L/L not collecting top-up

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  • #23349
    Anonymous
    Guest

    Where it is a known fact that a landlord does not collect any top-up from his tenants and accepts the value of HB as payment in full, is there something in the regs that allows us to re-refer to the rent officer at the lower amount the landlord is accepting?

    #12130
    andyrichards
    Participant

    Assuming that by “top-up” you mean the difference between the original rent and the ROD, why would you? Isn’t the landlord just going along with the RO’s opinion of how much he should be charging?

    Besides, if the system works, wouldn’t the ROD just come back as “not significantly high”? I’d love to hear a RO give a rational explanation if it didn’t!

    But in any case, I don’t see any statutory grounds for another referral.

    If you mean that the LL is just accepting whatever amount of means-tested HB is paid in each case, that would raise a few questions about commerciality.

    #12131
    Accura
    Participant

    – straight forward non-commerciality issue and is always something that we’d check if there were doubts about commerciality / contrivance.

    #12132
    Anonymous
    Guest

    Sue –

    There have been discussions on this subject here before (perhaps KevinD will be able to locate them). In a nutshell, you should not re-refer at the lower rent level which the landlord is accepting. If the full contractual rent is, say, £100, of which £80 is being met by HB and the landlord does not seek to collect the balance of £20, the fact remains that the contractual rent is £100. In theory, at least, the landlord could at any point turn around and demand the balance owed to him, so there are no grounds for re-referral at the ‘collected rent’ figure.

    As for non-commerciality, I doubt that this is much of a starter in more than a very few cases. Many landlords are wise to the RO arrangements and deliberately set a high rent to maximise the RO valuation. For example, if the landlord set a rent of £80 and the RO said that was fine, the landlord would then be wondering ‘Hmm, maybe I could’ve got £100…’

    #12133
    Kevin D
    Participant

    Edit: post compiled as Andy posted. Also, further note added following Andy’s post.

    The failure of a L/L to seek payment of the shortfall is not, in itself, enough to establish that an agreement is not on a commercial basis. A handful of CDs that may be of interest:

    [b:ce9f35f624]CH/1076/2002
    CH/2124/2005
    CH/2694/2005
    CH/5147/2002[/b:ce9f35f624]

    All of the above can be found on this site:
    new.hbinfo.org.com/menu2a/list_liability_comdecs.php

    [u:ce9f35f624][b:ce9f35f624]Further note:[/b:ce9f35f624][/u:ce9f35f624]
    [quote:ce9f35f624]Many landlords are wise to the RO arrangements and deliberately set a high rent to maximise the RO valuation. For example, if the landlord set a rent of £80 and the RO said that was fine, the landlord would then be wondering ‘Hmm, maybe I could’ve got £100…'[/quote:ce9f35f624]
    An interesting point. Although, wouldn’t such an approach be creating a liability to take advantage of the HB scheme? Just a thought.

    Regards

    #12134
    markp
    Participant

    On the other hand I have, in certain circumstances, reduced the eligible rent figure to what was collected and seen HB entitlement reduce. In one case the landlady (a relative of the tenant/partner) reduced the rent whilst tenant was working and only increased it again when he was out of work. We successfully argued the increased amount was a “contrivance” to take advantage of the HB scheme at a tribunal/ review board (can’t remember which, but (failing) memory thinks it was the latter).

    This would be OK as it is less than the RO decision anyway and you might be covered under Reg 12 (7) of the HB Regs.

    So it will all depend on the circumstances on your particular case.

    Good luck as I think it will be difficult to prove.

    Do I know what I'm doing? The jury's out on that........................

    #12135
    seanosul
    Participant

    [quote:e9db07ede5=”Accura”]- straight forward non-commerciality issue and is always something that we’d check if there were doubts about commerciality / contrivance.[/quote:e9db07ede5]

    How on earth is this a contrivance / non commerciality question. ?

    Wonderfully strange LA logic. We believe the rent you are charging is too high we have therefore restricted your eligible rent to…

    LL – ok (quite rare in reality)

    Council – aaah you agree with us so we will pay nothing!!!!!

    ?????

