The First Right of Appropriation | Discuss

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The First Right of Appropriation
29/07/2013
12:04 pm
Katherine
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I recently found out about this from the local Credit Union.

 

"This "Right of Appropriation" allows a customer to assign funds entering their bank account to specific events and needs.

I.E Banks are not allowed to use Housing Benefit or any other income related benefits to repay an overdraft as the law provides that a customer needs a minimum amount to live on . Arguably , the money is not actually the claimant's, they are just the agent too pass the money along to the landlord. If the bank do use this money to offset an overdraft the customer should be advised to seek legal advise or contact a CAB for further help and claim back any charges."

The customer will  need to give the bank written instructions and to make it clear that it is to cover all future payments.

The information goes on to say that although banks should be aware , some banks may not understand the process as it isn't used very often.

Further information is available on the CAB website

With all the ongoing discussions regarding benefits and UC, I thought landlords may find this a useful tool.

29/07/2013
12:17 pm
Paul Routledge
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Katherine,

What a great piece of advice. I have quite a few tenants who have had their benefit money taken to cover overdrafts and it has left them in a right pickle. I will tell them all but actually what we need is a template document drawn up of a letter landlords and agents can download and give to the tenants to take to the bank to get them to re credit their accounts.Laugh

29/07/2013
12:24 pm
Katherine
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Hi Paul

I have the full information provided by the credit union along with sample letters. If you let me have an email address I can send them over.Smile

29/07/2013
1:36 pm
Paul Routledge
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Hi Katherine,

Great can you send them to enquiries@landlordreferencing.co.uk and can we put them as a document template for others to share?

Paul

29/07/2013
6:25 pm
PaulBarrett
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Surely this right is superseded by a bank's terms and conditions which I think mostly state the bank may deduct all charges and interest in favour of the bank BEFORE any other payments  to other institutions would be taken!!?

If this right is valid then it could be the answer to many a HB claimant.

No need to change banks;just send the letter advising the bank is NOT to touch the funds due to go by SO to a LL

What happens with the remaining UC though!!!

Personally I would only use basic current accounts where you can't go overdrawn and usually fees aren't charged.

But really CU's are the way forward for UC claimants.

They do allow account holders to build up credit status for future CU borrowing  which with a bank account they will NEVER achieve.

Such CU usage would put the likes of Wonga out of business....................................not such a bad thing!!

29/07/2013
7:43 pm
Katherine
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PaulBarrett said
Surely this right is superseded by a bank's terms and conditions which I think mostly state the bank may deduct all charges and interest in favour of the bank BEFORE any other payments  to other institutions would be taken!!?

If this right is valid then it could be the answer to many a HB claimant.

No need to change banks;just send the letter advising the bank is NOT to touch the funds due to go by SO to a LL

What happens with the remaining UC though!!!

Personally I would only use basic current accounts where you can't go overdrawn and usually fees aren't charged.

But really CU's are the way forward for UC claimants.

They do allow account holders to build up credit status for future CU borrowing  which with a bank account they will NEVER achieve.

Such CU usage would put the likes of Wonga out of business....................................not such a bad thing!!

 

 

Paul, The credit union issued this information and having spoken to a family member who works for one of the big banks, she was aware of this.

My understanding of this, is that it's irrelevant of whether its benefits or income, the account holder can ask the bank to cover essential payments in writing. Exactly what is considered essential, I don't know and as we are aware, we all have different views on this.

Credit Unions are an good alternative to traditional banks, unfortunately as these are non profit making their marketing budgets are very limited. The church has done a good job of promoting them recently.

Pay Day Loans should be banned or maybe just restrict the interest rates and the charges for checking your eligibility.

If my tenants suggest a pay day loan , I suggest a repayment plan,in the long term that's the best option for landlord and tenant.

29/07/2013
8:37 pm
Mary Latham
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Katherine You are a star.  What a brilliant piece of information. I too have had tenants whose banks have claimed "charges" and left them short of the rent - I saw the bank statements.

Paul this is a really useful tool for landlords please post a link when you put it on the site so that we can get the message out.

 

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My book, where I warn about the storm clouds that are gathering for landlords is  herehttp://www.amazon.co.uk/dp/1484855337

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30/07/2013
2:24 am
PaulBarrett
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I must say I remain a little bit cynical over the supposed efficacy of this form.

What is to stop someone putting this form in and then after all income is taken for defined payments as per the form; then runs up unauthorised bank charges which increase monthly irrespective of monthly wage income which supposedly can't be touched and therefore the bank interest and charges rack up without being able to be deducted from monthly income.

I can't see a bank allowing this irrespective of any form.

They are always allowed to make a business decision to close your account.

I've had it happen twice for other reasons; basically I was making money out of the accounts and they weren't really earning out of me!!

I think a very close perusal of terms and conditions is called for; before I believe this form would work.

I am just a bit more cynical over banks than most as I know how they think; having legally  manipulated them over the past 25 years, don't do this anymore but I don't think the leopard has changed its spots!!

You have to be pretty switched on to beat a bank's T & C's and be prepared for long boring reading of the tiny print they issue their T & C in!!

I would seek absolute confirmation about this form before I risked testing the situation.

 

 

30/07/2013
8:15 am
David Price
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Katherine said
"Arguably , the money [Housing Benefit] is not actually the claimant's, they are just the agent too pass the money along to the landlord.

Katherine I like your sense of humour. Smile

I wonder if this would work with Client accounts?  Try as I might I have never managed to get any bank to acknowledge that the account I use as a client account contains funds which do not belong to me, the banks simply ignore all correspondence on the subject.  This is particularly pertinent in that charges to the client account should be debited from my business account not the client account.

