Direct payments

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  • #33889
    rebeccadodd
    Participant

    Can anyone clarify – are claims that are still being paid directly to the landlord under HB still to be paid directly to the landlord after LHA starts? Does the requirement to pay direct to claimant affect only new claims?

    On another note – Having had lots of enquiries about our basic bank account pack it seems that other banks are resisting this because some LAs have got 1,000s being paid directly to the landlord. Some of these will already have accounts but choose to be paid directly to LL – in fact in our experience this is the case in the majority. If it turns out that only new claims will be affected by the Direct PAyment requirements we would anticipate a small trickle of customers needing assistance in setting up bank accounts.

    #47944
    Anonymous
    Guest

    I think that you can continue to pay the landlord on existing claims as LHA won’t affect them to begin with, but as soon as there is a break and a new claim is made, which means the customer moves onto LHA, you will have to pay the customer.

    can I stress the ‘I think’………!
    😀

    #94246
    peterdelamothe
    Keymaster

    The draft transitional regs are not available but the DWP has promised HBINFO can have them once they have gone through the usual statutory consultative channels.

    In the meantime, I can confirm that current claimants will not be affected i.e. you can still pay the landlord.

    Whether you would wish to is a matter of policy for each LA. Confusion or what?

    #94247
    Anonymous
    Guest

    Does anyone seriously think that tenants and landlords will wait for a natural break in claim if they realise that they can get a much higher rate of LHA than HB.From April 2008 look out for requests for cessation followed by a new claim a week later from existing private sector claimants, or worse, landlords squeezing sitting tenants out to bring in a new tenant to claim LHA. That, together with split payments/split payment overpayments recovery and two schemes, HB and LHA, running side by side for a number of years and it makes the postings about the very rare requests for backdated underlying entitlement seem an irrelevance ( how many of those crop up across the country in a year?). LHA should be exercising the minds of contributors not rare anomalies.Early draft regs are out ( see an earlier post for the reference) and hbinfo contributors should be pointing up difficulties in these pages, especially since we know DWP are amongst the subscribers.Might influence the debate instead of moaning about it afterwards.

    #94248
    rebeccadodd
    Participant

    Hi Peem – your comments are very true – we’ve also identified that landlords could swap tenants rooms and they can reclaim on LHA.

    One of the reasons I asked the question was because we have set up a process to give people access to Basic Bank Accounts where our corporate banking provider has agreed to accept letters from us to prove identity AND residency (seeing as we go through more or less the same verification procedures). We have been getting calls and enquiries from LAs who are keen to get this issue sorted out well in advance. One of the issues that other LAs have encountered are the horrified local bank managers anticipating hundreds of people wanting bank accounts as a result of LHA. I have advised that unless the DWP intention is to make ALL claims directly payable the process would be manageable as it would be a slow flow of people when LHA kicks in.

    The reason for asking now is to reassure those banks that we are about to approach to widen the process that there will not be a flood of people in April 08. It may be a rare anomaly but important if LAs want to “sell” it to their banking providers to use the same sort of process and not leave customers stranded……

    #94249
    Anonymous
    Guest

    Good on you, Rebecca.This is exactly the type of information and ‘on the ground’ experience that we should be sharing on this LHA message board.More such contributions are welcome.Hope some of the Pathfinder/2WG are also prepared to share their actual experience, warts and all, and not just follow their management line that it is all plain sailing (well they would say that considering they took their authorities into the scheme).How are they really coping with split payments and recovery from both parties in the event of overpayments?
    Residential Landlord Association report escalating rent arrears in the pathfinder authorities.Is that the case and is managing vulnerability a growing problem for them? And what are LAs expected to do when, a few weeks after the first payments of LHA go out, tenants and landlords agree to a rent increase in order to get round the cap on the excess?If the LHA cap is set at £15 above the contractual rent then both parties can agree to an increase in the contractual rent and get more money as the following example illustrates

    Contractual Rent £ 60.00 pw
    LHA Rate £ 80.00 pw
    Capped LHA payt. £ 75.00 pw

    If the tenant and landlord agree to a contractual rent increase to £65.00 then the LHA payt. will go up immediately to the full £80.00.

