Use of DHP’s to fund a deposit

Currently, there are 0 users and 1 guest visiting this topic.
Viewing 15 posts - 1 through 15 (of 19 total)
  • Author
    Posts
  • #31920
    peterdelamothe
    Keymaster

    The Minister was quoted on the reform board as saying on Monday that those forced to move by the LHA limits would be able to get a DHP to cover the deposit at the new property. There seemed to be general agreement on the board that this is not within the law …..

    HBINFO questioned this today with DWP officials who kindly responded as below. Any comments / views?

    “Discretionary Housing Payments can be used for deposits and rent in advance providing that the customer is getting Housing Benefit for their current dwelling. The DHP is based on current entitlement; paragraphs 360 and 361 of the DHP Best Practice Guide refer.

    We will be reviewing the guide to expand on points such as this.

    Rent deposits and rent in advance

    360 You can make DHPs for a rent deposit or rent in advance schemes for a property that the claimant is yet to move into if they are already entitled to HB for their present home.

    361 The regulations are wide enough to permit this on the basis of a claimant’s entitlement to HB at their current home. The regulations do not say that the housing costs to which the DHP relates have to be housing costs relating to the property for which HB has been awarded. It is the limitation on the level of a DHP that relates to the property in respect of which HB has been awarded. See The level of the DHP earlier in this section.

    ExampleA: person in property A is receiving HB.They apply for a DHP to cover rent in advance and deposit in respect of property B which
    they hope to move into.The regulations will permit a DHP in relation to property B but the level of the DHP is limited by the HB award in respect of property A.

    #89268
    Anonymous
    Guest

    If a DHP deposit is awarded, will the clt be expected to repay it at the end of the tenancy if the LL returns it in full?

    #89269
    Anonymous
    Guest

    The cost of a deposit would normally far outweigh the amount of support which could be provided to a person to supplement their HB award to maintain them living in secure accommodation.

    If DHP were to be targeted at deposits there would be a huge drain on the budget and likely to assit far fewer people. The LA’s I know of are already finding ways to supplement their current DHP budgets just to keep pace with the weekly shortfalls without being asked for several hundred pounds for deposits.

    Usually Housing Options teams run bond schemes which can be run in conjunction with DHP i.e. the housing team guarantees the deposit and the DHP assists the shortfall so that a person can secure accommodation.

    With all the upcoming changes on LHA rates and the like authorities do not need any additional pressure on what is already meagre budget compared to demand.

    I also have to agree with Martin – if when the person leaves the property and they are due the deposit back then it has not actually been a cost which has been incurred and therefore the mechanisms which eed to be in place to recover the money will be complex. What if it is 5 years later how does that feed back into budget? What is there to stop people trying to abuse the system if they got the money back from their landlord and going on a tour of the UK collecting DHP deposits by moving every couple of months?

    I don’t think it is workable from DHP (without additional inward investment into the fund) and that authorities should have other more joined up solutions to deposits.

    #89270
    Anonymous
    Guest

    What was significant was that this was the first time the minister has conceded that people will indeed need to move.In the past he and government colleagues have always shied away from acceptance of this consequence of the cuts, suggesting that landlords will bring down rents and/or be prepared to carry the arrears caused by the shortfalls.

    #89271
    Anonymous
    Guest

    Don’t think of it as a deposit, think of it as future rent arrears

    #89272
    peterdelamothe
    Keymaster

    Note to DWP – thanks for your feedback!

    Dear DWP

    As promised I am writing to give you some feedback about this area.

    Firstly, we are not aware of any LA that uses DHP’s for deposits. Many LA’s think it is not lawful to do so. Others consider that the legislation does not allow it. The guidance is very limited and does not answer some basic questions. For instance,

    “If a DHP deposit is awarded, will the claimant be expected to repay it at the end of the tenancy if the LL returns it in full?”

    “Should it be paid to the landlord or the claimant? Don’t DWP realise there is now a statutory deposit scheme and the Landlord MUST hold deposits in an insurance scheme etc. or face heavy fines”?

    “What is there to stop people trying to abuse the system if they got the money back from their landlord and going on a tour of the UK collecting DHP deposits by moving every couple of months?”

    “How do LA’s account for monies which are effectively a loan”

    “Our auditors have said they see no way that this money could be accounted for subsidy purposes and have suggested that only members could authorise such a payment”

    For the Minister to suggest such a scheme exists when in practice it does not seems rather unfair to claimants and their advisors who are going to get faced with blank looks from LA’s when they request such a payment.

    I understand you are trying to cut down information flow to LA’s (the press was very critical of the “1300 pages” of “red tape” issued by DWP about HB last week) so hbinfo would be very pleased to issue any advice / information you might want to put out on this important area to our 10,000 members.