    #12136
    Kevin D
    Participant

    I don’t see any problem with looking at the level of rent & collection as relevant factors (amonst many others) to consider in non-commercial / contrivance options. It’s only a “problem” if no other factors are looked at.

    On the other hand, if a rent is substantially lower, or higher, than normal, it is likely to be the initial trigger for looking deeper into a case and, in some instances, the rent level may well be the single most significant factor (but not the only one, nor necessarily [b:6cd65186d1]the[/b:6cd65186d1] dominant one).

    Regards

    #12137
    andyrichards
    Participant

    My thoughts exactly Sean. I agree that if a tenant with a contractual rent of – say – £80pw – is working, is only entitled to £20pw in HB and LL says, “OK, I’ll just take that”, it’s questionable. But if it is just a case of the landlord agreeing to charge what the RO says is an appropriate amount for the property, I do not see how we can logically raise an issue of commerciality.

    Just sometimes, “how the hell am I going to explain the logic of this?” is a valid consideration – even in HB decision-making!

    #12138
    Anonymous
    Guest

    [quote:357b397d7d]wouldn’t such an approach be creating a liability to take advantage of the HB scheme?[/quote:357b397d7d]

    I think that would be a difficult decision to defend. The landlord is creating the liability to make a profit, whether by means of HB payments or the tenant’s earned income or whatever. By pitching the rent deliberately high for an HB claimant, the landlord is seeking to discover what the RO considers to be a market rent. If the landlord then accepts the HB payable on the basis of that fair market rent, I wouldn’t really consider that an abuse of the scheme.

    #12139
    Anonymous
    Guest

    Thanks for all your comments. We had a long dispute with a L/L who owes us a lot in unpaid invoices, he says [i:1f6eed1267]we[/i:1f6eed1267] owe [i:1f6eed1267]him[/i:1f6eed1267] almost the same amount because HB failed to meet the full rent charged (we paid CRR).
    We’ve written countless times to explain it was his responsibility to collect any shortfall from his tenants. We recently passed the debt to a collection agency, and so it’s all kicked off again.
    Because the property is an HMO, there are ineligible services included in the rent, which is why I wondered if we could re-refer. Mind you, reducing HB and causing a further overpayment is maybe not a good idea in this case.

    #12140
    Stalbansbenefits
    Participant

    I think accepting what the Council pay can sometimes be considered a commercial decision by a landlord.

    ‘Ok, so I’m £20 per week short, but I’ve got no chance of getting that from the tenant, and if I eventually evict them for rent arrears, the property could be stood empty for months and I’ll get no rent whatsoever. Besides, the current tenant is no trouble and the Council send me the money direct, better the devil you know and all that…’

    As previously suggest by Kevin, see CH 1076/02

    [quote:05e1faeb57]In my experience it is not unusual for a landlord to accept the amount of rent paid by Housing Benefit as payment of full rent even if it is lower than the contractual rent. In fact I would say this practice almost becomes the norm when such a tenant is behaving well and caring for the property. It should be remembered that people who qualify for Housing Benefit have very limited personal funds and most reasonable landlords are happy to write off a small amount of potential rent in return for an easy and regular tenancy. [/quote:05e1faeb57]

    #12141
    Anonymous
    Guest

    Sue

    just picking up on something that you posted. Have you had a look at Harringey V Cotter (it is in the caselaw section – high court decisions not commissioner). Part of that case was whether a landlord could “offset” monies claimed owed to him in outstanding HB against overpayments due from him. the answer was “NO”.

    I know this isn’t directly where your question started but you may find it helpful in countering any next claims from this chap if he is simply trying to get out of paying the monies back that you have determined are due.

    say hello to everyone at GYBC, who remembers me!!

    #12142
    Darren W
    Participant

    Sue have you thought of recovering the money owed via blameless tenant? Cheaper and more direct then using a debt collection agent.

    #12143
    chris harvey
    Participant

    I wonder if some of these replies would have been different if the HB shortfall was due to ineligible fuel charges. For example if the rent was £50 and the HB £45 because the R/O has valued fuel at £5. If the landlord is only accepting the £45 HB could you argue the passing rent is £45 so the eligible rent should be £40.
    If you do this and the landlord then accepts the £40 HB without seeking the shortfall, do you then reduce HB to £35. Where does it all end?

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