Have social landlords ‘stolen’ £27.65 million from their bedroom tax tenants?
5 months ago in March 2014 I take a bedroom tax appeal case for a tenant. The case wins as two of the purported bedrooms were too small and the council (Wirral MBC) pays the bedroom tax back to the tenants landlord (R). This was the case I reported on here in which the council’s presenting officer told the landlord they had a nerve to call the property a 3 bed property.
Wirral council also paid some DHP to the tenants landlord in 2013/14 and despite admitting in writing that the council has no legal basis to claw back these DHP payments it sends an invoice to the landlord for them to pay the DHP back to the council.
The landlord should refuse to pay this request for a number of reasons. Firstly, this is not an overpayment. Secondly, the councils has no right to claim this money back. Thirdly, the landlord would be paying the tenants money to the council without any authorisation from the tenant to do so.
The circumstances in which a DHP is recoverable
If the landlord R pays the councils invoice the tenants rent account will be debited with this amount and the tenant who is rightfully expecting the credit on her account to be paid to her will have no cheque forthcoming from the landlord – the landlord who will have paid the tenants money to the council and without the tenants consent and paid it back to the councils despite the council not having any lawful entitlement to this money back.
Or in simple terms the council is a sneaky bar steward and the landlord is an incompetent bar steward and the tenant is just the poor bar steward being shafted.
If the landlord has indeed paid the DHP monies back the council then they must also credit the tenants account with that money too as they have no right to pay the tenants money to the council.
Also if Wirral MBC has received DHP monies back from 2013/14 financial year then it must pay this back to central government as it is money not spent within 2013/14 financial year – which of course begs the question why did Wirral MBC seek to recover this money in the first place!! That also means all the ‘moral’ arguments that a tenant should not benefit from the pre 1996 loophole (ie cock-up) and that DHPs could then go further to other needy cases is fundamentally flawed too.
What a mess!
Of course should the tenant not receive her monies back, so she can at least afford to put the heating on this winter which she couldn’t do last year and her health suffered because of it, then I will be taking this case up with the landlord on her behalf and naming and shaming that landlord here (here there and everywhere to be exact).
So landlord R it’s up to you to decide.
To all other social landlords sent invoice by their councils for DHPs paid to tenants do not pay them. If you have already and many of you will have done with pre 1996 cases then I will be coming after you too. As I say above the councils do not have a right to claim back DHPs paid to a successful appeal case or a pre 1996 case so if you are one of those landlords not only have you paid this money back, you are also going to have to pay that money back to your tenants account and issue any credit should the tenant ask you for it.
Why social landlords didn’t take 2 minutes to ask themselves is the council entitled to this money back in the first place beggars belief. To merely assume the council must have a right to ask for it or merely assume that a DHP is recoverable in the same way as a hB overpayment is chronic ineptitude by social landlord rent teams.
Apart from this costing landlords double the incompetence of landlords not knowing the regulations on DHP it will also cock-up and invalidate any possession actions you have taken against tenants too. Yes that’s further cost to social landlords but yet again brought on themselves by their incompetence.
Let’s stay on the costs and look at some numbers. If all of the 40,000 or so pre 1996 cases had full DHPs paid from 1 April 2103 to 2 March 2014 and all landlords paid this back to councils the amount involved could be as much as 48 weeks x £14.40 x 40,000 cases – or £27.65 million.
The £14.40 per week is the national average bedroom tax cut in 2013/14 and the average pre 1996 is then 48 weeks of this or £691.20 above means if your landlord has paid your council this £691.20 to the council it also needs to pay back £691.20 to the tenants rent account.
The landlord can they try to get this back from the councils but not without a fight and if they hadn’t made this hasty error in the first place then they would not have to do this.
If I am right that the landlord has no right to pay tenant money back to councils and I am certain this is the case then landlords owe the tenant up to £27.65 million which they need to pay back into the tenants rent account as well.
For the landlord this means the bedroom tax DHP has up to a £55.3 million cost as the original £27.65m returned to councils together with the same further £27.65 million to tenants rent accounts! Ouch!!
If you are a tenant who has won an appeal or a tenant who got back the pre 1996 money your council wrongfully deducted AND your landlord has returned a DHP in error resulting in that money taken out of your rent account then it is time to demand that money back from your landlord.
The DHP was awarded to the tenant rightly and claimed by the tenant in good faith and these DHP awards were correct and not made in error. The error was in the HB decision not the DHP award and hence no claw back is possible under regulations.
In summary a chronic tale of DWP incompetence (pre 1996) local authority incompetence (pre 1996 and original bedroom tax decisions) and now landlord incompetence (returning the tenants money without any right or authority) and a costly one which won’t be borne by tenants despite them being the easy target for DWP. LA and landlord!!
Pre 1996 and appeal winning tenants should get a full rent statement from their landlord and if they see a payment going out and back to council then you need to be telling your landlord to put that amount back into your rent account. Then ask in writing for any credit back whilst remembering that as tenancies are a week in advance a balanced weekly tenancy is one that has you one weeks rent in credit and a monthly tenancy one with one months rent in credit. Over and above that it is your money and if asked your landlord has to return it.
Over the weekend the Guardian ran a piece of Universal Credit stating landlords were asking tenants to make extra payments as UC payments will be received monthly in arrears. This is linked to the above when it says:
In one case reported to the Observer, a tenant who was owed £362, after having paid the “bedroom tax” by mistake, was told by Town and Country that the money would not be reimbursed as it was in her “best interests” for it to “remain on your account” pending the introduction of universal credit, at an unknown future date.
What a landlord view of the ‘best interests’ of the tenant is has nothing at all to do with the legal position. Any credit is the tenants money and landlords churned out such excuses not to repay this money such as the ‘best interests’ line taken by the landlord above. I thought such bad and offensive practice had stopped but given the above Guardian article and the telephone calls I had today with the winning bedroom tax tenant it would seem not to be the case.
Apart from anything else the landlords who do this are just creating more risk of arrears as their reputation with tenants goes down the toilet and when UC comes in with its direct payment of HB to the tenant such landlords will find ‘their’ tenants remembering all such dirty tricks and de-prioritise the payment of rent even more. When I have long advocated that landlords should be supporting tenants to appeal the bedroom tax and rightly that the landlord wins too as rent levels stay the same and HB goes up and a back payment of HB is due – it also means tenants will make the payment of rent a higher priority when direct payments comes in to such forward thinking social landlords who do support tenants to appeal now.