    #89273
    peterdelamothe
    Keymaster

    DWP have kindly responded:

    “We do get queries from local authorities on this area, so I assume that some local authorities may be using DHPs to meet deposits and rent in advance. The guidance has been in place since 2008 and we involved quite a number of local authorities and the LAAs plus other stakeholders when we were drawing it up. The point on rent deposits and rent in advance was cleared by our lawyers. We will review and expand on this area of the guidance and in doing so we will take account of the points that you have raised below as it is important that we do our best to remove any barriers to local authorities using DHPs in this way”.

    #89274
    simonh
    Participant

    They may want to clarify this to software providers as well. Academy restricts a DHP award to a a maximum of the difference between HB awarded and actual rent charged.

    #89275
    valda
    Participant

    I remember reading this is the latest DHP guidance and feeling a bit suprised. The only way it would be possible to give a deposit for a future property would be to pay the DHP over preceeding weeks at the old address, and that’s only if they had a shortfall between the HB and the rent liability at this address.

    The logistics of the deposit being paid back to a certain LA’s DHP fund would be a nightmare. Or would the DWP just say carry it over if you move? Personally I feel the DWP are placing a lot of responsibility on an increased DHP budget which with all the changes, will not be able to cope with all the increased claims.

    Lisa

    #89276
    Alex G
    Participant

    Does this mean a claimant could possibly be entitled to 4 x DHPs?

    DHP on current rent deposit
    DHP on current shortfall in rent

    DHP on future rent deposit
    DHP on future shortfall in rent

    ?

    #89277
    Anonymous
    Guest

    With the reductions in LHA rates forthcoming, do we really expect claimants to be receiving any of their deposits back? Last I checked, HB is still paid in arrears. Most claimants will be in arrears as soon as they move in. With higher shortfalls, increased non-dep deductions and reductions in other benefits across the board the arrears will only accumulate. Landlords are within their rights to deduct rent arrears from the deposit, so lets not pretend that the claimant (or LA) will be getting the depsit back.

    If the DWP start publicising this as a serious option the only effect will be that certain landlords who do not insist on deposits from HB tenants will start requiring a deposit, since they’ll realise that its just more free money they can get from the taxpayer. 👿

    #89278
    Alimax
    Participant

    Just thought I would let you know how we are dealing with these at Leicester, we do help towards a rent deposit on a cheaper accommodation but only where we can backdate a DHP taking into account any shortfall that they may have had – in line with guidelines.

    We did challenge CIVICA last year to ask if they could amend the system to allow us to award to meet the level of a rent deposit – their response was ” they would not amend the system unless there was a directive by DWP”.

    #89279
    ralph
    Participant

    As a small authority this could quickly become a nightmare if DWP do publicise it.

    Our annual DHP budget is £6,000. That would mean we would only need 12 people asking for a £500 deposit and our entire budget for the year would be gone.

    #89280
    6david3
    Participant

    Clearly, the DWP and their lawyers have persuaded themselves that Reg 2 (1) (b) allows an LA to use the DHP system to pay deposits because the Reg says housing costs, without specfically saying the housing costs of the property in which the claimant is living and for which HB is being paid.

    However, if you read the regulations as a whole, it is clear that the original policy intention was only to help to pay the rent for the property in which the claimant is living.

    Otherwise, why would ineligible service charges and water charges, etc. be excluded?

    Although a DHP payment is not a payment of HB it seems to me that the intention was that a DHP should not cover payments which are not eligible to be met by way of HB and this includes deposits.

    The vague wording at the end of Reg 2 (1) (b) has allowed this nonsense about paying deposits to appear, undoubtedly a political ploy with the connivance of the DWP, given the fact that the equally ridiculous idea that tenants and claimants would negotiate lower rents did not work and the fact that, in the current financial crisis, ministers are clutching at any straw they can find.

    Many LA’s simply have not got enough money in the DHP pot with which to pay deposits and, in any case, has anyone any idea of what this would cost nationally if this idea were to be implemented nationwide? Probably not.

    I would be interested to know if there is any case law on the subject.

    #89281
    Anonymous
    Guest

    [quote:3e03686dc5]I would be interested to know if there is any case law on the subject.[/quote:3e03686dc5]
    http://www.bailii.org/ew/cases/EWCA/Civ/2008/1450.html

    Discussed here: http://hbinfo.org/forum/viewtopic.php?t=15545

    As I understand it, lump sums (arrears, deposits) can be paid by DHP, but only if you can identify a period (in the past) where the required amount could have accumulated within the weekly DHP limit.

Viewing 15 posts - 1 through 15 (of 19 total)
  • You must be logged in to reply to this topic.