How the proposed changes may affect LHA tenants

EastMidsGal

There are talks of changing the way LHA is paid so instead of going to the tenant it goes directly to the landlord. I appreciate this will dramatically cut down on social tenants going into arrears and may help to make them appear less unattractive to landlords and letting agents.

But for those going through the rent deposit scheme where the first months rent is paid in advance by the council and has to be repaid by the tenant I think it could cause serious hardship. As the rent is then effectively paid in advance as opposed to in arrears, the final payment once the tenancy os over is an overpayment. It is to be used to settle any outstanding debt to the council from repaying the first months rent or to reimburse the tenant if the debt is already paid off.

Who is to say a LL or LA will return the overpayment? They could use it in lieu of a cash deposit or they might just see it as a lovely little cash bonus should the tenant not pursue it's return.

The responsibility of reclaiming the overpayment, I have been told by the council, falls on the tenant, so if they are having to move through no fault or choice of their own, as if a move isn't stressful enough they then have a battle on their hands to reclaim what is rightfully theirs and the councils.

To me this is a fundamental flaw and is open to exploitation by shady LAs and LLs and a vulnerable LHA tenant who could well be disabled could be left hugely out of pocket, especially in London where monthly rent stretches into thousands.

What safeguards would be put into place to protect tenants should they go through the scheme and have their LHA paid direct to the LA or LL?

I for one would insist that if I was repaying the council for the first months rent then the LHA would have to go through me so I could keep the final months overpayment to reimburse the council.

If the Localism Bill comes in and the council views a refusal of a private tenancy as an act of voluntary homelessness, what happens to the tenant stuck between a rock and a hard place?

I can just see vulnerable LHA and low incomed tenants stuck in a vulnerable position between the council and unscrupulous LLs and LAs

I don't know if this is the right forum for this or if Discussion Time would be better, if I have posted wrongly, I apologise in advance, but would be very interested in hearing the opinions of those with experience how they would see the future shaping out if the changes were introduced

theartfullodger

Your concerns are largely valid, sadly. However AIUI HB/LHA already goes direct to social landlords (Councils, housing assocs..)_


The only thing I can suggest is to vote Labour: The Conservatives & Liberals are behind this policy and don't look like they'll change their minds. Indeed the budget due Wednesday will probably have more cuts to hurt the decent ordinary folk of Britain.

EastMidsGal

Unfortunately by the time the next GE comes along the damage will already be done and may be irreversible. If they announce the changes on Wednesday and say the changes are becoming law, how long do you think until they are implemented?

samasina

Caution and common sense are needed with this. I know of several people (through voluntary work) who were in difficult situations but due to the lengths of social housing waiting lists used guarantors to rent privately without telling their LL's that their rent was being paid through LHA to prevent homelessness -the LL's in question don't accept LHA due to bad past experiences with claimants/ having to pay tax on the rental income. They have saved their deposits by cutting other expenditures and haven't had any arrears thanks to their standing orders being paid on time. If people who have admittedly been dishonest in one respect but have never been tempted to keep payments for themselves, why would the government see fit to effectively make them homeless and force them back onto social waiting lists.

Our local council's practically pleading with people on the list to move into private housing, even though there's only a handful that will will accept LHA without a month's deposit and rent upfront. The myth that private LL's will eventually start reducing their rents is just that.

From all the upcoming changes, I envisage it becoming even harder for those who lose their jobs in the near future due to cuts to return to employment due to additional problems of finding affordable rented homes and for low earners to remain in their current homes. I can also see many vulnerable people being forced to move away form their support systems. Some people I work with have already received councils letters in early January stating that they will be affected by the changes but without details of when and to what extent. A quick phone call revealed central government had yet to give them details.

Where I live, LL's now have several people wanting to rent each private property. Which LL will take an LHA tenant over one who can pay a larger amount each month? Another issue is that regeneration of areas that were once easier for LHA tenants to rent privately in, are seeing large rental increases as well and so the problem is increasing. This is not to say that I'm against regeneration of areas that have been neglected in the past -I just wish the impact on all sections of communities are taken into account.

poppysarah

Lower rents are good.

