HB: Full rent no longer paid.


J

Jim

My housing benefit has recently been renewed.

I have lived in my house for the last 3 years. Previously the local
authority paid full HB.

My landlord had recently increase the rent by about 5%. This is the first
increase since I have lived in the property.

The council, have advised that they have refered this to the rent service
and have assess the HB at below the rental cost. Indeed the new assessed
value is actually £2.50 less than the previous rent that was previous paid
in full.

I have asked the rent service to reassess the property, who have concluded
that

1) The rent is reasonable for the property

2) I require 3 rooms. For a property with 3 rooms in the areas a reasonable
rent would be £xxx (where xxx is the rent my landlord is now charging)

3) The local reference rent is £yyy (this is a average between the lowest
and highest reasonable rent in the locality, incompasing 5 postcode areas!)

The council have today advised that following the decision of the rent
service, they remain unable to pay my full rent and that I cannot appeal
this decision.

My questions are:



1) The property have previously been assessed by the rent service who
allowed the full rent charged by the landlord without deduction for the
previous 2 years. How can the HB paid now be lower than that what the local
authority was using 3 years ago! Does this mean that rental values have
fallen over then last three years?

2) How can the rent service claim that a resonable rent for this number of
rooms is £xxx and then determine a lower reference rent. As the reference
rent include 5 post code areas, and is a simple average of highest/lowest
resonable rents, why do we need a rent service at all!

3) Any suggestions?
 
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M

mogga

3) Any suggestions?

Complain to your local councillors - and directly to the labour party
who are making this change.
The intention is to make people move to cheaper places if they're on
HB.
 
J

jIM,

Complain to your local councillors - and directly to the labour party
who are making this change.
The intention is to make people move to cheaper places if they're on
HB.
I dont know much about housing benefit, but if the person is assesses in
being allowed 3 rooms, and the rent service state that a reasonable rent for
a 3 room property is say £500 in the area, then why isnt the rent paid. (i.e
the rent service have already stated what size property is appropriate, at
what a reasonable rent would be for such a property)

What is the purpose of a "local reference rent". Surely you cant just take a
range of properties over multiple postcodes and take a straight average
between the cheapest and most expensive excluding unreasonable rents.

If the basis is say £250 and £600 this would given a local reference rent of
£425, which is may be impossible to find a suitable property at the lowest
rate they quote. If say the cheapest propery is £300 and upper range £600,
this would make a significant differnet to the tennent ( i.e £300 per year)

On this concept, do all housing benefit claiments get the same rent paid?
i.e they all have the same reference value?

What is the point of determining what a reasonable rent for the size
property required would be, if they only pay a basic average?
 
S

scoff12

Does this mean that thousands of people will end up being evicted?
 
M

mogga

Does this mean that thousands of people will end up being evicted?
It'll depend on whether you want to top up the rent out of your own
money.
I suspect the expense of moving has to be weighed against the expense
staying.

Of course landlords could find themselves being forced not to increase
rents to avoid tenants moving out, which may be a bad thing if things
are tight with mortgage payments.

My main feeling about the change in HB rules are that if there was
cheap social housing for everyone who wanted it then this could in
theory provide the best route to go. However this governement's
actions have increased the BTL private landlord market causing
property prices to rise and rents seem to have gone up too.

With the introduction of property into SIPPS next year it seems there
may be yet more investment in housing as landlords which people will
then depened upon for pension in years tocome.

The whole housing thing in the UK seems to be a flimsy house of cards
waiting to fall down. It is the prop behind Gordon's economy miracle.
 
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R

Robbie

mogga said:
It'll depend on whether you want to top up the rent out of your own
money.
I suspect the expense of moving has to be weighed against the expense
staying.

Of course landlords could find themselves being forced not to increase
rents to avoid tenants moving out, which may be a bad thing if things
are tight with mortgage payments.

My main feeling about the change in HB rules are that if there was
cheap social housing for everyone who wanted it then this could in
theory provide the best route to go. However this governement's
actions have increased the BTL private landlord market causing
property prices to rise and rents seem to have gone up too.

With the introduction of property into SIPPS next year it seems there
may be yet more investment in housing as landlords which people will
then depened upon for pension in years tocome.

The whole housing thing in the UK seems to be a flimsy house of cards
waiting to fall down. It is the prop behind Gordon's economy miracle.
It's not a new thing though; the late 80s boom was in part driven by the
housing market. Once the market reached stretching point in 1989/90 we
then plunged into a recession and again had 3m unemployed. The simple
fact is that we don't have enough of a manufacturing or new technology
base to drive the economy forever forward so something else has to do
it. In the past 2 decades that has been the state of the housing market.
As prices go down, so we head into recession.
 
E

Ellis

Does this mean that thousands of people will end up being evicted?
In those areas that have the new "Local Housing Allowance", there is just
one flat rate paid for all claimants within the area, who have similar
entitlements. (ie 2 rooms, 3 rooms and etc). It is also, of course, means
tested.

