Our objective was to reduce barriers to work by giving people more responsibility for their Housing Benefit payments and to provide a better service based on simpler rules.

Hmnn, yes its a fairer way to calculate entitlement, but this thing about giving people more responsibility for their housing payment, in reality, means giving them licence to steal from you and me as the benefit is not used for its intended purpose but for booze, fags, toys like 40inch LCD TVs and the latest gadgets.

2. The complex interaction with other benefits and weekly adjustments in payments for those who work variable hours can also reduce the incentives for work

you got that too right! b****y nightmare. I have a couple whose LHA has varied every single 4-week period due to the hubby working, that I just want to get rid and give myself some peace. Not their fault obviously, but its low paid work, benefit gone down from £94/wk to something like £30/wk, and they are getting further in arrears. Frankly, he'd be better off not working. But then he wants to work, and I support that.

3. The way in which rates are set has meant that customers in some areas have benefited more than others. In some areas, Housing Benefit can support customers to live in accommodation that many people in work cannot afford. This makes it harder for customers to come off Housing Benefit when they move into work. Furthermore, including high rents when setting Local Housing Allowance rates has driven up benefit levels and has contributed to the annual Housing Benefit budget rising more than it otherwise would have done

If the gofmint had thought it through, they would have seen it coming. We landlords knew that, but as they don't consider us worthing of being listened to, they went ahead anyway. I told you so, dear gofmint!!

4. It also sets out our long-term aspiration to move towards greater integration of Housing Benefit into the wider tax and benefit regimes

oh dear! the system will become so complex, no one will be able to work it out properly - not even Gordon himself who is very clever at putting together indecipherable (at least to the common man) tax and benefit schemes. Means tested schemes where those who need it most, don't get it and those who don't need it get it, and then gofmint complains there's pots of funds left unclaimed. You work that one out.

5.  More integrated benefit provision is not something we could introduce overnight. Change of this order will take time if it is not to involve unacceptable cost and be difficult to implement

The final caveat and "get-out" clause!! yes of course, dear gofmint, we understand perfectly. These things do take time, which you, thankfully-hopefully, do not have.

Fellow landlords who take LHA claimants, I hereby appeal to you, to ensure that you give the gofmint your views on this matter, tell them your experiences, good and bad so they get a balanced view, and hopefully, things will change for the better. I'm not holding my breath though!! ha!

More LHA Headaches!!

Its been one of those days today. I've spent a lot of time on the telephone to Housing Benefit offices in three different local authorities, and postponed the call to a fourth till tomorrow. I'm tired, frustrated, and down right angry. And tired of well meaning but largely powerless council staff trying to explain to me how the LHA scheme works-as if I didn't know already. Oh yes sir, don't I just know how it works.

The people in gofmint that thought up the LHA scheme and insisted on having LHA paid direct to tenant in all cases, and the civil servants that drew up the guidelines, have a lot to answer for. They just haven't got a clue about the damage they have caused with their do-gooding ideas.

Don't get me wrong, I'm all for empowering people and encouraging them to exercise their rights to this and that and the other. But with rights come responsibilities. The two go hand in hand, like the two halves of a pair of scissors. You can't have rights without responsibilities. Too often people focus on their rights, conveniently forgetting their responsibilities, and that's why the LHA is not working. Frankly, by not including any repercussions or sanctions for failure to use the LHA correctly, the gofmint opened the floodgates to fraud. Lets call a spade a spade, okay, and not a digging implement. Accepting LHA and then using it for purposes other than rent is theft, fraud, stealing, robbery.... you get the jist. It is government-sanctioned daylight robbery. But does the gofmint see it that way? Oh no. If that is what this gofmint calls empowering, then I think we are in deep deep trouble here. We already are in trouble anyway.

I do (sometimes) feel for the council staff at the benefit offices. Theirs is not an easy task, and being on the receiving end of the anger and frustration of landlords who have been robbed by tenants, cannot be a good experience. Perhaps the gofmint would be wise to actually conduct a proper survey of the benefit office staff, and hence get another enlightening view to assist with their enquiry into the LHA scheme.

