Many thanks to the Nearly Legal Blog for reporting this Housing Benefit Appeal case which will be of great interest to all landlords whose tenants’ rent is paid by Housing Benefit (HB) /local housing allowance (LHA).
Landlords can require the HB to be paid direct if the rent is more than 8 weeks in arrears under Regulation 95 of the Housing Benefit Regulations 2006. However where, under the tenancy agreement, rent is payable in advance (as is the case with practically all tenancy agreements), Local Authorities have been refusing to pay until the period for the rent has passed.
So if a tenant fails to pay rent at the start of the second month, they would not pay rent direct until after the end of the second month. Meaning that landlords would lose a months rent. The reason the local authorities did this was because Housing Benefit Local Housing Allowance Guidance Manual told them so.
However in a recent decision in Coventry supported by the Guild of Residential Landlords the Judge held that this was wrong, and said that the landlord should be paid compensation, saying:
“Rent is in arrears once the contractual date for payment has passed irrespective of whether rent is due in advance or in arrear. Regulation 95 of the 2006 Regulations refers to a liability to pay rent and the liability in this case is to pay rent in advance”
The question now is, will all landlords who have suffered as a result of this rule in the past, be able to claim compensation …
You will find a report of the decision on the Guild of Landlords website here.