Covering the money gap

Recent statistics show that local authorities and housing associations raised almost 25,000 eviction actions in Scotland in 2005.1 Around 96% of cases were for non-payment of rent. Around one third of actions resulted in decree; and out of that number one third of households were physically ejected or abandoned their tenancy – some 3,000 households in total.

There are no centrally held statistics on evictions in the private sector. However the data available (paper quoted, para 7) confirm that actual eviction rates in the private rented sector are significantly higher pro rata than in the social rented sector.

The Scottish Parliament recognised that delays in payment of housing benefit resulted in needless private sector evictions, and so gave effect to s 12 of the Homelessness etc (Scotland) Act 2003.

Section 12 amends the Housing (Scotland) Act 1988 and requires the court to take into consideration the extent to which the failure to pay rent is due to a failure or delay in the payment of housing benefit. Importantly, this change means that mandatory “Ground 8” eviction actions – where there are at least three months of arrears – are now discretionary and subject to a “reasonableness” test where arrears are due to housing benefit delay or failure.

It is important therefore to recognise the pivotal role that housing benefit plays in the majority of eviction actions, both in the social and private rented sectors.

This article will focus on the most common areas where tenants can get into difficulty with housing benefit and rent arrears. The perspective will be from the viewpoint of how tenants can protect their legal position and pay their rent and arrears. If they can do that, they should be able to avoid eviction.

1) Late claims and backdating

When a tenant applies for housing benefit it will take several weeks for that application to be determined. The national target is 36 days, or just over five weeks.2  It is not uncommon for a claim to take eight weeks. In practice many tenants will get a housing benefit application when they make a claim for social security benefit at the DWP. Unfortunately some will omit to return their housing benefit application to the council, or fail to provide the necessary supporting evidence.

Where claimants fail to apply on time they can request housing  benefit to be backdated for up to 52 weeks, if they can show that they would otherwise have been eligible and have “continuous good cause”: Housing Benefit Regulations 2006 (SI2006/213), reg 83(1). “Good cause” is not defined in the regulations, but has been developed as a concept from various decisions of the social security commissioners – the leading one being R(S) 2/63.3

The classic test approved in that case is:

“ ‘Good cause’ means, in my opinion, some fact which, having regard to all the circumstances (including the claimant’s state of health and the information which he had received and that which he might have obtained) would probably have caused a reasonable person of his age and experience to act (or fail to act) as the claimant did.”

Thus tenants may be able to seek backdated benefit if, for example:

• a close relative died and they were unable to deal with the claim;
• a serious domestic emergency affected his or her ability to claim;
• they had been ill or incapacitated;
• they had been given misleading advice by an adviser or official; or
• they had difficulties communicating because there were learning, language or literacy difficulties, or they are deaf or blind and had no one else to help them.(4)

If a tenant only has good cause for part of a backdated period they can only get housing benefit backdated for that period. Importantly, tenants have to apply in writing to claim backdated benefit. The onus is on them.

Tenants in Glasgow can get free help from a local law centre (there are six), local money advice agency, Shelter Housing Aid Centre, or local CABx.5 Glasgow City Council also employs money advisers and welfare rights officers who can provide free help, as indeed do some housing associations, including the GHA. Local authorities receive 100% central government subsidy on claims correctly backdated – so there is no cost to the council here.

(2) Overpayment of housing benefit (6)

Overpayment of housing benefit can be a complex area, and indeed a factor which can result in tenants being unable to meet ongoing rent. To give an example:

Mr Jones was receiving income support, but in 2005 his entitlement ceased. Instead he became eligible for incapacity benefit. In 2006 the council wrote to him intimating an overpayment decision based on his no longer being entitled to income support. The council assumed no entitlement – and to be fair this is usually because the claimant fails to provide evidence to the contrary. An overpayment decision for £1,200 was issued. The council then proceeded to recover this overpayment by way of deductions to current housing benefit at the standard rate of £8.70 per week.7 This creates an additional shortfall of around £35 per month to rent. Understandably, Mr Jones’ housing association landlord enrols an incidental application to recall the sist and move for decree as arrears are increasing.

The first observation we can make here is that the local authority will usually reduce the level of deductions for claimants not in receipt of income support to the minimum level, £2.90 per week – if the tenant can show hardship. If a tenant is facing eviction, is on incapacity benefit, and is repaying an overpayment of benefit, the council is generally sympathetic and should reduce the deduction rate. But the tenant needs to ask for this in writing and provide evidence of hardship. Securing a reduction will prevent rent arrears increasing.

The second observation is that it is often possible to challenge the legal basis of an overpayment decision. Importantly, when a challenge is made the local authority must stop deductions pending any appeal before the social security tribunal. Returning to the case of Mr Jones, it will be apparent that he has an underlying entitlement to housing benefit. In other words, when his benefit changed from income support to incapacity benefit he would still be eligible for 80% of his previous housing benefit award.

