A council who refuse to pay the LHA rate as they say “its too much”

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  • #38806
    David Morrison
    Participant

    Hi guys

    I wondered if you could cast your expert eye over this situation?

    One of my masterminder colleagues has contacted me for advice with regards to a 4 bedroom house she is renting to a family of 4, who are entitled to the 4 bed rate (mum, 19-year son, 15-year daughter and 9-year boy). They are entitled to full HB as they’re on benefits with no other income. They have been living there 2 years.

    The LHA rate for 4 bedrooms in her area is exactly £1500 pcm (£346.15pw) and at the moment, she is charging her tenant much less than this and asked for advice about putting the rent up to match the LHA rate.

    She has “been round the houses” today with the local council to get some advice and she has been told by an adviser in the HB office that they would not pay £1500pcm as it’s “too high for the area” and that the market rent is £1100 a month and they won’t pay higher than that.

    I said that I’d never heard of such a thing and therefore thought I would put this on the HBINFO forum for an expert opinion.

    My understanding of LHA rates is that they are fixed and regardless of the property or the area, it’s the FAMILY UNIT that determines the rate paid. If this is so, then why would the council tell her that they won’t pay £1500 and would only pay £1100?

    Thanks in advance

    David

    #109745
    Kevin D
    Participant

    Please don’t take this the wrong way, but HB is there to assist tenants pay their rent – a LL isn’t “entitled” to any amount of HB. Onto the issue…

    The LA cannot just say “it’s too much”. But, until there is a rent increase, the LA isn’t required to make a formal decision and any advice is not legally binding (although poor advice *could* leave the door open to compensation by way of the complaints procedure).

    In short, the 4-bed rate is normally payable (subject to the yearly LHA anniversary rule which may prevent an increase in doesn’t prevent an increase until the anniversary date is reached). On the basis that the 4-bed rate is the appropriate LHA restriction level, there are only two *apparent* methods by which the LA can restrict below the LHA rate (in no particular order):

    1) decide the liability has been created to take advantage of the HB scheme (“unfairly” or “improperly”). That would mean no HB at all. There is contradictory legal authority on whether this provision can be applied at the time of a rent increase or whether it can only apply at the outset of the original liability / tenancy. Me view is that it CAN apply at the time of a rent increase. Playing devil’s advocate, the info in your post does appear to suggest the LL and tenant are, at least to a degree, colluding on the issue of the rent increase for the purpose of obtaining additional HB. The LA *might* take the view that the approach here would not have occurred if the tenant was not on HB.

    2) a general restriction under regulation 12B(6) of the Housing Benefit Regulations 2006. HOWEVER, in a recent decision of the Upper Tribunal, Judge Wikely stated (obiter – i.e. not binding) that this provision might not be lawfully applicable to LHA cases. The case in question is [b]AA v Chesterfield BC [2011] UKUT 156 (AAC)[/b] – file reference CH/0107/2010 – @ para 40.

    It might be worth your colleague WRITING to the LA, giving details of the advice given verbally and asking the LA for the legal basis of the advice.

    NB: You should be aware that any postings on HBinfo should be regarded as being on a public forum and, as such, it’s possible someone at the LA concerned might see this thread and be able to identify the case in question.

    #109740
    David Morrison
    Participant

    Here are some more details:

    The house is in xxxxxxxxxxxxx and the local authority is xxxxxxx. It is in the xxxxxxxxxx BRMA. On the website is says:

    (edited by DM to remove the name of the council and town)

    Shared Accommodation Rate:£74.04 per week
    One Bedroom Rate:£144.23 per week
    Two Bedrooms Rate:£183.46 per week
    Three Bedrooms Rate:£213.46 per week
    Four Bedrooms Rate:£346.15 per week

    And this the the message I got from my colleague:

    Hi David,

    The family are definitely entitled to a four bed. There is the mother, son who is 19, daughter who is 15, and another son who is 9.

    They moved in two years ago this month, therefore now would be a good time to put a new tenancy agreement in place with the new rent.
    I have just spoken to the tenant and told her I’m putting up the rent, and she is happy to fill out any required forms and go to the housing office as required.

