Local Housing Allowances – Credit Unions to the rescue

The Local Housing Allowance Scheme, discussed in my earlier article regarding landlords from Blackpool, is due to be rolled out across the country in 2008. The main criticism from landlords is that under the new scheme the rent cannot be paid to them direct any more. It has to be paid to the tenant, unless either the rent is in arrears of eight weeks, or if the tenant is adjudged to be 'vulnerable'. However in both of these cases the direct payment takes some time to be set up, during which time arrears may be accruing making the tenant vulnerable to a claim for repossession.

Many tenants also are unhappy about not being able to elect to have the rent paid to their landlord direct. They would much prefer to know that this is being done and that their home is not at risk. If they want rent to be paid direct, it seems ridiculous that they should not be allowed to have it.

The reason given on the DCLG web-site for the enforced payment to tenants is

"Personal responsibility: Empowering people to budget for and to pay their rent themselves, rather than having it paid for them, helps develop the skills unemployed tenants will need as they move back into work"

However it is noticeable that this personal responsibility is not being encouraged where the landlord is a social landlord, or where the benefit is for mortgage payments. Only the poor old private landlord (with considerably less political clout than the social landlords and the banks) is going to be vulnerable to having his rent spent on drink and drugs in an effort to encourage personal responsibility among his tenants.

There may though be an answer. I attended a Landlords Forum meeting at Suffolk Coastal Local Authority recently where a lady from a local Credit Union told me that they are now setting up special accounts for tenants so the rent can be paid in and then paid out to the landlord. This is better than having the LHA paid to the tenants bank account because, as it is only being used for the transfer of the housing allowance, the money is not at risk of being swallowed up by the tenants overdraft or being spent by the tenant (perhaps in error, perhaps while under the influence) on other things.

Even more interestingly, we were told by a gentleman giving a talk on Local Housing Allowances, that section 94(3) of the Housing Benefit Regulations 2006, provides for the tenant to request that the benefit be paid to another person. This is the statutory authority for setting up the Credit Union payment, however he speculated that the tenant may also be able to use this section to request that the rent be paid to the landlord!

Looking a little closer at the regs, section 94(1) seems to be providing against this. If this is the case though, that means that the only person the tenant is not allowed to request the rent be paid to is the landlord – the person he is legally liable to pay the rent to! How mad is that? Are there any human rights ramifications here?

Still, the Credit Union idea seems like a very good one, and I commend it to you.

Oxford City Council to extend HMO licensing scheme

Landlords in Oxford who let to three or more unrelated tenants who share amenities (i.e. bathroom, toilet, kitchen and living space) beware! Your city council is seeking to extending the current mandatory licensing scheme (which just applies to the larger properties of three or more stories and five or more occupiers in two or more households) to all HMOs. This will include, for example, three students sharing a small two story house or a flat. See the report from the Oxford Mail here.

The city council say that 26% of houses in Oxford are privately rented (many presumably to the large student population), 61 per cent of HMOs are below standard in terms of fire precautions, and 29 per cent of HMOs have below adequate management. The Council hope that extending the licensing system will allow them to change this. I hope they have sufficient manpower to deal with the massive amount of extra work they are taking on.

No doubt other cities with large student populations will in due course be looking to do the same as Oxford. Although of course much of the student population in Oxford comes from a ‘posh’ background, so they may be under more pressure to deal with the problem of sub standard student accommodation.

The city council have started public consultation on the proposals. If you want to be involved in this the email address is hmos@oxford.gov.uk or contact the HMO licensing officer on 01865 252307. After this process they then have to apply to the government so the extending HMO licensing regime is not going to come into force until next year at the earliest.

Pathfinder scheme criticized in Blackpool

There is an interesting article here on the new government ‘pathfinder scheme’ for the payment of housing benefit. This was initially set up in 2003 in a few pilot areas and is gradually being rolled out across the country. A fixed rate of benefit, known as a local housing allowance, is paid for all properties of the same type, and which is not linked to individual rents. The tenant can therefore shop around, and if he finds a property with a cheaper rent, can keep the difference.

However the aspect of the pathfinder scheme which annoys landlords is that the option which the parties had under the old scheme for tenants to elect to have their rent paid direct to the landlord, is no longer available. Some of the Blackpool landlords are claiming that the rent payments are too much of a temptation for some tenants who are using the money for drink, drugs and lottery tickets.

The problem, they claim, is particularly acute in Blackpool as it has such a large private rented sector. It is also apparently the ‘drug death capital of the UK’, and a local coroner has recently claimed that benefit money is helping to fund the cities drug problem.

Landlords have been complaining about the pathfinder scheme ever since it was first set up in 2003, claiming that many tenants will not be able to resist the lure of these lump sums of money being paid to them, to fund their drug and similar problems. However areas where the scheme has been piloted have not apparently had that many problems. Skeptics claim that this is because the rate of benefit set in pathfinder pilot areas has been more generous than in other areas. When the scheme is rolled out nationwide, they claim, this generous rate will not continue and huge problems will result.

