Barbara Leask chaired a forum for private landlords in Orkney to discuss upcoming changes to housing benefits. Leslie Rendall from Orkney Islands Council explained the new Local Housing Allowance (LHA) system beginning in April 2008, which will set standard allowances based on property size. Ray Richards from Orkney Citizens Advice Bureau discussed assisting tenants with rent arrears or inability to pay. He emphasized prioritizing rent payments. Leslie Rendall also discussed benefit fraud and encouraged landlords to be aware of tenants' circumstances and report any suspicions. The forum concluded with a question and answer session.

1. Orkney’s Forum for Private Sector Landlords
Wednesday, 5 September 2007
Orkney Hotel, Kirkwall
Chair: Barbara Leask, Housing Officer (Advice & Information)
Advice & Information Section, Orkney Islands Council, Kirkwall
Tel: 01856 87 35 35 (Ext 2175)
Speakers: Leslie Rendall, Revenues Manager
Department of Finance & Housing, Orkney Islands Council, Kirkwall
Tel: 01856 87 35 35 Ext (2104)
Ray Richards, Accredited Money Advisor
Orkney Citizens Advice Bureau, Anchor Buildings, Bridge St., Kirkwall
Tel: 01856 87 52 66
Minutes: Denise Brown, Assistant Housing Officer (Advice & Information)
Advice & Information Section, Orkney Islands Council, Kirkwall
Tel: 01856 87 35 35 (Ext 2189)
Welcome and Introductions
Barbara welcomed everyone to the forum (landlord attendance – 21 in total).
Local Housing Allowance
Speaker: Leslie Rendall
Housing Benefit
Housing Benefit (HB) is a benefit paid to eligible tenants towards the cost of their rent. The
Department of Work & Pensions sets the rules, the Council administers the benefit and is reimbursed
by the DWP.
At the moment, HB is calculated based on the financial and personal circumstances of the claimant
up to a maximum amount which is set by the Rent Officer as the average rent in that area. It takes
approximately 27 days from receipt of an application to notifying the claimant of their award.
Currently, tenants can choose to have the HB paid directly to their landlord.
Local Housing Allowance
However, April 2008 sees the introduction of the Local Housing Allowance (LHA) – the main
differences to which will be that the maximum rental rate payable to a claimant will be a set amount
based on the size of property required for the household; and that the tenant cannot choose to have it
paid direct to the landlord. Payments will only be made direct to the landlord where there are arrears
of 8 weeks or more; or where the Council considers that the tenant is unlikely to pay the rent, is
vulnerable, or is likely to have difficulty managing their affairs.
The LHA will be phased in to initially cover new benefit claims made after April 2008 – including
those who need to make a new claim following a change of address or a break in benefit entitlement
of one week or more.
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2. LHA Calculation
The set amounts for each household size will be calculated by the Rent Officer and published on a
monthly basis and will be the same throughout an area referred to as the Broad Rental Market Area –
this extent of the area has not yet been determined. The Rent Officer will compile a list made up of
information from the private sector and will set the LHA at the median (middle) rate to be updated
every month.
Potential Issues
• As tenants are being encouraged to take responsibility for budgeting and paying the rent
themselves, landlords may be concerned that the rent would be left unpaid and that arrears
would build up. However it is important to note that if evidence can be provided to show that
the tenant has problems managing their finances (e.g. if the tenant seeks assistance from the
Money Advice service at Citizens Advice Bureau) then LHA can be paid direct to landlord.
• Landlords will have to collect rent from the tenants (as would apply to those tenants not on
benefit).
• LHA amounts payable still takes into account the financial situation of the claimant so may
not receive full rental amount and tenant may have to make up the difference themselves as is
currently the case with HB.
Potential Benefits
• Both landlord and tenant can check the amount of LHA payable to the household size before
committing to the tenancy as the information will be published monthly.
• LHA rates will be constant throughout Orkney.
• Benefit claims should be faster to process therefore reducing any potential delays with setting
up rent payments.