In my area, the Local Housing Allowance seems to aim at the lowest rental
properties on offer, rather than the average for the area. Hence, I would
guess most people would have to pay at least £5 or £10 a week, or more,
towards their rent, unless they take one of those flats in a HMO where the
rents are lowest.

The op's experience seems most unusual. I have not heard before of a case
where they have paid the HB for three years and then reduced it. Even here,
when private tenants come on to the new scheme their old rents are protected
at the old rate, initially, However, if the rents are later increased, the
council will not (I believe) pay the increase.

The only logical explanation I can think of is that either the local rents
have fallen or the council have got their facts wrong. There are some
experts around here who could probably give some insight in to the
situation.

Ellis
 
S

Sue

In the Extra Info section of the HB claim form
"jIM said:
What is the purpose of a "local reference rent". Surely you cant just take a
range of properties over multiple postcodes and take a straight average
between the cheapest and most expensive excluding unreasonable rents.
The idea is to prevent HB covering rents that are above the average for
the area - even slightly above the average, and even if the area isn't
expensive. The effect is that you only get max HB if you live in the
cheaper half of the area's rented places.
On this concept, do all housing benefit claiments get the same rent paid?
i.e they all have the same reference value?
No, they get the lowest of the actual rent, the reasonable rent for the
particular place, and the average rent for places that size in the area.

BTW Local Housing Allowance doesn't apply in this case.
 
S

Sue

In the Extra Info section of the HB claim form
This isn't a LHA area, or there wouldn't be a Local Reference Rent.
The op's experience seems most unusual. I have not heard before of a case
where they have paid the HB for three years and then reduced it. Even here,
when private tenants come on to the new scheme their old rents are protected
at the old rate, initially, However, if the rents are later increased, the
council will not (I believe) pay the increase.
He shouldn't be an old scheme case either or there wouldn't be a LRR.
Mistakes do happen though: if the OP has had the same rent contract
since before 1996, he should take it in to the Council and tell them
he's exempt from LRRs.
The only logical explanation I can think of is that either the local rents
have fallen or the council have got their facts wrong. There are some
experts around here who could probably give some insight in to the
situation.
Local rents must have fallen - perhaps the local economy's taken a
downturn.
The valuations aren't done by the Council but by the Rent Officer
Service, who work for central government but do honest valuations
anyway. I've mostly found them very professional - and when they
weren't, they were asking us to grass up landlords who'd done cowboy
conversions.

Anyway, the OP's options are:
1) Negotiate a lower rent with the landlord. No landlord likes to see
a good tenant move out, because they don't know what the next one will
be like. Do some research first, find out what other landlords are
charging for similar places.
2) Ask the Council for a Discretionary Housing Payment to make up the
rent - but unless there's something special about the case, it'll only
be temporary while he finds somewhere else.
3) Pay the difference out of his other income. Some people seem to
manage this, but I'm blowed if I know how.
 
M

mogga

In the Extra Info section of the HB claim form

The idea is to prevent HB covering rents that are above the average for
the area - even slightly above the average, and even if the area isn't
expensive. The effect is that you only get max HB if you live in the
cheaper half of the area's rented places.
But with a lack of cheaper places you're basically in trouble?
 
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E

Ellis

This isn't a LHA area, or there wouldn't be a Local Reference Rent.
That is what I thought. (But did not make it clear.)
He shouldn't be an old scheme case either or there wouldn't be a LRR.
Mistakes do happen though: if the OP has had the same rent contract since
before 1996, he should take it in to the Council and tell them he's exempt
from LRRs.
Sounds like the best advice he is going to get.
Anyway, the OP's options are:
1) Negotiate a lower rent with the landlord. No landlord likes to see a
good tenant move out, because they don't know what the next one will be
like. Do some research first, find out what other landlords are charging
for similar places.
If the rent is above average then there may be some leverage, but landlords
are very reluctant to reduce a rent if it is average for the type of
property. With regard to new tenancies, a prospective tenant is on very
shaky ground asking a landlord to reduce the rent to meet the local HB
level. Unless, of course, it is a "tenants market", or a property is
attracting no tenants.

Other things being equal, a tenant living on means-tested benefits, whose
HB is less than the rent payable, must surely be a most unattractive option
for a landlord and will only be accepted if no other tenant is available.
2) Ask the Council for a Discretionary Housing Payment to make up the
rent - but unless there's something special about the case, it'll only be
temporary while he finds somewhere else.
Which may mean paying a sizeable bond and rent in advance plus removal fees,
plus finding a landlord who will have you. Much cheaper and easier to stay
and pay the difference.
3) Pay the difference out of his other income. Some people seem to
manage this, but I'm blowed if I know how.
You simply do without other things. It is easier for people over the age of
60 to make up the difference as they are allowed more generous applicable
amounts. But for a lot of people and especially those under the age of 60,
I can only imagine that they have to live on credit as well as benefits. So
they must either get in to debt or be evicted, and move into bed and
breakfast accommodation, care of the local council.

There is simply no alternative. There is no appeal against the new Local
Housing Allowance, which presumably is intended to be implemented
Country-wide, and the OP, who does not fall within the remit of the LHA,
has said he has been told he cannot appeal the Council's decision either.

