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LH 35 Memorandum submitted by the Scottish Association of Landlords' Policy & Parliamentary Affairs Committee. The Directors of the Scottish Association of Landlords (SAL) welcome the opportunity to provide written evidence to the Work and Pensions Committee Inquiry into "Local Housing Allowance". Our Association's membership represents a diverse range of private
landlords operating throughout SAL would like to draw the Committee's attention to the following main issues of concern that our members have expressed in relation to the LHA. We can honestly say that no issue, in recent years, has perplexed and frustrated our membership just as much as LHA has. We sincerely hope that the representations we make will be taken on board by the Committee and, if considered useful, we would be willing to provide oral evidence direct to your membership. In making these representations we have tried our best to comply with the format set out in your original invitation. * Have the objectives of LHA been met in practice; In April 2008 the Government introduced a major change to
the way HB was calculated for private sector tenants, and more importantly,
prescribed HB should be paid direct to tenants, except in a few exceptional
occasions where it was felt the tenant was vulnerable and incapable of looking
after themselves and/or their financial affairs. The changes were introduced
despite major concerns and objections being expressed, in advance, by organizations
such as SAL that predicted these new measures would adversely affect the
relationship between tenant and Landlord, and make much more bureaucratic and
testing, the relationship between Landlords and HB departments, which
previously had been, in general, very good. In our membership's view, HB is now much more complex than it has ever been. New rules, circulars, and associated guidance are all too frequently being issued to councils who, in turn, are having difficulty keeping pace with the changes. LHA creates a two tier HB system affecting new and pre LHA tenants - but only for private sector tenants. Although the scheme has enjoyed a great deal of publicity, much of it was either Governtment propaganda promoting its virtues or Landlord/Welfare organisations pointing out its downside, especially in relation to the retrograde move denying tenants the right to assign direct payments to their landlord. Council staff don't seem to have much in the way of specialist training on this complex topic, especially at the 'coal face' customer service point. Council HB departments, already under pressure and scrutiny, struggle to understand its detail, complexity, and frequently get themselves mixed up with how the 'old' and 'new' style sytems should operate. For example, in some cases, Landlords still have the right to mandatory direct payments (Regulations 95/96) - if, for example, there is arrears of rent for 8 weeks or more .......etc. In other cases, councils should consider making the first payment of HB (following a new claim or supersession) by sending the tenant a cheque, payable to the Landlord to ensure, as the HB Guidance manual puts it: 'to avoid the possibility of a claimant misusing a first payment covering several weeks' entitlement'. The GM sets out a number of such scenarios and the various issues to be considered but all too frequently these provisions are either misunderstood or just completely overlooked, despite protestations of landlords. Landlords despite their best efforts frequently end telephone calls or leave council premises completely frustrated, and often angry, because of their seeming inability to achieve a sensible solution, especially when the tenant is fully supportive of the move. Recently, the Scottish Public Services Ombudsnman published a decision Report Number: 200800154 relating to Edinburgh Council. Although the complaint relates to a specific case the circumstances mentioned in the narrative below is all so familiar to our members and supports our previous contention about lack of knowledge and understanding of HB regulations and procedures on the part of council staff.: Overview: Specific complaints and conclusions
Redress and recommendations
The Council have accepted the recommendations and will act upon them accordingly. Furthermore, colleagues in the Guild of Landlords in * The impact of direct payments to claimants on both claimants and landlords; According to research recently published by Shelter 'Giving Claimants a Choice', and earlier reports from Citizens Advice, and the National Landlords Association (NLA), a year after the new system was introduced, many tenants are, as predicted, already failing to pass on these HB payments to their landlords which, in turn, is causing major problems for tenants and landlords alike. Shelter's research states 'the presumption of direct payment to tenants is increasing cases of rent arrears and discouraging landlords from accepting LHA claimants as tenants'. The survey involving 450 individuals across England has highlighted: (1) 25% have fallen into arrears since moving on to LHA; (2) Of the claimants who would choose landlord payment 95% are struggling to manage their affairs; (3) 50% who have experienced both forms of payment believe landlord payments help them in managing their rent payments. In the most serious cases, landlords have to pursue
