The Chartered Institute of Housing’s in-house magazine “Inside Housing” recently reported on a scandal that’s been developing over the past year, in particular, caused by a mixture of DWP/Council maladministration and some of the welfare reform measures. http://www.insidehousing.co.uk/finance/‘unintended’-housing-benefit-cuts-hit-tenants/7001667.article

In the article, reference was made to:

“The number of sanctions against benefit claimants deemed not to be doing enough to find work increased to 860,000 in the year to June 2013; the highest for any 12-month period since statistics began to be recorded in their present form………….Private Landlords & Housing Associations have also reported anecdotal evidence of tenants falling into rent arrears as a consequence of housing benefit (LHA) being cut, off the back of sanctions”.

My own mailbox confirms, an ever increasing number of councils, throughout the UK, are suspending and, in many cases, cancelling housing benefit (LHA), due to the implementation of Jobseekers Allowance (JSA) & Employment Support Allowance (ESA) “claimant commitment” sanctions (e.g. loss of benefit for between 4, 13 or 26 weeks) and thereafter, failure on the part of the tenant to respond to requests for information, following the suspension. The problem is not limited to the imposition of sanctions e.g. moving from one “passport benefit” to another has the same effect. As the “claimant commitment” and associated sanctions are extended to 20,000 Jobcentres, by the end of next month, it will almost certainly become an even bigger problem.

As the Inside Housing article suggests, JSA & ESA sanctions should not, in themselves, affect Housing Benefit. So why are so many awards being suspended and later cancelled, creating gaps in entitlement and £000′s in unnecessary rent arrears?

The problem is associated with DWP and Council “information sharing” arrangements. Councils receive notification from DWP when JSA & ESA claims are terminated, even if it’s only for a short period of time; sometimes 1 day! The process is designed to minimise overpayments and prevent fraud but is also having the negative impact of bringing claims to a premature end or prompting questions about whether the tenant remains entitled to LHA.

The information sharing is limited to the fact benefit has been cancelled, but doesn’t fully explain why this is happening. So when a claimant has a sanction imposed or moves, let’s say, from ESA to JSA; another very common situation, the ESA termination casts doubt on the tenants continuing HB/LHA eligibility; prompting a suspension on the claim and letter to the claimant, seeking an explanation. The letter intimating suspension should provide 30 days to respond, but oftentimes doesn’t or claimants fail to reply or delay, and then fail to seek an extension of time. The common outcome: claims are cancelled wholly unnecessarily, creating rent arrears and potentially rental loss.

There’s various ways to tackle the problem of suspension/ cancellation; secure restoration of the housing benefit; and wipe out the rent arrears. However, claimants tend to accept, rather than challenge the decision; an opportunity sorely missed! Equally, landlords, of all types, who receive HB/LHA direct, should be notified of the cancellation, as a “person affected”. If they act quickly enough, many of their tenants could quite easily retrieve the situation but, here again, few have effective procedures in place to tackle the problem and are often suckered by council requests for a new claim, leaving a gap in entitlement, which tenants will struggle to repay.

Landlords encountering such problems need to be equipped to tackle them properly, as the rewards for the effort can be very significant for both tenant and landlord alike. I explain how to tackle the suspensions & cancellations issue and much more asides, during my LHA seminars http://www.rla.org.uk/landlord/courses/local_housing_allowance.shtml One of the recent delegates has since recouped £9,000 in “lost” Local Housing Allowance!

If you’d like any more information on this critically important topic drop me a note bill@ucadvice.co.uk or phone me on 07733 080 389.