Here endeth my day of chasing LHA payments: (i) Two different councils failed to pay LHA into nominated credit union accounts, even where details were specified fully on application forms, (ii) where tenant is more than 2 months in arrears (including time served), request made 2 weeks ago to pay landlord direct, but council still "investigating with tenant", and (iii) where benefit suspended.. for unknown reasons.

If I were a drinking person, I'd be downing a few shots of whisky by now. But, I'll just have to make do with a cup of tea.....

Government Signals U-turn on LHA

The government, via the House of Commons Works and Pensions Committee, has indicated it will carry out a review of the LHA system later this year. This comes in the face of campaigning by landlords organisations NLA and RLA following the rollout of the system in April 2008 and the subsequent humonguous losses suffered by landlords as a result of tenants deciding not to pass on the LHA to their landlords.

If you are a landlord, and have tenants in receipt of LHA, you should have your say by filling in the online questionnare. What is the saying that .. "bad things happen when good people do nothing"... Let's each do something to redress the balance.

The RLA have a comprehensive questionnare, so please go to Full LHA Survey.

At the end of it, you can and should also download a template letter to complete and send to your MP.

The NLA have a shorter version which is Postcard LHA Survey

Come on people, lets tell the gofmint exactly what we think of their "air-brained" scheme.

1. Whilst I think that the idea of using the market rents is fair, and simple to calculate, and determining the allowance based on room needs/requirements, the implementation of it by the various Councils leaves a lot to be desired.
2. What happened to the fundamental right of the tenant to choose to pay the allowance to the Landlord? Most of them want it paid direct anyway, and are surprised that they are not allowed to (nanny gofmint..).
3. And why are there no deterrents put in place for those who might be tempted to use the LHA for something other than rent?  when taxpayer's money has been given to the tenant to use for rent and tenant misuses it, is that not fraud or theft??
4. What happened to the right of the taxpaying public to expect accountability for their taxes paid in good faith and given to claimants for the specific purpose of paying rent?
5. Why must landlords suffer at least 8 weeks of lost rent before being able to get the LHA paid direct? And how are we supposed to recoup the spent LHA from people with little or no assets? I suppose we can flog the 40inch plasma screens .... We can't claim lost rent on expenses now can we???

Think again, gofmint. Enough is enough. We are not charities, nor do we have deep pockets. We are small businesses being strangled slowly and surely. The banks to whom you gave our tax money are hoarding it and not giving us any. They pull our overdrafts, refuse to give us credit for anything-not even for retraining, and hike our repayment rates and interest charges and all those other charges that they dream of. So what, dear gofmint, are you going to do about it??


Over to you folks and fellow landlords. Lets give the gofmint something more useful to work with than their rosy, unrealistic 3-4 year old Pathfinder trial results.

Tories urge tenant benefit change

Yes, now the tories are on to it! and about time too.

The BBC has has the story which says: "Automatic direct payments of housing benefits to private tenants in England should be stopped, the Tories say."
And it goes on further:
"The Conservatives want to allow tenants to choose whether to have benefits paid directly to the landlord or maintain responsibility for passing on rent payments themselves.
At the national conference for homeless charity Crisis, shadow housing minister Grant Shapps said: "Fearful that rent money may never be paid, some landlords routinely include the words NO HB in their ads, further restricting the supply of housing for affordable rent.
"At the same time some of the most chaotic tenants have struggled to manage their finances, meaning that the cash is already spent by rent pay day.
"It strikes me that the current situation is bad for everyone and I can see no reason why people on Local Housing Allowance shouldn't enjoy the freedom to have their Housing Benefit paid direct to their landlord. Our proposal will destigmatise the system and increase the amount of affordable homes available."

Hear! Hear.  Freedom of choice was taken away from tenants by the government that insists on being a nanny state. Hopefully sanity will prevail and freedom of choice will be restored, and with it, restore confidence in the benefits system which has seen landlords lose money hand over fist.

