19/05/2012 
lrs_keeper
This week the Department of Work and Pensions have published statistics revealing that as of February 2012 there were just over 5 million people claiming housing benefit; a dramatic increase of 28,290 on the figures for January.
The numbers of social renters claiming housing benefit increased by 13,410 to 3.37 million, while there are now 1.63 million private renters claiming housing benefit, up by 14,880.
The new fraud and error figures report for 2011/2012 also shows that out of a total benefit expenditure of £159 billion, £3.2 billion was lost to fraud and error (over payment of benefits) :
- £1.1 billion has been lost to fraud
- £1.3 billion has been lost to customer error (the highest it’s ever been)
- £0.8 billion has been lost to official error.
Welfare Reform Minister Lord Freud said:
“The current benefit system is far too complicated, which leaves it open to fraud and error. Universal Credit will revolutionise the way we pay people benefits by simplifying and automating the system to ensure taxpayers’ money is going to those who need it the most.
“Universal Credit will dramatically reduce the chances of fraud entering the system and will cut down on error as it will be much easier to understand and administer. It will also reduce the incentive for fraud by making sure people are better off in work than on benefits.”
Universal Credit will mark a significant change from the current system in which many social housing tenants choose to have their housing benefit paid directly to their landlord.
The intention is that this payment – which will include an element for housing costs – will be paid as an integrated payment to the tenant.
The controversial bill has been criticised by homeless charities, which claim that plans to introduce universal credit and an overall benefit cap could see 40,000 people forced out of their homes.
We at LandlordReferencing are also highly critical of the universal credit bill, as we believe tenants should have the right to decide if their rents are paid directly to their landlord – to help tenants on low incomes avoid debt and arrears.
Principally, this is deeply worrying for residential landlords across the UK, because if this bill is passed un-amended not only will it drive up rent arrears, evictions and homelessness, it also threatens the delivery of affordable housing in high-value areas; which we are already beginning to see happen…
- Social Referencing Imperative as ‘Social-Cleansing’ continues.
- Winter Migration; Tenants Fly North.
- New Government Policy will Breed Rogue Landlords.
- LRS Tenant Alert Running Total 2012.
Ahead of Universal Credit, the DWP has stepped up its efforts to target fraudsters with the intention that it will reduce annual welfare fraud and error overpayments by one quarter, by March 2015. The range of measures include a regional task force, using credit reference agencies, a new IT system (which will automatically inform local authorities of new claims or changes in benefits and tax credits) and joint investigations via HMRC and local authorities.
The Welfare Reform Act 2012 also has tougher penalties to deter fraudsters, which includes low level benefit fraudsters now facing a fine of up to £2,000 without being taken to court. Cautions will no longer be an option, which in theory means no fraudster will escape without punishment.
Other penalties coming into effect in the future to cut down on fraud and error include:
- Extended loss of benefit for offences, which result in a conviction, of 13 weeks for a first offence, then 26 weeks for a second offence and three years for a third offence.
- An immediate three year loss of benefit for serious or organised benefit fraud or identity fraud.
- A new £50 civil penalty in cases where claimants negligently give incorrect information on their claim or fail to report a change in circumstances which results in an overpayment.
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I think people are missing the point here, LL do NOT want direct payment under ANY circumstances from the tenant.
There is an all too palpable risk of LHA being clawed back from the LL.
Therefore LL will always wish to have rent paid form the tenant.
Then any clawback claim will have to addressed to the tenant.
This of course will never occur as the tenant will have no money to clawback, unlike a LL who may have monies the useless council can get their grubby little mitts on caused by unotified change of circumstances or application deceit by the tenant.
There I would ONLY ever recive payments direct from the tenant.
The ONLY way at present to guarantee that a LL may recive guaranteed LHA payments is from a Credit Union.
LL will if they experience problems with direct payment will insist on payments be made from a CU or evict the tenant.
In the event of clawback aLL could be many thousands of pounds out of pocket.
So sensible LL will wish not to risk this and will insist on a credit union being used to make such LHA payments.
