Landlords supporting tenants to appeal the bedroom tax? Play 20 questions and get the single malt out!

The stunning bedroom tax appeal win that saw a father win a right to a bedroom for the shared care of his son is significant for so many reasons.

  • On a legal basis the judge gave very cogent argument as to why a child can live in two homes.
  • The judge bravely, and correctly, failed to follow a poor judgment from the higher court in the Upper Tribunal. Not the first time as the Carmichael FtT case went against a much higher Court of Appeal judgment and again correctly.
  • If upheld when the case inevitably goes higher it could easily take 20,000 or as many as 50,000 cases out of the bedroom tax and cause massive political damage to the policy, a policy that all other parties then the Conservatives wanted to abolish – again correctly as it costs the taxpayer and public purse more than it saves

Yet what is perhaps most significant and gaining a lot of comment and discussion is that the case was funded and supported by a landlord, Coast & Country Housing Association (CCHA) and this is causing all other social landlords to ask themselves if one landlord can do this why can’t we? – Again correctly.

CCHA is being lauded and feted by all social tenants and a number of other social landlords – extremely correctly – as this is not just good practise or even best practice, it is brilliantly clever financial practice.

Supporting and funding tenants to appeal many will wrongly see it as a moral or ethical decision and in part it is, yet I primarily developed it on a practical and financially beneficial basis and even Cameron would call this a something for something case.  It is mutually beneficial for so many more important reasons for landlords and that is why they need to consider it very seriously.  It is also why every tenant affected by the bedroom tax should be haranguing their landlord to do it as well.

Despite my well known zeal, or is that arrogance(?) to get rid of the pernicious policy and the natural bias that goes with that and despite the fact I will benefit financially from it and / or any kudos, deserved or misplaced, I receive for developing it, I outline below  a far from comprehensive list of why all social landlords should adopt supporting their tenants to appeal that makes a compelling business case.

Questions to which the answer is YES!

  1. The bedroom tax directly created tensions in the landlord / tenant relationship
  2. Landlord and tenant need a good working relationship
  3. Supporting tenants to appeal the bedroom tax improves that relationship
  4. Do tenants want support in appealing the bedroom tax
  5. A good landlord should respond to tenant needs
  6. When a tenant bedroom tax appeal wins the landlord benefits financially
  7. When a tenant wins an appeal the rent stays the same
  8. When a tenant wins an appeal the ongoing HB increases
  9. When a tenant wins an appeal a sizeable HB backpayment goes to landlord
  10. When a tenant wins at appeal the asset value of the property remains the same
  11. The initial costs of funding tenants to appeal is more than recouped from additional HB the landlord receives
  12. The tenant supported by the landlord is more likely to prioritise rent when direct payment of HB goes to the tenant
  13. The tenant has more trust in the landlord that supports their issues
  14. When landlords ask their tenants for precise details of the welfare benefits they receive in order to assess landlord financial risk from the overall housing benefit cap they are more likely to do so if their landlord supports them to appeal.

If you answer anything other than YES to all the above you need to reconsider.

I could go on and no and the above is far from an exhaustive list.  I explain in detail at the end why 6 through 10 of the above are 100% factual and that is important.  Landlords were worried about supporting tenants to appeal as falsely they assumed they could lose out by this. They can’t as I explain at the end.  Those reasons for NOT supporting tenants to appeal are obsolete and always hollow ones.

Even the typical excuse for not supporting tenants to appeal as it would appear to be politicking are easily circumvented and rendered as nonsense by point 4 and 5 above.

YET more important is the goodwill supporting tenants creates which counters the rift in the landlord relationship directly caused by the bedroom tax at point 1 and far more importantly WILL see tenants pay more rent when direct payments come in as they keep paying rent a high priority.  The pilots of direct payment revealed a 6.6% non payment of rent rate which if reproduced will put many social landlords out of business as it is circa 13 times the current non payment rate of about 0.5% or so.

That is the really crucial reasoning in developing my package for landlords to support tenants to appeal.  Even if the direct payment settles down at 2% as the DWP suggests that is still 4 times the current non payment rate and a financial nightmare for all social landlords.  Getting the tenant onside by supporting them to appeal is not primarily a moral decision it is a financial decision and a very sensible one of good business practice.