    ———————-

    Hi David,

    Today I have been on the phone on and off for a couple of hours with the council. They have passed me around the houses, and very few seem to actually know what the rules are when you start to drill into the detail, but luckily for me you have both given me advice that I am now using. What this experience has highlighted to me is that we really do need to know the in’s and out’s of what we can get and how to get things through, as I have received conflicting advice today from the various council employees I have spoken with one who told me that they don’t pay the LHA rate because it is too high!

    When it comes to private landlord accommodation, it would appear that where I live the Housing Benefits office work with other council ‘agencies’ to house people, and do not house people directly themselves. The agency then sources properties for the council tenants from private landlords and try to get the properties at ‘standard’ market rates, which is less than the LHA rate. The woman at the agency were my tenants have come from told me she would not take on a four bed property at £1500 a calendar month (which is the LHA rate). She said she would pay no more than £1100 as that is what other 4 beds rent for privately.

    The outcome of today has been that I can A)increase the rent from the current £950 to £1100 a month without too many objections, or B)do some more research, find the right contact at the council, and establish if there is another way that this arrangement can be set up so I can earn the £1500 a month which is what I am entitled to.

    #109747
    David Morrison
    Participant

    Thanks for your brilliant advice Kevin… will speak to my colleague ASAP!

    > You should be aware that any postings on HBinfo should be regarded as being on a public forum

    I have edited the post to remove the town and council.

    Thanks again
    David

    #109786
    Andy Thurman
    Keymaster

    Couple of comments here:
    1. Respectfully disagree with Kevin’s “devil’s advocate” position!! There is a blurred boundary between collusion and a good “working” relationship between landlord and tenant but on the brief description given it simply seems that the tenant has accepted a new agreement and agreed to tell the council. Well away from the blurred middle imho! 8)

    2. Although the way BRMA boundaries have been set provide many ‘quirks’ where localities within the BRMA are a lot higher/lower (mainly they are higher where they exist!) than the LHA rates, they are “scientifically” set at the 30th perecentile on known tenancy info. In my opinion, this negates any provision to restrict below the LHA rate.

    3. The above applies to ‘normal’ private tenancies. From the details in the quoted message, this may be more to do with leasing schemes or some other housing “options” service? The council (or its agencies) can put whatever limits they like on the terms of a lease or a landlord’s involvement in such a scheme provided it can get sufficient landlord’s ‘on board’ to meet their requirements. If the LA’s housing involvement is simply introducing tenants to private landlords, their only way to restrict the rent below LHA is outside of HB i.e. In return for involvement in a scheme for priority placements, the landlord signs an agreement at lower levels and prevents/restricts increases for the tenant for a future period. Without this unlikely agreement, the landlord (after the initial tenancy period) can ‘do as they please’.

    If this is a lease agreement – this is different as the property is effectively then sublet by the council/agency and it is for them to charge/collect rent from their tenants. As LA’s can charge 90% of last January’s LHA rate (effectively 100% of current rates usually) plus a management fee on such leased properties, any landlord interested may want details of how the LA sets its rents!!

    4. Although Kevin is right to remind of the need for some caution with naming people/organisations on the message boards, there are very few from the benefits side allowed access to this part of the site (unless Ghita or Peter have changed this?!?) to allow for frank debate!

    #109794
    Kevin D
    Participant

    Based on the information given, I think it was reasonable to raise the “devil’s advocate” position (which was qualified). For example: “I have just spoken to the tenant and told her I’m putting up the rent, and she is happy to fill out any required forms and go to the housing office as required.” I’m not convinced the tenant would have been so agreeable if HB hadn’t been payable. But, Andy and I are, how shall I put it, unlikely to take the same view on this :).

    Andy is right about the limited access to the “agents” forum. However, I have personally seen any number of sites over the years where access has been limited but a glitch at some point has inadvertently opened the door. It *shouldn’t* happen, but it does, no matter how reputable the site. For example, a software change might inadvertently reset permissions, a site can be hacked (this has happened to hbinfo in the past), a workaround may be discovered. Unlikely, sure. But far from impossible. This is exactly why I keep my more inflammatory comments offline… :bigsmile:

    #110159
    peterdelamothe
    Keymaster

    It is intended to limit this part of the site to landlords and a few others …for that very reason!

    It is amusing how quickly the idea behind LHA has been forgotten by LA’s; it was not intended to reflect the property size at all.

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