The problem Mr Jones will have is that this issue might only come to light in 2007 when he obtains legal advice on the application to recall the sist. The Housing Benefit and Council Tax Benefit (Decisions and Appeals) Regulations 2001 (SI 2001/1002) provide that a claimant has one month to challenge a decision, unless he or she can show that it is in “the interests of justice” to allow a late appeal. This is narrowly defined in reg 19 to mean circumstances where (a) the applicant, or his or her partner or dependant, has died or suffered serious illness; (b) the applicant was not resident in the UK; or (c) normal postal services were disrupted. If a late appeal is eligible it must be submitted within one year after the last date for appeal.

Accordingly, it may be impossible to submit a late appeal. The solution, which many tenants and advisers may be unaware of, is to submit an “any time revision” in terms of reg 4(2). This provides:

“An original decision may be revised or further revised by the relevant authority which made the decision, at any time by that authority, where that decision:

(a) arose from an official error; or

(b) was made in ignorance of, or was based upon a mistake as to, some material fact and as a result of that ignorance of or mistake as to that fact, the decision was more advantageous to the person affected than it would otherwise have been but for that ignorance or mistake.”

Here tenants can argue that the local authority has made its overpayment decision based upon ignorance of a material fact, namely their underlying entitlement to housing benefit. Separately, the tenant can also argue that the local authority has failed to apply the law correctly as it ought to have carried out an off-set calculation in terms of reg 104 of the 2006 Housing Benefit Regulations. There is case law to support this proposition, decision CH/4943/2001, reported at 2003 Greens Housing Law Reports 65. Commissioner Jacobs held that local authorities had to ascertain what a tenant would have been entitled to during the disputed period, and deduct that sum from the overpayment.

To summarise then, many tenants may be able to challenge overpayment decisions, and in so doing, be in a much better position to meet their ongoing rent and arrears. In the example of Mr Jones, a successful challenge would have saved £960, and resulted in no deductions from housing benefit.

Discretionary housing payments

Discretionary housing payments are something which many tenants and indeed some advisers may not be aware of. Discretionary housing payments are not payments of benefit. Instead they are freestanding payments to be made at the discretion of local authorities from funding provided by central government. They are made in addition to housing and council tax benefit.

The DWP has issued guidance on the operation of discretionary payments for councils.8 In general, discretionary payments can be claimed by someone who is eligible for housing benefit in respect of help with housing costs. “Housing costs” include council tax liability and eligible rent. A wide discretion is given to local authorities on who should receive these payments.

Glasgow City Council has an application form for these payments, available online.9 The Council gives the following non-exhaustive examples of the circumstances in which it may make discretionary payments available:

The rent officer has restricted the amount of rent to be used in the assessment of housing benefit because he/she has decided that the rent which a claimant has agreed to pay the landlord is too high.

A claimant is not entitled to full housing or council tax benefit because his/her income is above the income support level, but is having difficulty making ends meet due to an illness affecting a member of the household which is leaving him/her short of money.

A claimant has just started work and has had his/her housing benefit or council tax benefit reduced, but is finding it difficult to make ends meet because he/she has new expenses, such as buying overalls, tools or other equipment needed for his/her job.

Mike Dailly is Principal Solicitor at Govan Law Centre, Glasgow

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GOOD CAUSE: THE CLASSIC TEST

“Good cause” for making a benefit application late has been defined as “some fact which, having regard to all the circumstances (including the claimant’s state of health and the information which he had received and that which he might have obtained) would probably have caused a reasonable person of his age and experience to act (or fail to act) as the claimant did”.

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WEB REFERENCES

1 See www.scotland.gov.uk/Resource/Doc/1033/0039931.doc  (Scottish Executive Homelessness Monitoring Group Discussion Paper: Preventing Homelessness – addressing rent arrears, September 2006).

2 www.dwp.gov.uk/mediacentre/pressreleases/ 2004/june/framhb_ctb240604.asp

3 For a summary of the approach of local authority HB assessment officers on backdating see: www.londoncouncils.gov.uk/doc.asp? doc=17627&cat=2299

4 See further the comments of the Social Security Advisory Committee on “good cause” here: www.ssac.org.uk/pdf/pubs/backdate.pdf

5 The locations of free legal and money advice centres in Glasgow can be found here: www.glasgow.gov.uk/en/Residents/YourHome/Housing Options/FurtherAdvice/Money/; and www.govanlc.com/glasgow.htm

6 For recent DWP Guidance see: www.dwp.gov.uk/hbctb/circulars/2006/a13-2006.pdf; and http://www.dwp.gov.uk/advisers/ni260/

7 2006-07 benefit rates are available at: www.dwp.gov.uk/mediacentre/pressreleases/2005/dec/ben_ rates.pdf . Deductions can be higher where fraud is alleged.

8 Guidance is available online here: www.dwp.gov.uk/housingbenefit/manuals/dhpguide.pdf

9 www.glasgow.gov.uk/NR/rdonlyres/2E7D2B7C-C61D-4325-BEB7-0C816191D38E/0/W5172.pdf