It is a something for something package as Cameron would say, or call it a mutual back scratching exercise if you want, call it anything you like but consider the likely longer term goodwill this brings.  If the landlord who supports the tenant to appeal achieves a 1.5% non rent payment rate when direct payment lands rather than a sector average of 2% as DWP assume then that 0.5% could easily runs into hundreds of thousands of pounds per year payback for supporting tenants to appeal!

The recently announced reduction in the overall (housing) benefit cap means landlords critically need very precise welfare benefit receipt data from all its tenants to assess landlord financial risk.  Yet landlords have no legal right to get this from any source and the tenant can refuse this.  However if the tenant has higher trust for its landlord because its landlord supported them…

Questions to which the answer is No!

  1. Can the tenant who have struggled beyond belief to pay the bedroom tax these past years do so for a further 5 years?
  2. If we don’t challenge the bedroom tax our arrears will not increase?
  3. Can landlords just sit back and do nothing about challenging the bedroom tax?
  4. Landlords are best challenging this on their own and not involving tenants fully?
  5. Our tenants will sit idly by and refuse to help in challenging the bedroom tax?
  6. Our tenants will not fully involve themselves and support all other tenants to appeal the bedroom tax and act as mentors and supporters of tenants appealing the bedroom tax?

It is difficult to articulate how strongly tenants despise the bedroom tax and despite landlords going out of their way pre bedroom tax to say the bedroom tax is not their fault, many tenants do wrongly perceive landlords were a part in this and because of the initial red-inked letter bombardment and other regrettable practices some landlords took when the policy began.

Mostly such offensive practices have ceased or at least dramatically reduced in scale and number and I no longer hear about housing officers ‘doorstepping’ tenants in their home or extremely offensive pay your rent or social services will take the kids letters.  The sector knows some offensive practices took place and the consequences of that was always going to be further tensions in the landlord tenant relationship and an increase in non payment of rent when direct payment landed.  It was naive short termism by the few for which the many will suffer.

Yet the same tenants will jump at the chance of support to appeal which they badly need and want and yes some will say about bloody time BUT it will restore the vitally needed faith and trust in their landlord again which will result in much higher rent payment and massively benefit all landlords.

On an even more cynical note, social landlords in part adopted the AR model to increase revenue by some £150 million or year in 2013/14 alone to mitigate and counteract the increase in arrears the bedroom tax created.  Yet AR is dead as a dodo because of the reduced benefit cap and no longer viable for this purpose whether you believe this posit to be cynical or not.

Landlords have to do something as there is no way tenants  – who have foregone 2 or 3 meals and often more per week in order to pay the bedroom tax for the past two years  – can continue this for another 5 years.

The key to winning bedroom tax appeals is in the written arguments submitted ahead of the tribunal hearing.  I developed and honed these arguments from a what works basis and they get amended after every decision at First-tier and Upper Tribunal.  Each new case gives subtle changes to how any appeal on size or usage or shared care of a bedroom each for a couple on medical grounds and all other appeal grounds.

It is these arguments and training on them that sees landlords win at appeal and of course that also gives in house welfare teams better knowledge and skills for other issues such as benefit maximisation challenges and the like.

That gives a short term involvement while remaining in the background to help and advise with some of the more unusual and more complex cases that arise and to draft argument to set aside or appeal up losing cases if requested.  It still leaves an ever developing skill set for in house welfare teams to argue and present such cases but as CCHA’s team have proved in the GL case they are more than up to that challenge and they have done a magnificent job in this (and soon to be reported upon) other cases too.

While I have not undertaken any formal cost benefit analysis on this CCHA project in speaking with their welfare team the increased HB income from the number of CCHA tenants awarded an exemption for a bedroom for an overnight carer alone exceeds the fees charged and runs into 5 figures per year – an unexpected bonus but a welcome one and no need to go to tribunal either. Add to that the appeal wins and the magically appearing DHPs for appellants  – a known and typical by-product of appealing – and all of the longer term financial benefits of higher and more prioritised rent payment in direct payments become an additional financial bonus.

