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Landlord having to refund benefit back to the council

FlatsHere is a question to the blog clinic from Brendan who is a landlord

I am a landlord, recently I received a letter from the council telling me that I have to repay housing benefit because they received notice that one of my tenants vacated the property two months previously.

They have said that because the money was paid directly to me then I am the one who has to pay it back.

My tenant did not give me notice and left the place in a tip, I was forced to change the locks because she did not hand her keys back either. The deposit only went part of the way to cover the cost of putting this right.

Do I have to pay the money back to the council? This is the tenants fault, not mine.

This is the downside of direct payment of benefit to landlords, which everyone has forgotten about.

I am afraid that you are probably liable to repay the money to the Council , if it was paid to you at a time when the tenant was not entitled to receive it.

In fact, back in the day when direct payment of benefit to landlords was the norm, some landlords refused it, to avoid having to pay the money back in these sort of circumstances.

The council have to serve the proper form of notice on you before the money is payable.

I think also there is an exception to the rule if the landlord is the person who tells the benefit office that the tenant is no longer entitled to the benefit (a rule introduced to encourage landlords to keep the benefit office informed).

Otherwise, they are supposed to claim the money back from the tenant first, but if the tenants whereabouts are unknown, then they will come to you.  Sorry!

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5 Responses to Landlord having to refund benefit back to the council

  1. I am afraid that you are indeed liable to repay the money to the Council , if it was paid to you at a time when the tenant was not entitled to receive it.

    I don’t think this is always the case, post 10th April 2006, it depends on the circumstances;

    Person from whom recovery may be sought
    (2) For the purposes of section 75(3)(b) of the Administration Act (recovery from such other person, as well as or instead of the person to whom the overpayment was made), the prescribed person is—

    (a)in a case where the overpayment arose as a consequence of a misrepresentation or failure to disclose a material fact (in either case, whether fraudulently or otherwise) by or on behalf of the claimant or any other person to whom housing benefit has been paid, the person who misrepresented or failed to disclose that material fact;

    Reading between the lines from the scenario above, Brendan may not be liable.

  2. I was just going to respond quoting regulation 101 but somebody’s beaten me to it!

    We get this a lot and in most cases we are successful but it depends on each case.

    If the tenant failed to notify the local authority that he had vacated and there was no reason for the landlord to know that the tenant had gone, then, it’s for the tenant to pay back because the tenant failed to disclose a material fact which caused the overpayment.

    Equally, if the landlord knew the tenant had vacated (whether the tenant had given correct notice or not) then, the landlord is under a duty to notify a change in circumstances and so ‘may’ be liable to repay (I say ‘may’ because here there might be two people failing to disclose).

    If the tenant did notify the council on time but they continued to pay then it will be an ‘official error’. An official error is only repayable if the recipient (landlord in this case) “could reasonably have been expected, … to realise that it was an overpayment” (which can be a vey lengthy argument as to what is reasonably expected!)

    Assuming the landlord didn’t know (nor could have reasonably been expected to know) that the amounts received were an overpayment, he should at first seek a ‘written statement of reasons’ as that will buy a little time because the appeal clock stops momentarily and should answer some of the above questions. Then, he should seek a ‘revision of the decision’ setting out his reasons why the overpayment should be recovered from the tenant (e.g. the tenant failed to disclose a material fact). This will go to a senior officer unconnected with the original decision and the outcome may determine whether a further appeal to the Tribunal is appropriate or not.

    Hope this helps.


  3. yes this is one of the reasons to work with a credit union. Money processed into a tenant’s credit union account to be passed by BACS to a landlord has to be pursued via the tenant, not the landlord. Many credit unions offer this LHA processing service, and are gearing up to get ready for Universal Credits too



About the post author:

Tessa Shepperson

Tessa is a lawyer and specialises in creating products and services which help landlords and letting agents learn and understand landlord & tenant law. For example, she runs the Landlord Law website (now in its 14th year) and is a director of Easy Law Training Ltd and Your Law Store. Tessa also sits on the Property Redress Scheme Council. When not working she enjoys reading, cooking and messing around on the computer. You can also find her on Google

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