Low rents mean more money in your pocket to spend in the wider economy.

EastMidsGal

samasina wrote: »

Our local council's practically pleading with people on the list to move into private housing, even though there's only a handful that will will accept LHA without a month's deposit and rent upfront. The myth that private LL's will eventually start reducing their rents is just that.

To encourage LLs to lower their rents councils are offering to pay LHA direct to them as long as they reduce the monthly rent in line with the new LHA caps making it more affordable for the social tenant.

So the LL lowers the rent and gets the LHA paid direct to him. Job done.

But for those with no months rent upfront or a deposit councils introduced the rent deposit scheme whereby they would provide a deposit through cash or a bond letter and they loan the tenant the first months rent which is to be paid back every month. This is where the problem lies.

as LHA will still be being paid in arrears the final payment with be an overpayment and as it is being paid direct to the LL it will go straight to them, the onus then falls on the tenant to recover it from the LL to settle their debt from the council for the first months rent in advance and reimburse themselves for any money they have already paid back to the council. By rights that final payment, which is an overpayment, belongs to the council and the tenant, but who's going to make an unscrupulous lettings agency or LL pay it back? So the vulnerable tenant could be doubly out of pocket as they can't reimburse themselves and if the tenancy comes to an end before their debt is settled with the council they won't get further help finding a new home until that debt is settled.

EastMidsGal

poppysarah wrote: »

Lower rents are good.

Low rents mean more money in your pocket to spend in the wider economy.

errrr yeah. But how are you going to create those lower rents? And for people on LHA lower rents doesn't mean more money in their pocket, just less money in the LLs pocket

I don't see what your post has to do with the OP

Jowo_2

Must admit that I don't fully understand the OPs point about shady and greedy landlord effectively stealing the last rent payment from vulnerable tenants which magically becomes an overpayment when the landlord receives the rent directly.

I wonder whether the OP is conflating the deposit guarantee scheme and the final month's rent, wrongly believing that the landlord receives the first month's rent from the local council and hence is paid this sum twice when the LHA kicks in.

My understanding of how a DGS operates comes from council's websites which say things like

"No money is paid to the landlord at the beginning of the tenancy. Instead, the landlord and tenant enter into a legal agreement with the Council.

You then pay an agreed or monthly amount to the Council over the course of the tenancy to cover the value of the deposit.

If, at the end of the tenancy, the landlord has suffered a loss, they can submit a claim to the Council for compensation up to the value of the deposit.

If we agree with the claim, we pay the landlord from the money you have paid to us.

Any money that is left over will be returned to you, just like having a savings account!"

My understanding of the deposit guarantee scheme run by local councils are that they are precisely that and relate to providing a deposit for the tenant - a guarantee against damage in the property from the tenant. It is not to pay their rent and if the tenant doesn't damage the property, there is no claim made by the landlord to the local council, and hence no repayment required by the tenant to the local council for it. In the meantime, many councils make clear that they expect the tenant to save for their own deposit for the next property (easier said than done, though) but that some councils will help set up an arrangement to help the tenant do this.


LHA is paid in arrears and rent is paid in advance - that's always been a problem for benefit claimants to overcome as their income doesn't coincide with when the rent is due. But then again, it's the same for those in employment - the rent may be due at the 1st of the month and their pay received on the 31st, and they too have to pay a deposit and 1st months rent upfront (though obviously have better means to save up for it or borrow it).

But I can't understand why if LHA switches back to how HB used to operate to make it easier to pay the landlord directly, and Deposit Guarantee Schemes have been operating for years, why there is some kind of flaw in it which means a landlord receives 7 months rent for a 6 month tenancy, forcing the tenant to recover it directly (especially as I thought that councils have the power to claim HB overpayments back from landlords anyway).

EastMidsGal

Jowo wrote: »

Must admit that I don't fully understand the OPs point about shady and greedy landlord effectively stealing the last rent payment from vulnerable tenants which magically becomes an overpayment when the landlord receives the rent directly.

