6th August, 2021
The Local Government & Social Care Ombudsman has just reported on a case of Housing Benefit (HB), where the complainant landlord lost rental income when the Council failed to pay HB to him, instead of the tenant, despite repeatedly requesting redirection due to the tenant owing more than 8 weeks in rent arrears.
In such situations, the HB regulations, DWP guidance, and Upper tier caselaw, consistently confirm, payment MUST be made to the landlord. The Ombudsman concluded, the Council’s failure to comply constituted maladministration and an injustice, which merited recompense for the landlord. The landlord recieved their rental loss of £1628 (one months’ rent) and was awarded a further £150 in recognition of the effort he expended by pursuing his complaint.
The Ombudsman has consistently adopted the view, he “must consider whether any fault has had an adverse impact on the person making the complaint……… as to do otherwise, “would be unjust”. Over the past 10 years, I’ve successfully pursued similar cases, with the LGO and secured compensation of more than £7000 in one case, where the landlord had lost out, through payment of HB being made wrongly to the tenant, who then promptly misused the funds.
Contrast this, with Ms Joanna Wallace, the Independent Case Examiner’s stance, in relation to Universal Credit “housing costs element” (HCE) complaints, when maladministration is upheld, the landlord is never compensated. Why?
Ms Wallace maintains, the Landlord must pursue their tenant for the loss, through the courts, if necessary, even though it has taken 2-3 years to secure an outcome to their complaint and the tenant is now an ex-tenant. Others like, the LGO and eminent Upper tier Judge, Edward Jacobs, have pointed to the futility of “throwing good money after bad” and recommended compensation for the landlord.
In reported decision R(H) 2/08 Judge Edwards explains:
“I sympathise with the landlord in this case. My inclination throughout has been to allow a further payment if possible. Of the claimant, the local authority and landlord, it is the landlord alone who is not at fault. The claimant failed to pay her rent. The local authority failed to notify its decision. The landlord alone acted promptly and properly.”
This statement could equallly be applicable in Universal Credit cases, where the landlord applies for an Alternative Payment Arrangement (APA) using DWP’s online “direct payments” system, frequently because their tenant has accrued more than 2 months of rent arrears. DWP Tier 1 guidance suggests, the landlord should receive payment, in these circumstances, but all too frequently their application is not acknowledged; attempts to secure updates on the progress are rebuffed by DWP staff, citing Data Protection, GDPR etc; and payment continues being made to the delinquent tenant, who, remember, has already misappropriated the funds, designed to reduce or extinguish rent liability and more than likely will repeat the offence. In some cases, I’ve been asked to intervene where the landlord has lost more than £5000 due to clear cut DWP maladministration.
DWP has yet to show any empathy for landlords’ losses. It claims, it’s no more than a tenant/landlord dispute and needs to be resolved between the parties, conveniently overlooking its mistakes caused the problem. It also claims it can’t share information about APA requests or its decisions, without the tenant’s consent. Here again, such claims have little merit, as its own legal advice suggested, it could indeed share information with landlords, but chose not to because of suggestions, unscrupulous landlords might exploit this situation. If that were true, how have councils administering HB, supported by DWP’s HB Guidance Manual, been able to share information with landlords with remarkably few of these problems emerging.
In an exchange with DWP’s Director General (Neil Couling) in June 2015, DWP agreed to suspend payment of the “housing costs element” on receipt of an APA request from a landlord. In the intervening years, they’ve consistently failed to do so, even though its own guidance to Decision Makers recognises this is possible and appropriate in some cases. Indeed, why would DWP not wish to do this, when its Secretary of State has an obligation to protect public funds from misuse.
Sadly, DWP’s attempts to protect public funds have failed miserably. In 2020/21 its UC Overpayments amounted to £6 billion, representing 14% of the UC overall expenditure. A large proportion of this amount relates to “housing costs” where DWP paid substantial sums in the HCE, without checking with the landlord there was a legitimate tenancy in operation, or the amount of the charge being claimed was accurate. Having been heavily criticised by the National Audit office (NAO) it’s now embarked on a mission to try and recover some of these misappropriated funds.
Who is DWP pursuing? In many cases the innocent landlord, on the basis, they were in receipt of APAs and “they could reasonably have known” something was amiss?
You couldn’t make this up, but that’s exactly what’s happening and it’s something you need to be alert to and ready to challenge, if you receive any overpayment letters or invoices. When an overpayment arises the first thing DWP must do is determine the cause(s). If the overpayment was caused by the tenant misrepresenting their circumstances or failing to report a change, that could alter the duration or level of award, it is to the claimant DWP should pursue recovery, not the landlord. Nevertheless, they pursue the landlord because recovering the sum from the tenant is more difficult and takes longer, as Overpayments are low in the pecking order of “Third Party” deductions.
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