The game has changed. Formerly, HB claimants could live in nice places and
have all the rent (even if it was over-priced) paid for by the local
council. Now the shoe is on the other foot. HB claimants now, are in many
cases, receiving less HB than is needed to rent a reasonably priced property
at the lower end of the market.

But the people affected are mainly tenants in the private sector. People in
Council, or Housing Association properties continue, I think, to have all
their rent paid. So we are treating individuals very differently. A person
living in an area coming within the remit of the Local Housing Allowance,
will be treated differently than someone who comes within the normal
regulations. Similarly people in council or housing association properties
are treated more favourably than people who rent in the private sector.

The government say you must have "x" amount of money to live on. But if you
have to use some of that money to pay your rent then you must actually end
up with less.

Ellis
 
A

anthonyberet

mogga said:
Complain to your local councillors - and directly to the labour party
who are making this change.
That's not right - the relevant rent officer regs haven't changed since
about 1995.
You are probably thinking of the local housing allowance, which is being
piloted, but the OP doesn't seem to be referring to this.

Councillors and MPs are unable to do anything in individual cases -
although of course MPs could ultimately change the legislation.
The intention is to make people move to cheaper places if they're on
HB.
No it isn't - it's to stop landlords charging above market rates to HB
claimants.
 
A

anthonyberet

jIM said:
I dont know much about housing benefit, but if the person is assesses in
being allowed 3 rooms, and the rent service state that a reasonable rent for
a 3 room property is say £500 in the area, then why isnt the rent paid. (i.e
the rent service have already stated what size property is appropriate, at
what a reasonable rent would be for such a property)
Because in this case, the Local Reference Rent is lower, and that is
what the regulations stipulate must be paid.
What is the purpose of a "local reference rent". Surely you cant just take a
range of properties over multiple postcodes and take a straight average
between the cheapest and most expensive excluding unreasonable rents.
The Local Reference rent is the lowest rent in the area, which is not
unreasonably low, added to the highest rent in the area, which is not
unreasonably high, and divided by two.
If the basis is say £250 and £600 this would given a local reference rent of
£425, which is may be impossible to find a suitable property at the lowest
rate they quote. If say the cheapest propery is £300 and upper range £600,
this would make a significant differnet to the tennent ( i.e £300 per year)
You are right that the LRR would be 425 GBP in that situation. However,
how could it be impossible to find a lower rent if there is a similar
property, not unreasonably priced, at 250 GBP?
On this concept, do all housing benefit claiments get the same rent paid?
i.e they all have the same reference value?
No, they don't.
What is the point of determining what a reasonable rent for the size
property required would be, if they only pay a basic average?
The highest and lowest reasonable rents are assessed in order to feed into
the calculation of rent officer determinations - That is their only
purpose AFAIK.
 
A

anthonyberet

Ellis wrote:
The game has changed. Formerly, HB claimants could live in nice places and
have all the rent (even if it was over-priced) paid for by the local
council. Now the shoe is on the other foot. HB claimants now, are in many
cases, receiving less HB than is needed to rent a reasonably priced property
at the lower end of the market.
The game has changed a bit, but even without the LHA, the Local
Reference Rents exists to prevent full HB being paid on an overpriced
property.

I think the issue here is that you may not agree with the Rent Officer
Service about what is a reasonable rent - I must say, I have no idea how
they arrive at that decision, and the Rent Officer Regs don't shed much
light on it either.
 
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M

mogga

- There must always be a cheaper half...
Yes that doesn't mean its empty or available to let and indeed
measures such as not paying enough for hb will mean that people will
not be moving into dearer accomadation in case they should need HB at
some point.

If it was as simple as moving into cheaper local authority properties
then I am sure a lot of renters would do this.
 
M

mogga

Ellis wrote:


The game has changed a bit, but even without the LHA, the Local
Reference Rents exists to prevent full HB being paid on an overpriced
property.
So the level of rent needs to be adjusted which in turn would make the
HB work?
 
J

Jim

No it isn't - it's to stop landlords charging above market rates to HB
claimants.
But this isnt true!

The Rent Service state that a) the rent is reasonable b) that a reasonable
rent in the area would be £x (where x is the same as the landlords rent)

and then doesnt pay the full rent as LRR is below reasonable rent for the
area.
 
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S

Sue

In the Extra Info section of the HB claim form
No it isn't - it's to stop landlords charging above market rates to HB
claimants.
Here I have to disagree with you. The reasonable rent is to stop
landlords charging HB claimants more than the place would fetch on the
open market. The effect of the LRR is to prevent HB claimants living in
better-than-average properties.

BTW the LRR in Darkside has just gone down, so some of our claimants who
reapply on unchanged rent will be in the OP's position, finding HB won't
cover the rent any longer.

The one mercy is that we've only spent a third of the year's DHP money.
We can't afford to make it up from the General Fund because the bl**dy
Benefits Manager has allowed a backlog of interventions to build up,
which is costing us a fortune in LA error overpayments.
 

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