repossession because the HB element is invariably not handed over to the
landlord creating hundreds of pounds in arrears, within a matter of weeks. It
is also creating considerable tension and heated exchanges between tenant and
landlord. On rare occasions, this can also lead to threats of physical abuse,
damage to property, and involvement of Police. * Whether adequate and consistent mechanisms/processes are in place to help Housing Benefit Departments identify and assess vulnerable claimants; In our experience, most HB departments are already hard pressed just administering the standard scheme and spend little or no time trying to identify potential vulnerable casualties of LHA. Assessing 'vulnerability' creates an additional layer of uncertainty/complexity and decision making, involving the exercise of discretion in an area in which HB officers do not have expertise. Unwilling to simply accept evidence of incapacity or vulnerability from tenant/landlord, many revert to asking for letters/reports from GPs/Social Workers to allow them to make a decision. Many tenants understandably find the 'vulnerability' test quite intrusive and demeaning. Some simply resent losing the choice over how their benefit is paid, and on a practical level find difficulty cashing cheques in banks, as traditionally they were not accustomed to having bank accounts. Some revert to shopping centre 'cash converter' companies who take commission for providing cash. Any shortfall created by such transactions has to be absorbed by landlords with little hope of compensation. None of this is in any way a surprise to Landlords. It was all so predictable, because during the Pathfinder Pilot areas, Citizens Advice Bureaux were contracted to provide money management support to claimants to help them cope with the change. Councils set up referral arrangements with bureaux for tenants who were viewed as having difficulties managing their financial affairs, or who need help in opening and managing bank accounts. In addition, bureaux had been proactive seeking out claimants in the local community who needed advice and support with the LHA. * Whether advice services have the capacity to adequately support LHA claimants. By the end of September 2005 the five bureaux with LHA contracts had advised around 2,500 clients with concerns relating to the LHA. These included general advice and information about the LHA, problems with accessing and managing bank accounts, support with vulnerability assessments and help with rent arrears and other debt. None of this 'pilot' support was extended to private sector areas and Citizens Advice Scotland (CAS) and for that matter, local bureaux could not have in any case coped with the problems of LHA in addition to all the other raft of problems it grapples with year-on-year never mind the mountain of debt related issues arising from the Credit Crunch and general recession. Case Examples The following case examples have been supplied by some of our members and highlight some of the difficulties created by the new approach of paying HB direct to tenants. They also underline the worrying consequences this is having on number of arrears, legal actions for repossession, and number of vulnerable tenants, being exposed to long-term homeless existences. 1. Landlord A.
I have had 2 tenants claim housing benefit but who decided not to pay their rent with it. I have since served a notice to quit on both tenants and now that they have vacated my property. I am now pursuing a small claims action against both tenants for unpaid rent.
Not paying the benefit directly to the landlord will result in many tenants not passing the money received over to their landlord and in many cases resulting in the tenant being given a notice to quit. The result of which will increase pressure on the homeless department and may result in landlords refusing to take on DWP tenants.
2. Landlord B.
I have had several problems with tenants being paid direct and not passing on their rent to me. We have had to give notice to 3 tenants already.
3. Landlord C.
Just a brief note to say that I lost out to the tune of £2000 because of the change in housing benefit payments.
When
the tenant got the money directly, payments were missed left right and centre,
culminating in the debt over a couple of years. I was pleased just to get rid
of the tenant eventually. This was a 2 bedroom flat in
I would NOT take on a housing benefit tenant again under the existing rules.
4. Landlord D. I have lost out on two months' rental payments from a tenant who has
now left my property. She thought the money which arrived in her account
was her 'bounty' for recently returning to work after being on benefits.
The council hadn't informed her that the money was to be passed to
myself. When I got in touch with her approx. 1 week after the first
payment was missed so told me she had spent it and could she pay me back at £50
per week? The next month's payment was late. 5. Landlord E. This was my
first experience of helping swap a tenant over to LHA from the I had a similar letter from Karen at LHA. I had requested direct payment as the tenant was becoming quite stressed out about payments. They are digging their heels in stating that the matter is a legislative one and not one that the council can change. Here is an attached letter from her relating to it.