I didn't say they would automatically, but there would be nothing stopping them


I wonder whether the OP is conflating the deposit guarantee scheme and the final month's rent, wrongly believing that the landlord receives the first month's rent from the local council and hence is paid this sum twice when the LHA kicks in.

the landlord does receive the first months rent in advance from the council, my council anyway. I have been offered the opportunity to go through the local councils rent deposit scheme as we will be made homeless soon as our current landlord is selling the house. As LLs don't like being paid in arrears and want to be paid in advance, the housing officer told me they would pay the LL the first months rent as a loan, therefore he would then be paid in advance. They told me I would have to pay the council back for this at approx £50 a month and that as it doesn't affect the frequency with which the LHA is paid it would still be paid in arrears which would make the final payment an overpayment and it was my responsibility to recoup that from the agents/LL. It has all been described to me in great detail, I appreciate all councils operate differently, this is how mine operates and they would indeed give the LL his first months rent and so in effect it would be paid twice


My understanding of how a DGS operates comes from council's websites which say things like

"No money is paid to the landlord at the beginning of the tenancy. Instead, the landlord and tenant enter into a legal agreement with the Council.

You then pay an agreed or monthly amount to the Council over the course of the tenancy to cover the value of the deposit.

the housing officer at my council was very specific when she explained that no money changes hands for a deposit, that they NEVER pay a cash deposit, but they provide a letter which forms a bond that if any damage did occur the agents/LL were to contact the council and the council would recoup the cost from me

If, at the end of the tenancy, the landlord has suffered a loss, they can submit a claim to the Council for compensation up to the value of the deposit.

If we agree with the claim, we pay the landlord from the money you have paid to us.

Any money that is left over will be returned to you, just like having a savings account!"

I haven't been asked to give the council any money, they just said that once the tenancy started I would have to set upa direct debit to pay them back a set amount each month to reimburse them for giving the landlord the first months rent upfront and I had to be careful that I worked that into my budget


My understanding of the deposit guarantee scheme run by local councils are that they are precisely that and relate to providing a deposit for the tenant - a guarantee against damage in the property from the tenant. It is not to pay their rent and if the tenant doesn't damage the property, there is no claim made by the landlord to the local council, and hence no repayment required by the tenant to the local council for it. In the meantime, many councils make clear that they expect the tenant to save for their own deposit for the next property (easier said than done, though) but that some councils will help set up an arrangement to help the tenant do this.

I have not been told to save for a deposit, though sensibly I should, finances don't allow me to


LHA is paid in arrears and rent is paid in advance - that's always been a problem for benefit claimants to overcome as their income doesn't coincide with when the rent is due.

which is why with the rent deposit scheme at my local council at least they pay the first months rent upfront for you as aloan to make you a more attractive tenant so you can overcome that

But then again, it's the same for those in employment - the rent may be due at the 1st of the month and their pay received on the 31st, and they too have to pay a deposit and 1st months rent upfront (though obviously have better means to save up for it or borrow it).

But I can't understand why if LHA switches back to how HB used to operate to make it easier to pay the landlord directly, and Deposit Guarantee Schemes have been operating for years, why there is some kind of flaw in it which means a landlord receives 7 months rent for a 6 month tenancy, forcing the tenant to recover it directly (especially as I thought that councils have the power to claim HB overpayments back from landlords anyway).

I was very clearly told that it was my responsibility to reclaim the overpayment from the council, it would then be used to settle any outstanding balance I had with the council from them lending me the first months rent upfront and what was left reimbursed me for my monthly payments to them. So everyone gets the right amount of money and no one is left out of pocket

I will try and find a link to a rent deposit scheme that operates in the same way mine does as it's clear your experience with rent deposit schemes is vastly different to the way my local scheme operates

EastMidsGal

Sorry should have made clear in my original post that I am talking about LHA tenants renting in the private sector and when I said LA I meant letting agent not local authority

poppysarah

EastMidsGal wrote: »

errrr yeah. But how are you going to create those lower rents? And for people on LHA lower rents doesn't mean more money in their pocket, just less money in the LLs pocket

I don't see what your post has to do with the OP

Lower lha means easier to find work and afford to live.

Create lower rents by reducing lha. Landlords can either accept less money or sell up.