Who will benefit be paid to?
What are these exceptions?
Why are eight weeks arrears significant?
What if I, as a landlord, just prefer to have the rent paid direct to me?
If I ask 8 weeks rent in advance, so that the tenant is ‘in arrears’ after one day of the tenancy, is the local authority obliged to pay me directly?
What if the tenant is withholding rent due to a dispute?
What is the “fit and proper” test?
Direct payments to the landlord
Who will benefit be paid to?
Personal responsibility and financial inclusion are two key aims of the LHA. In the vast majority of cases, benefit will be paid to the customer who will be responsible for making their own payments of rent to their landlord. In certain circumstances, benefit can be paid directly to the landlord. Please see the tables below for basic bank account details. These tables can be downloaded and printed should you wish.
What are these exceptions?
Local authorities will have discretion to pay rent direct to the landlord where there is evidence that the customer would be unlikely to pay their rent and making direct payments would be in the interests of the customer. The following factors, which are not exhaustive, may be considered when deciding on whether direct payments should be made:
- The customer may have learning difficulties, a medical condition or educational needs that suggest that they may have difficulty in handling their own financial affairs; they may not be able to read or have language difficulties; they may suffer from drug or alcohol addiction; or have debt problems. It should be noted that the existence of any of these factors does not necessarily mean that rent should be paid directly to the landlord.
- People who are unlikely to pay their rent. Customers may have demonstrated, through their past behaviour, that it is improbable that they will pay their rent. In these cases, a local authority may make payments direct to the landlord.
- The Local Authority considers that it will assist the tenant to secure a new tenancy or retain an existing tenancy. The tenant will only be accepted as being able to retain or secure a tenancy if the rent is at a level that the LA considers they can meet whilst on Housing Benefit.
- If 8 weeks rent arrears have built up. If rent arrears are owed, the local authority will arrange to make payments direct to the landlord unless it is not in the customer’s overriding interests to do so. However landlords are encourage not to wait for the 8 week period to be reached before contacting the local authority.
Basingstoke and Deane Borough Council Benefit Section have compiled a safeguard protocol to ensure the above factors are considered fairly.
Why are eight weeks arrears significant?
Under Schedule 2 of the Housing Act 1988 (as amended by the Housing Act 1996) a landlord may be able to terminate an Assured Shorthold Tenancy Agreement when at least eight weeks rent is unpaid and the rent is payable weekly or fortnightly.
What if I, as a landlord, just prefer to have the rent paid direct to me?
The choice of having the payment made directly to the landlord will not exist under LHA. Taking responsibility for the payment of essential items such as accommodation is an important aspect of helping customers with the move into work. Most customers will be paid their benefit into a bank account and then will be free to set up a Standing Order to pay you, just as they would if they were in work.
If I ask 8 weeks rent in advance, so that the tenant is ‘in arrears’ after one day of the tenancy, is the local authority obliged to pay me directly?
The Department for Work and Pensions’ takes the view that a person cannot be in rent arrears in respect of a period that has not yet been served. Additionally, the requirement to pay directly is intended as a safeguard to protect vulnerable tenants as well as legitimate landlords and remedial action may be taken if there is evidence that this safeguard is being abused.
What if the tenant is withholding rent due to a dispute?
Once arrears of rent, whatever the cause, have reached 8 weeks then it is mandatory for the local authority to make payment direct to the landlord provided that there has been no finding that the landlord is not a “fit and proper” person or that it is not in the customer’s overriding interests to make direct payments. This can include where the tenant is in dispute with the landlord, but they must provide evidence of this.
What is the “fit and proper” test?
Local authorities are not obliged to make direct payments where they are not satisfied that the landlord is a “fit and proper person to be the recipient of a payment of rent allowance”. This will apply even when the criteria for a direct payment would otherwise have been met.
A landlord may not be a “fit and proper person” where it is proven that they have engaged in financial impropriety. This should normally include an element of HB impropriety, such as fraud or a knowing failure to declare changes in circumstances affecting the payment of benefit. Authorities may choose to consider other areas, such as failure to pay Council Tax or business rates, but generally the lesser connection that the offence or impropriety has with Housing Benefit, the less relevant it will be.