The bold decision taken by Iain Sim at CCHA to support his tenants needs and wants was perspicacious – a word we will struggle to pronounce when he finally takes me on that single malt sampling session he once promised when the project proved successful and I have not forgotten about, ahem!  Seriously I don’t want to delve into the realms of sycophancy but Iain does deserve all the plaudits he and his teams at CCHA  are getting over this: Many CEO’s did put their heads above the parapet and decried the bedroom tax policy, Iain, unlike most, acted on it.

I could make a strong argument that in house welfare teams save money on staff recruitment and retention costs too as they love the job they do and all this involves.  Much of the social and other media challenge to the bedroom tax has heartbreaking stories of severely disabled tenants and other emotive factors.  Challenging them cannot be emotive yet the joy on staff faces when they win and they know they have kept the tenant in their property and taken away the despised bedroom tax so they can now get back on with their lives is something to see.

As it is with tenants who – whether they win or lose – play a heart warming and key part in supporting other tenants when they appeal.  Tenants don’t want other tenants to have to suffer like they have done and they spread the positive word that their landlord helped them even if they lost their own cases.

Tenants themselves can also be trained up to take appeals and one of the first cases I won in Liverpool saw a tenant decide to take cases for other tenants.  She is disappointed with the 70% success rate she has achieved in these appeals too!!  She has widened her brief and started FACE to take other welfare benefit appeals and with a staggeringly high success rate in ESA and PIP and DLA cases to boot – though of course still unhappy.  Other groups locally such as ReClaim also have a greater than 70% success rate in bedroom tax appeals and have given local landlords staggering amounts of additional HB income too and higher welfare benefit income to tenants with ESA and DLA appeals too.

It is hard to put a price on the return on investment supporting tenants to appeal the bedroom tax will produce in direct payment and in other areas.  Yet the look on the tenants face and on your staffs faces when they win and the goodwill this creates you couldn’t put a price on anyway.  And, as stated above this has already increased income before we get to the longer term benefits of direct payments and increased goodwill and trust CCHA has gained from its tenants.

If I say perspicacious again you reckon there may be a few Islay single malts going…

_________________________________________

Reducing rent levels, re-designation, and DWP hogwash

The offending and errant bedroom tax guidance in the HB circular A4 of 2012:

a42012 para 12

This COULD read that if a property is decided for bedroom tax purposes to only have 2 and not 3 bedrooms that the landlord must reduce the rent, must reclassify the property and therefore have a very adverse impact on the asset value of the landlords stock giving problems with borrowings and interest rates on them.  It is utter hogwash in law and regulation yet undoubtedly landlords shied away from supporting tenants to appeal the bedroom tax for this reason – and would be entirely correct not to support if any of this nonsense held water.

The HB regulations on reducing HB payment levels are clear as day.  This can only happen where the rent level is unreasonably high – see Schedule 2 3(1)(b) of the 2006 HB regulations – which in any case this regulation relating to social landlords was abolished when the bedroom tax came in and HB decision makers now have no powers to reduce the rent or HB payable through a referral to the Rent Officer.

The national average rent differential between a social rent 2 and 3 bed is £5.97 per week according to HCA figures so a 3 bed becoming a 2 bed plus boxroom or whatever cannot be argued to be unreasonably high.

Indeed the DWP confirm this in HB circular G2 of 2015 after having first issued a truly bizarre assertion in the earlier U6 circular of 2014.

The U6 of 2014 said:

hb circular u62014.

Yet the G2 circular of 2015 forced and embarrassing climbdown to reflect the law in the HB regulations:

G22015 hb circular

“…as it is recognised that this is outside their remit…”  In other words impossible for the HB decision maker to do, yet still the DWP add an equally perverse waiver to say “…especially where the landlord of the property is not the LA.”

That could be read as the HB department in the council could re-designate a council or even ALMO property and could reduce the rent level of HB paid to that rent level is the owner is the council.  Utter hogwash as the HB regulations do not allow this, yet the sophistry of this waiver to the preceding fact is typical of DWP circulars in distorting the fact of what the regulations and law says when they do not like what it says!

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