Compensation for with held LHA

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    david bradley

    So my tenants rent has not been paid since feb 3rd and now is in arrears of £3,500.

    The complication is the tenant thought they had sold their house 6 years ago. It turns out a rouge investor took an option on it and she was given false legal advice. Now the council knows she owns an asset and have agreed that she has not commited fraud and will pay her rent, but not before the asset is disposed of, which could takes weeks/months (i do want to buy it on the cheap).

    Im holding out as do not want to evict her as I am confident this will be resolved.

    Can anybody advise what duty of care the council have to her?…
    I can now file for eviction in court as I served a section 21 2 months ago. If I did that she would not be able to claim HB again? is this true?

    My real intention for filing for eviction is that if the council have a duty of care to her then they will pay her rent regardless of the house because they would be responsible for her becoming homeless.

    Kevin D

    Hi David.

    Based on the info given, the issues appear to be as follows:

    1) whether or not the clmt is the legal, or beneficial, owner of the asset.
    1)(a) if so, can it be disregarded?
    1)(b) if not, whether it was disposed of with there being “…a significant operative purpose…” of obtaining / increasing benefit.
    2) the right of appeal for the claimant.
    3) the right of appeal for the landlord (i.e. you).

    Housing law isn’t my area, so I can’t advise on any advantages / disadvantages of commencing formal eviction proceedings, nor on whether the Council has any duty in the event of homelessness on the facts of your tenant’s case.

    In my (substantial) experience, I’m unclear as to how someone can *think* they have sold a property only to later find it has remained in his/her possession. However, that’s as maybe…

    The crux question is this: Does the tenant own (beneficially) the asset in question? If the answer to that is “yes”, then the starting point is to take the value into account for benefit purposes. But, there are circumstances in which the asset can be disregarded entirely. For example, is the clmt taking reasonable steps to dispose of the asset? Is the asset occupied and, if so, are any of the occupiers connected to your tenant and, if so, in what way? Are any of the occupiers over 60 or incapacitated? These are simply examples and the question of disregarding the property depends on the answers.

    If the asset is not occupied and no steps are being taken to sell it, what is it’s true market value to a willing buyer? Such a value must have 10% deducted and then any encumbrance (e.g. outstanding mortgage or secured loan etc).

    You mention you are confident of the issue being “resolved”. What is meant by “resolved”? Has HB merely been suspended, or has a formal decision been made which has been formally disputed by the clmt (i.e. a request for a revision of that decision, or, an appeal against it)?

    If the clmt / tenant hasn’t formally appealed, a relatively recent decision in the Upper Tribunal *may* mean you have the legal right to make an appeal yourself. Feel free to come back with more info and, if/when I’m able to, I’ll try and narrow the focus of my response.

    david bradley

    Thanks Kevin,

    The details:

    6 plus years ago a guy took advantage of the tenant, he gave her a loan of £40,000 to buy the house from the council with a right to buy discount, he then registered a charge against the house…. later she was suffering domestic violence and wanted rehousing somewhere else, he offered her a property he owned and he instructed a solicitor to represent her, the solicitor also represented him (conflict of interest). She was under the impression he was buying it, however I believe (not confirmed yet) he took an option on the property, gaining control, he then rented it out to people on HB. The tenant remained the owner unknowingly.

    He benefit has been suspended and they wrote to me in April to say they were going to claim back the rent I had received directly. I responded accordingly and they dropped the attempt to claim rent back from me.

    The ‘behind closed doors’ support agency have been working with the tenant and have informed me that HB team can confirm they do not suspect her of HB fraud. However the HB team also are aware that they have been paying housing benefit to the tenant in her old house, I estimate 6 years at £6,000 a year to be £30,000. This money has gone in the pocket of the con man. I assume they want to reclaim this money, ideally from the sale of the property.

    Writing this has just raised a thought. If the people claiming it for the other house are claiming it legitimately, however paying it to a con man…….. is the HB team entitled to claim it back??????????

    Now answering your questions:

    Yes she is the legitimate owner.

    No appeals have been submitted.

    The property is tenanted, by whom I do not know, however they are on HB.

    A solicitor is looking into the case against the firm that represented my tenant in the property transaction to seek damages.

    A different solicitor is representing her regarding the original claim that she was committing fraud.
    The tenant wants to sell it, however unaware of her rights to it and she is leaving it with the solicitors to confirm the procedure for her. I have been unable to speak with this solicitor as of yet.
    The property is probably worth £60,000, the only charge against the property will be from the con man. This I suspect will be removed…… how, how long etc I have no idea.
    Resolved: Her HB reinstated, the asset sold and the HB team off her back (assuming they get something from the sale of the asset.

    So my thoughts are now evolving having just typed this……..

    Do I just pay my own solicitor to look into this and see if the charge is legal that is registered? If not then buy it from the tenant, she pays the rent out of her profit until she runs out of money then reclaims for benefits when it has run out?

    How would that effect the tenant? Obviously I would only pay in the region of £40,000 for the house. It will have a nock on effect, what kind I don’t no.



    Kevin D

    Given the new information about the possibilitly of a prosecution, I’m concerned about offering further advice. The concern isn’t about upsetting the DWP and/or LA, but about offering advice in the absence of paper work that may directly affect that advice. Experience has long since taught me to be cautious.

    So, at this time, my advice is as follows:

    1) if not already the case, the tenant/clmt needs a solicitor who is positively competent in:
    a) criminal law and associated court procedure; and JUST AS IMPORTANTLY,
    b) social security law.

    2) Irrespective of “1)b)”, you client MUST instruct her solicitor to obtain, asap, the services of an “Expert Witness” who really knows his/her stuff in social security law – this can *normally* be met through legal aid (at least for now). Contrary to the view held by some solicitors, instructing an accountant as an expert witness in social security cases is usually a complete waste of time and effort – they simply don’t have the knowledge to advise on the substantive issue and, frankly, any half intelligent 10 year old can check sums with calculator (exceptions may be where financial trails are involved).

    3) IF formal notifications of the decision(s ) have been issued, appeals need to be made as a matter of the utmost urgency. The normal time limit is one month with there being an absolute maximum of 13 months (i.e. the normal one month plus a further 12 months for late appeals).

    Based on the info so far, I am far from convinced the DWP or LA has got this right. BUT, without seeing ALL of the paperwork, it’s simply impossible to advise safely.

    Feel free to furnish this thread to your tenant and/or her solicitor – a good solicitor shouldn’t take offence at my generalisations.

    david bradley

    Thanks Kevin,

    Useful advice. I believe there’s is a letter in the post for me tomorrow to say the HB has been reinstated and to be paid ASAP. We shall see.

    As for the house she owns. Do the council have any right to take the house or money from the sale? after all the council have paid a legitimate claim to the tenants that were living there. It just happened so that the money finally ended up in the hands of a criminal??????

    Thanks again for your advice and I will be seeking further advice from a solicitor who knows social security law.


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