If a tenant in receipt of local housing allowance falls into arrears, there are two options for the landlord:

1. To try to persuade the Local Authority to pay the rent to him direct. There is a general rule that this will be done if the tenant is in arrears of more than 8 weeks. The DWP Resource Centre on benefit states on this point

"If rent arrears are owed, the local authority will arrange to make payments direct to the landlord unless it is not in the customer’s overriding interests to do so. However, landlords are encouraged not to wait for the 8-week period to be reached before contacting the local authority."

The landlord may also be able to persuade the Benefit Office to pay the rent direct on the basis that the tenant is ‘vulnerable’. Information on how Officers are to identify potentially vulnerable claimants can be found in paragraph 5.30 onwards in the Local Housing Benefit Allowance Guidance Manual, to be found online at the DWP web-site.

The main criticism of both of these options from landlords, is that it takes time for the benefit office to be persuaded and the new arrangement set up, during which time they are not receiving any rent.

2. To bring proceedings for possession. This is unpopular with landlords as it can take up to six months (more if the landlord is unlucky) to recover possession of the property, during which time he will not be receiving rent and will have to pay court and legal fees.

Also, although this will resolve (at a cost) the individual landlords problem, the tenant will still need housing, and his addiction problems will not be helped by being evicted from his home. The problem to society therefore will remain.

The Blackpool landlords suggest that landlords who are accredited should be permitted to have rent paid direct to them, if the tenants agree (and many probably would). The Local Authority say that they cannot do this as it is not permitted by the scheme rules. However the government might want to consider this option, if it wishes to encourage accreditation and thereby improve standards.

Tenant defending s21 claim under the DDA 1995

Readers may be interested to learn that I have been contacted by a landlord who tells me that his tenant is defending, or rather seeking to overturn, a possession order obtained via the accelerated procedure under section 21, under the provisions of the Disability Discrimination Act 1995. This is the very situation I was concerned about when I wrote my earlier posting on the Malcolm case.

The landlord brought the claim after it became apparent that the tenant was spending her housing benefit on other things, although this was not specified in the particulars of claim, which (as is usual) gave no reason for the claim other than that the notice had been properly drafted and served and that the tenant had not vacated. Her lawyers however are claiming that the reason why she has not paid her rent is because she is suffering from a mental disorder, and therefore the landlords action in evicting her is discriminatory and unlawful.

The landlord is aghast at this claim, as if it succeeds he is faced with the prospect of this tenant remaining in his property indefinitely, free of charge. How, he asks, is he expected to pay his mortgage and other expenses on the property? Is this really what the draftsmen of the DDA 1995 intended?

The tenant is in receipt of legal aid and the landlord has been told by her lawyers that they will fight the case all the way to the European Court if necessary. The poor landlord however has no legal assistance and is unable to afford expensive legal fees (particularly as he is not receiving rent!).

If this claim succeeds, bearing in mind that the landlord had no idea that the tenant was suffering any mental problems, it will have serious repercussions throughout the whole of the letting industry. The landlord has agreed to keep me informed of the outcome of the case.

More on Equality

Following on from my previous item on the Equality website, I was interested to see this item in the Times Law section today on John Wadham who is heading up the new Equality and Human Rights Commission.

This article makes the point that the new commission not only covers areas of law formerly dealt with by three separate commissions, it also has a budget to enforce the Human Rights Act. It will be really interesting to see how that works out.

How will it affect housing law? The main area that I can see at present is defending possession claims where the defendant is being evicted for some reason connected with their disability. It will be interesting to see if this will be largely confined to the social landlords or whether it will extend to the private sector (something discussed by myself and Nearly Legal in my previous post on the Malcolm case).

Can anyone see any other potential areas of conflict?

The new Equality web-site

While doing some writing for Landlord-Law I discovered that the new Equality Web-site is live. This was set up by the Equality Act 2006 which also set up a new Equality and Human Rights Commission. This will deal with discrimination over all areas, rather than, as before, just concentrating on specific areas such as race, and disability. The act also gives the commission power to make regulations regarding other types of discrimination, such as religious belief and gender.

The three earlier commissions, The Commission for Racial Equality (CRE), The Disability Rights Commission (DRC), and The Equal Opportunities Commission (EOC) have now been merged into this new organisation, which has a web-site at www.equalityhumanrights.com. Any attempt to reach the old web-sites will just take you here.

It is a very clear web-site. All the fussy content of the old sites is gone. Anyone searching for information about their rights will find it quite easy. There is also a section for advisors which, again, is very clear, if rather sparse.

In fact the whole site has a ‘light on content’ feel about it, perhaps because it is so new. I spotted a A-Z index at the bottom but this just lead me to a registration page. It was extremely irritating however, having registered, to be told that access was denied and that the page had been disabled! (Was it because I said I am a lawyer? Am I being discriminated against?)

Still, if you are looking for information on any sort of discrimination this is a good place to start. Although like most sites aimed at the general public it is rather light on authorities.