This as LHA rent payments will be ringfenced and therefore prevent the tenant withdrawing the rent monies to spend on drink and drugs and anything else that is not the rent.
Direct payments are NOT the answer.
In the event of LHA not being passed onto the LL then the tenant will be given the choice of joining a CU or being evicted whilst direct payments are made until eviction.
On balance I lose less by having direct payment and risking overpayment than I do by trusting the tenant to pay. The problem is not direct payment itself but the law which requires the landlord to repay but gives him no say in the claim. Every Housing Benefit claim needs to be a tripartite claim between the landlord, the local authority and the tenant (look up there are pigs flying overhead).
If the credit union scheme is successful then it will give the landlord the best of both worlds, effectively direct payment with no liability to repay. Sounds too utopian to be true. I do hope that Universal Credit includes all the funds necessary for the tenant to pay his own Council Tax (those pigs are back), but I suspect that it will not. Equally I hope that housing associations are not given the preferential treatment they presently receive. One thing is certain the housing situation will have to fail catastrophically before any government takes action to redress the balance towards of the landlord.
Remember clawback could be for thousands of pounds for years of a LHA claim.
For example a partner is proven to have been living at a property for years.
The council would come to the LL for clawback of what the LHA claimant would have received for 2 people occupying the property.
I could never take the risk of direct payment and not many LL could, they just don’t realise the risks they are running.
Under no circumstances would I want direct payment unless I had to claim direct payment for LHA whilst I was evicting a tenant.
CU will be the only answer for LHA claiamants, particularly with the advent of UC.
Such CU ringfencing of monthly payments like Council tax and rent will be the only way that astute LL will accept rent payments from.
There is a countrywide CU called TPS which could be used for all LHA claimants.
The common bond works everywhere.
I will insist that any tenant of mine who has to or does take LHA benefit, will have to join or be evicted.
Can’t see many LHA tenants refusing can you!!?
Sadly even the officers who we work with from one of our local councils do not have faith in their housing benefit office. It has just taken us five months for the housing benefit office to recognise one of our Tenants third child. The housing benefit claim has been back dated and sadly at today’s LHA rate.
We have now had to appeal it to get it back dated at January 2012 rate.
If this had been a landlord who did not know how the housing benefit system works they may have believed it was the Tenants fault.
Regards
Steve
http://www.polarpropertyservices.co.uk
I have a number of tenants on HB but i always insist that on their benefit claim form that WE have the right to talk about the tenants claim on their behalf. That way if there are any problems we are always able to contact the tenant and even take he or she by the hand to the benefit office and get any probelms sorted out quickly.
Can someone please explain to me how a credit union can be used by the LHA tenant to pay the rent to the land lord???
Thanks
Dan
Hi Daniel,
have a look in the community forum at this link there is a debate started today http://www.landlordreferencing.co.uk/discuss/community-forum/credit-unions-how-do-they-work-and-do-they-work-to-benefit-anyone-apart-from-themselves/
@Paul Barrett
Can you tell me more about the TPS Credit Union and the services that we LL would be interested in. I have googled them but can only find TPS CU in Ohio USA!
At Tasker Payment Services, we offer a credit union style service but with several important differences.
- Our business is simply to provide a solution to the above issues
- We send money over to the landlord the day it arrives from the Local Authority(Usually every fortnight). This means the LL knows of any changes in the LHA claim immediately
- We have no common bond so we can deal with tenants from any borough
It is simple to sign new and existing tenants up to this, and as mentioned earlier, the LL is not asked to pay back overpayments as it is still a direct payment. As we are concentrated purely on the payment service, we aim to build healthy relationships with our customers and inform relevant parties early in the event of tenants changing circumstances. To date we have accounts in several boroughs all working very well.
When UC comes, we will be receiving the UC payment, paying the rent to the LL then loading the remaining money onto a prepaid debit card for the tenant to withdraw. Very similar to the “jamjar” kind of account that Mary Latham mentioned earlier in the thread.
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