Guess what?
"The government say the new system is fairer and simpler than the one it replaced but are beginning a review of the system later in the year"

Government still insists its a great system. But of course they would. Afterall, they've spent taxpayers money to create the "flagship" system, and can't be seen to be backing down or doing a U-turn. It might be fairer in terms of rent calculations, and simpler to implement for the councils, but the insistence on paying the HB to tenant in all but a few cases stinks. I bet you none of these law makers would ever rent to someone on HB, as they know the implications. No rent for 8 weeks, tough. Can't claim it back from someone with no assets, can they? The hypocrisy of it all. How on earth do they expect landlords' businesses to survive in such a situation beats me. But then again, we all know what planet they live on .... gravy train called Westminster. That, explains it all.

When is a tenant 8 weeks in arrears?

You may be wondering why this question is relevant or important. If so, bear with me whilst I enlighten you. A tribunal decision in Coventry is set to shake the current practice of councils paying housing benefit to claimant tenants 4-weeks in arrears. Landlords who have such tenants ... take note.

The Housing Act 1988, Section 8 (as amended by Section 151 of the Housing Act 1996) states that a landlord can serve notice on the tenant to seek possession of a property let on an assured tenancy on grounds of rent arrears, if at least eight weeks rent is unpaid, where the rent is payable weekly or fortnightly, or at least two months rent is unpaid if rent is payable monthly".

Tenancy agreements normally stipulate that rent must be paid weekly or monthly in advance. So tenants are expected to pay rent in advance of the period for which the rent is applicable.That is the liability to pay rent. For example, if rent is due on 1st of each month, and the tenant doesn't pay rent due on 1st Sept and 1st October, then on 2nd October, the tenant already has 2 months rent unpaid, and the landlord can serve notice seeking possession.

The complication arises where a tenant is receiving housing benefit, which councils tend to pay 4 weekly in arrears. So, in the example above, tenant was due to pay rent on 1st September, but didn't get housing benefit until 28th September. Tenant decides not to pay the landlord anyway, and spends it on something else. On 2nd october tenant has two months rent unpaid. On 3rd October, Landlord informs council housing benefit office and requests direct payment, but council insist that tenant is not yet 8 weeks in arrears because 8 weeks of actual time has not elapsed from 1st September to 2nd October even though contractually, tenant is more than 8 weeks in arrears. So, council refuse to pay next lot of housing benefit to landlord, as the law requires them to do. But don't blame the council, its the same government that wrote the law that then gave the guidelines that "DWP takes the view that a person cannot be in rent arrears in respect of a period that has not yet been served". Completely ignoring the contractual obligations that the "person" signed with the landlord.

So, the Guild or Residential Landlords, on behalf of one Landlord, Mr Doncaster decided to take Coventry City Council to court to challenge their decision, and the Tribunal Judge, CJ Jones ruled in his favour.
He said: "In making this decision I have considered the Housing Benefit Local Housing Allowance Guidance Manual as amended in March 2008 and in particular the note at the foot of 6.86 - 6.89 that rent cannot be in arrear in respect of a period that has not been served.
I do not agree with that view. Rent is in arrears once the contractual date for payment has passed irrespective of whether rent is due in advance or in arrear. Regulation 95 of the 2006 Regulations refers to a liability to pay rent and the liability in this case is to pay rent in advance."

Hurray, Hallelujah. At last, someone with clout has pointed out the obvious, something landlords have been saying for yonks and which has fallen on deaf government/council ears.

This judgement has serious implications for all landlords who have tenants in receipt of housing benefits or local housing allowance as it is now called. Maybe common sense will now prevail.
See full story here.

I have already written to one council about problems with a current tenant, and asked what steps they were now going to take in view of this judgement - I got a reply-the usual official jargon, but no answer to the question. So, I'm sending another letter on Monday asking the same question. Watch this space.