11th March, 2013
The media is focused with laser precision on Universal Credit no doubt anticipating Ministerial resignations due to the chaos and scandalous loss of public money. Based on the recent Guardian revelations it’s looking ever more likely, the planned national rollout will be delayed until after the May 2015 election. By that date, it’s anticipated no more than 25,000 of the simplest JSA cases will have been transferred via the Pathfinders compared to the initial target of 12 million by 2017. Pushing back the date in this way, and considering the complete lack of confidence in the ability of DWP to deliver (watch out for a further Public Accounts Committee slating during the next week), it appears Housing Benefit will continue to be a critical source of revenue for housing associations way beyond its planned abolition date of 2017 – good news for a change!
Currently, Housing Benefit accounts for some £16 Billion in revenue for association tenants, producing between 40-65% of rental income, with 95% of payments going direct to associations; the preferred method by tenants. The likelihood of all this continuing beyond 2017 should be viewed as great news, as it will guarantee inter alia the four weekly HB schedule of payments from councils; associated HB award letters at the point of claim and end of tenancy; and the annual rent increase exercise will continue to follow the current automatic process thus avoiding the possibility of benefit loss (a concern arising from Universal Credit plans).
On the downside, Housing Benefit administration, UK wide, is poorer now than ever before, as cash strapped councils cut back on staffing levels, critical training, use “Call centres” and significantly increase the rate of claw-back from associations’ HB awards through over-zealous recovery of Housing Benefit Overpayments. These claw-backs currently account for £1.3 Billion in potential recoveries every year, usually at the expense of landlords. Because there’s a clear correlation between Housing Benefit payments and rent arrears, all of this adversely impacts on association cash-flows and rent arrears levels.
In the past few weeks I’ve successfully represented Landlords in a number of HB Overpayment appeal cases involving £23K, £11K, & £7K. In each case, I was able to repel the attempt by the council to recover the HB Overpayment caused by claimants as the law and caselaw (Upper-tier judgements) support the position of landlords in these situations.
So why are councils being over-zealous?
Quite simply, doing so invariably ensures immediate payment, either in a lump sum or via deductions from “Blameless Tenants”. Councils employ “Landlord Indemnity” statements and require associations: “If they are paid too much Housing Benefit for any tenant they may have repay it and that the Council can take the amount of overpaid benefit from the benefit they get for any other tenants”.
What most RSL Directors don’t appreciate is, councils also receive a 40% bonus from the DWP from making such recoveries. The 40% comes in the form of a “subsidy incentive”, designed to offset much of the costs of recovering from tenants, rather than landlords, as doing so can take years. But the “incentive” is perceived by some Council Finance Directors as an opportunity to generate much needed cash for the administering council, so target the landlord instead. Councils will deny it but as an ex Government Advisor, and CIH’s trainer, on this topic, for too many years, I can attest to what happens at the coal face.
Quite apart from the problems caused by Overpayments, HB sections are frequently slow to progress claims, often taking 6, 8, to 12 or more weeks to process claims (instead of 2 weeks) and are guilty of making school-boy errors on “bread & butter” issues like:
- Who apart from the tenant (partner or non-dependant) can actually claim;
- Payment not being made from the date of liability, particularly in “pass-ported” claims;
- Demanding to see evidence of income/capital when, in some cases, this is not required;
- How “prescribed rules” relaxing claiming times and reporting changes in circumstance are being overlooked or misunderstood;
- How claims are being sometimes suspended and cancelled unnecessarily, causing rent arrears;
- Many others
As your organisation may rely on 40 – 65% of its rental income from Housing Benefit (higher in some cases) it’s critically important you make sure you’re staff are properly trained on how best to: maximise your HB income; minimise the chance of tenants accruing rent arrears; comply with pre-action protocols/requirements; and avoid the significant costs of legal action for recovery.
I offer in-house courses directly and via CIH (see programme attached). I can also mediate on your behalf and that of your neighbouring associations, with councils, especially where the main problem lies in the length of time it’s taking to process claims. The statutory period is 2 weeks, whilst the norm can be, as mentioned above, 6-12 weeks. Acting on behalf of associations I have a track record of effectively reducing council processing times (see testimonials) and through this rent arrears levels.
If you’d like any further information on this critical topic please contact me email@example.com or phone me on 01698 424301 or 07733 080 389. Alternatively, if you’d like to become a member of our website and associated service or have a FREE trial to assess its worth, please contact me.