30/07/2013
12:06 pm
Mary Latham
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David Price said

Katherine said
"Arguably , the money [Housing Benefit] is not actually the claimant's, they are just the agent too pass the money along to the landlord.

Katherine I like your sense of humour. Smile

I wonder if this would work with Client accounts?  Try as I might I have never managed to get any bank to acknowledge that the account I use as a client account contains funds which do not belong to me, the banks simply ignore all correspondence on the subject.  This is particularly pertinent in that charges to the client account should be debited from my business account not the client account.

I agree David I now have to put extra funds into my "deposits" account to  make sure that the bank charges are covered 

 

Follow me on Twitter@landlordtweets

My book, where I warn about the storm clouds that are gathering for landlords is  herehttp://www.amazon.co.uk/dp/1484855337

 

 

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30/07/2013
3:31 pm
@ZEPHYoRUS
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It would be safer to use GPO for delivery of Universal Credit than trusting banks. Banks getting a Hidden Subsidy √box liquidity

 

via twitter

30/07/2013
5:00 pm
PaulBarrett
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@ZEPHYoRUS said
It would be safer to use GPO for delivery of Universal Credit than trusting banks. Banks getting a Hidden Subsidy √box liquidity

 

via twitter

Z agreed; but who would run the brilliant universal; readily accessible PO bank account.

ANSWER....................the BOI who are broke!!!!

BOI are the ones who have arbitrarily increased fixed tracker rate differentials on BTL mortgages going back a decade!!!

Would you trust that lot!!??

I agree though a proper PO account which is operated out of PO could save PO form closing and do the big banks out business from those type of clients.

Govt could have upgrade the existing PO card to a non=status bank account which would have assisted benefit claimants of all sorts.

But the big lobbying greedy banks got their way!!

30/07/2013
5:05 pm
David Price
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Remind me Paul B, who was it that sold the Giro bank?

30/07/2013
5:45 pm
PaulBarrett
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David Price said
Remind me Paul B, who was it that sold the Giro bank?

 

The giro bank; an 'everyman's bank'

I think most of us of a certain age had or still have a PO savings account provided by Girobank!!

Just think a bank account for everyone if they wanted it with NO credit checking because no credit is being asked for.

Easily accessed at any PO that was still open!

The ability to have ALL benefits paid to such an account and to be able to draw out cash from the PO from that account from a PO teller.

Just imagine all benefit claimants being offered the facility to open a non-status current account to receive benefit payments; would do wonders for the share price of the soon to be privatised PO!!

With also the facility to upgrade the PO current account to a full status account with OD etc!!

I don't think the big banks would be too pleased in losing about 10 million  benefit claimants to the PO; do you!!???

 

 

 

 

30/07/2013
7:53 pm
Adam Hosker
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Giro Bank is now Santander is it not? I dont follow.

The First Right of Appropriation could be a useful tool although a Credit Union discussing it said "Although appropriation can be a useful tool in the short term, the bank is only likely to accept instructions for a short time before withdrawing banking facilities."
If you dont bounce payment with your LL, your bouncing it with the bank - their not going to sit back and watch.

If any landlord is having an issue with Tenants payments being swallowed up by overdraft, its the tenants issue. If you are the caring and pro-active kind of landlord their are "none status" accounts available from Natwest, Barclays and HSBC that are no credit-check accounts. The guy behidn counter does not want to offer this, so tenant has to keep saying they want the basic, standard, no credit check, no overdraft or credit, just a basic account with the staff member. The facility is available get the tenant to switch incoming payments their, transfer what they "need" and rest to the old account.. Or just swich.

That being said, overdrafts are used because like you or I the tenant is living outside of their means. Bounced payments happen when expenditure is higher than income - people spend to much, assess expenditure and recommend tenant to kill whatever is taking their cash.

30/07/2013
8:29 pm
Katherine
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Banks are in the position to withdraw banking facilities. Landlords can't withdraw housing facilities quite that easy.

If the tenant isn't in a position a pay the rent this then becomes the landlords issue. The Right of appropriation can be used in conjunction with supporting the tenant in the short term. Agree this isn't a long term solution.

With a basic account would this work to ensure rent is paid ie ring fencing the rent? I believe some but not all credit unions are able to do this.

If we are in a position to advise and support tenants to manage their income, even if they choice not to, experience has shown it is always useful to be one step ahead.

In order to support a tenant, we as landlords need to intervene at an early stage. I find this approach identifies those that won't pay quite quickly and they need to find alternative housing.

 

 

 

31/07/2013
12:00 am
David Price
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Adam Hosker said
Giro Bank is now Santander is it not? I dont follow.

Giro bank was originally the account which Paul B describes in post no 12, it was sold to Abbey National which metamorphosed into Santander.

02/08/2013
9:56 pm
LyndonBaker
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David Price said

Katherine said
"Arguably , the money [Housing Benefit] is not actually the claimant's, they are just the agent too pass the money along to the landlord.

Katherine I like your sense of humour. Smile

I wonder if this would work with Client accounts?  Try as I might I have never managed to get any bank to acknowledge that the account I use as a client account contains funds which do not belong to me, the banks simply ignore all correspondence on the subject.  This is particularly pertinent in that charges to the client account should be debited from my business account not the client account.

David, BRPL has three accounts with Lloyds. The first is a current used for paying salaries, invoices etc. The other two are "Client Call Rent" and "Client Call Deposit". Annually they sign a statement to NALS that there is no right of set-off from these accounts to the current account.

 

As for the "original" Girobank, I am (sadly) old enough to remember saving at school with National Savings!

 

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