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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.

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