    DWP don’t think this will happen.Wanna bet?

    #94250
    Anonymous
    Guest

    One of the other pessimistic predictions made when LHAs were first floated was that landlords would simply raise their rents to LHA levels (since those figures have to be freely advertised), as was the case when fixed-rate housing allowances were paid as a part of Supplementary Benefit.

    Two Pathfinders I spoke to (albeit quite early on in their Pathfinder careers) seemed to think that there was very little evidence of that happening. I’d be interested to know if that is still the case some three years down the road.

    (Could I also mention, Peem, that those of us who spend a lot of our time as appeals officers come across the “rare anomalies” all too often!)

    #94251
    seanosul
    Participant

    I do not believe in the cap or transitional regulations. Savings will not be generated by imposing an artificial cap and creating an additional scheme on top of the myriad of others.

    #94252
    Anonymous
    Guest

    Any ideas on how the LHA will impact on DHP funding?

    #94253
    andyrichards
    Participant

    In response to Peem, I am at a loss to understand why the govt went down the gradual route rather than the big bang approach we trialled in Brighton and Hove. Here everyone went onto LHA unless their existing benefit award was higher than they would get under LHA. It was easy to administer and understand.

    The approach adopted for the roll-out will lead to all sorts of problems as you have described.

    We are now faced with having to go back from the big bang approach to the gradual!

    #94254
    rebeccadodd
    Participant

    I agree. The speaker from DWP at the London Councils conference indicated that they believe there is no transitional scheme because as your caseload turns over more people will go onto LHA. Bit of a sweeping generalisation!! There are some people on our books who have been claiming since before I started working in HB and that was 20 years ago!! If what we’ve got is not a transitional scheme then I don’t know what is!!!

    #94255
    seanosul
    Participant

    I have to say I agree with the posters here, I have no idea why they did not go big bang as any potential long term savings could only be made from this by taking a big bang approach and not imposing a cap.

    The cap will skew the claims (as per the examples above) and will therefore also skew the average as tenants will not have the full incentive to seek lower priced prroperty.

    The “phased” approach will mean that the administrative burden that this scheme was supposed to do away with will remain as we will then have pre 89, pre 96, reference rent and lha schemes to deal with. As a result of this there will be only a limited reduction in the work of the Rent Service, so there will be no savings there either.

    Oh well

    #94256
    Anonymous
    Guest

    I agree with Rebecca’s comments having contacted most of the banks in my area. They are unwilling to enter into any partnership with the LA in order to assist customers opening these basic bank accounts. My LA’s banker in particular was of the opinion that they did not want these types of customers in their branch anyway so they are already stereotyping benefit customers as those they do not want. So much for their corporate financial inclusion policies (if they even have them). They may well be required to offer a basic bank account, however they don’t publicise them as there is no money in it for them and as they are private companies, who can blame them….?

    #94257
    seanosul
    Participant

    I spoke to a former employee the CAB (quite a high level person) who was very much against the idea of partnership agreements with banks on basic bank accounts, as this could be seen as encouraging a particular bank. On the flip side, if your bank does not want “our type of customer”, should you as an LA be offering them your custom?

    #94258
    rebeccadodd
    Participant

    To be fair……….to our bankers they were completely open to the idea. They were very positive and guided us through the process. They were the ones who insisted that we did not go into “partnership” as it goes against their banking code and they were insistent that we promote other accounts as well – but they were happy to adopt their procedures even if the other weren’t. They were keen to promote themselves as a bank set on financial inclusion. they also wanted to push their scheme of funding for social housing – so this was probably the “pull”.

    Our approach has been to publicise Basic Bank Accounts in general and as part of that explain that we can assist with Lloyds applications. Beyond that we have agreed a specific set of procedures with Lloyds TSB – any other banks are welcome to adopt the procedures….but me thinks they won’t!!

    If anyone is interested in the Lloyds set up then you can contact Satchid Kale
    Lloyds TSB Corporate Markets, 3rd Floor | 25 Gresham Street | London EC2V 7HN
    Telephone 0207 661 4695 | Fax 0207 661 4952 or 4969

    e mail satchid.kale@lloydstsb.co.uk

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