They are not going to sway - and I get the impression that if it is a problem for you and your tenant that they are not directly saying so but - to go 8 weeks in arrears is the only way that payment can be made directly.
Instead of empowering people it is in my mind - disempowering them because they are being left with less certainty about being able to fulfill their contractual obligations to pay rent and of course with disgruntled landlords.
I found it really annoying that on the one hand XXX are asking us to support people and on the other LHA are suggesting that we are not in a position to assist tenants - that should be left to other bodies. It is a real dichotomy - they need to decide what our roles are.
The letter from LHA department is quite explicit in this regard:
'..........As a landlord it is not your position to offer personal support to your tenant unless you choose to do so. I will write to DXXX separately to see if he wishes referred to other agencies that may be able to assist / offer advice he may want'.
I do not intend to offer my property to anyone on LHA henceforth and or at least until they get themselves sorted out - re timings of payments and I have heard good feedback on it. Today I was expecting payment via an established standing order - and no money forthcoming. More time, effort and energy on my behalf - chasing that up tomorrow.
7. Landlord G.
As discussed, here is some evidence on tenants withholding their housing benefit:
X Council - we had two separate tenants withhold their first two months LHA (before we applied to have it come to us) in two separate properties in CXXX last year. We found the council particularly unhelpful in trying to resolve these; they refused flatly to discuss the claims.
We've had a case at
In all these cases, we've had to request rent be sent to us. And more cases come up all the time.
Why not email members to send some more evidence or set up an online petition? Would appreciate any help on this as it's a total nightmare!
7. Landlord H
My names DXX and have been a landlord since 2005. I have only been involved with the New housing allowance of payments directs since November last year and has issued a notice to quit to my tenant as its not working at all.
If you need my signature on any campaign I am willing to help
I also understand from JXXX that SAL is responding to the DWP Select Committee inquiry into LHA which is great news. Let's hope they take notice and actually start listening to landlords
A tenant we had for over 4 years has now just disappeared on us owing £1300 in rent arrears. She never had any issued on the old HB system. Then she had a change in circumstances in December, went on to LHA and slowly but surely has built up these arrears - mostly in the last 4 months.
We have had 2 more safeguards granted as a direct result of the tenants being overdrawn on their bank accounts and not having enough money to pay rent. LHA goes into bank account, bank taking overdraft money or bank charges and leaves them short of approx. £200 (average at the moment)
We have also evicted 2 more tenants for non-payment of rent/LHA in the last 2 months.
8. Landlord I.
PXXXX has not passed onto me either, or more likely, her circumstances had changed and she wasn't entitled to the benefit. When I phoned WXX I was informed that it was a matter between me and the tenant. So far she has paid me £100 and still owes me £638. This has been ongoing since July 2008. The Scottish Association's position can be summarized as follows: a) The objectives of the April 2008 have not been achieved, especially in relation to the decision to make HB payments direct to tenants; and b) One of the key objectives of extending 'choice' has created the unintended consequence of discrimination towards only private sector tenants and a situation where many vulnerable tenants are in fact denied their preference of having the benefit paid direct to their landlord; and c) As predicted, many private tenants have succumbed to the temptation of misusing public funds to satisfy their addictions to alcohol, drugs, gambling etc resulting in their landlord losing much needed revenue and being forced to revert to legal proceedings, and the costs associated with this, in an attempt to recover the debt and/or simply repossess the home; and d) Our members have found that council HB departments are not sufficiently informed or resourced to deal with the myriad of issues created by these problems. Many have commented on the strain and tensions this has created between them, tenants and the council, in some cases, destroying previously effective relationships; and e) Many vulnerable tenants having misused their payments have found themselves homeless. Due to their circumstances, and reluctance on the part of an increasing number of landlords to participate in LHA scheme, and a dearth of suitable accommodation elsewhere, many will remain homeless and become even more vulnerable to the vagaries of existing on the street. The Scottish Association of Landlords calls on the Committee to immediately address the concerns created by some aspects of LHA, and especially requests that the 'right to choose' to whom benefit is paid in future is restored as soon as possible. November 2009 |