Experiences so far
The LHA scheme has been piloted in some areas already and although at the start the public’s
feelings were not hopeful, once implemented the feedback has been generally positive and the LHA
amounts were generally higher than previously set HB rates. However, there is no guarantee that
would be the case in Orkney and the pilot schemes may alter by the time LHA is phased-in in April
2008.
Questions / Comments for the speaker
Q: How will the “average” rates be determined for each household size?
A: The Rent Officer should be consulting with private landlords and agents.
Q: What if I can get more rent from my property through LHA than I could from a tenant not in
receipt of benefit – will the temptation not be there to increase the rent?
A: If you were to put the rent amount up as a result of the LHA applicable to the property size for
the household then you may get into problems later in the tenancy should the tenant no longer be
eligible to benefit, as the lease cannot be that flexible.
It is worth pointing out that at any one time the Council is dealing with about 400 HB claims, but
that these are not consistent and that over the year there may be about 600 total claimants. So
always bear in mind that your tenant’s circumstances may change.
Q: What effect would the needs of disabled tenants have on the LHA amount?
A: None – it will be based on size of property for the household only. This would mean that a single
person would only be entitled to the LHA for a one bedroom property even if they required a second
bedroom from time to time for a carer. Equally, non-resident parents – despite having access to their
children - would also only be entitled to one bedroom when calculating household size.
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3. Q: The LHA scheme is set in Westminster and yet the Rent Officer is a civil servant with the
Scottish Government – isn’t this likely to cause conflict?
A: This shouldn’t be the case as the Rent Officer is employed as an independent assessor.
Rent Arrears
Speaker: Ray Richards
Role of Money Advisors at Citizens Advice Bureaux
Money Advisors are there to empower their clients to enable them to take responsibility for their
debts and assist them with the practicalities of repaying their creditors. This includes looking at
what can be done to maximise their income e.g. are there any benefits they may be entitled to? They
will then look at their expenditure and prioritise the payments as rent, council tax, food, and warmth.
If a client refuses to pay
Unless a client has a reason for refusing to pay a debt – such as a dispute over the money owed,
CAB will be unable to assist a client who has the means to pay but is choosing not to.
As a landlord, this leaves you with the option to evict and / or to take civil action for any monies
due. If evicting a tenant you would need to be sure a) what type of tenancy you have created, b) the
grounds you will be using for eviction and c) the legal notice required to end that tenancy on those
grounds. When going to court for arrears you would use the Small Claims procedure for sums of
less than £750 or the Summary Cause procedure for sums between £750 and £1,500. There is a
court fee applicable of about £36 and you may require legal advice and assistance on top of this.
If a client cannot pay
A person can incur debts for a variety of reasons such as through a period of sickness, redundancy,
bereavement, or relationship breakdown. If a client is unable to pay these off then bankruptcy may
be the only solution in which case creditors would also be affected. If low income is a contributing
factor to the client’s inability to pay the debts, then they may be entitled to Housing Benefit to help
pay current rent, and if there are 8 weeks or more arrears, the landlord can request rent paid direct.
This is the case with current Housing Benefit and future Local Housing Allowance.
If a client can pay
Once the money advisor has looked at the client’s income and expenditure (of which current rent is
seen as a priority), then the disposable income can be calculated. From this figure, the repayment of
debts would be allocated on a pro rata basis depending on the different amounts owed.
Assisting landlords with rent arrears
CAB can offer advice and assistance to landlords whose tenants have built up rent arrears and advise
you recommend your tenant seeks financial advice. If the tenants co-operate then CAB will aim rent
payments can continue and arrears can be addressed – and the whole situation can be resolved
without the need for eviction or legal action both of which can be costly options.
Both OIC and Orkney Housing Association Limited refer tenants to CAB for money advice and
have found them to be very helpful.
Fraud Awareness
Speaker: Leslie Rendall
What is benefit fraud?
Benefit Fraud occurs where a claimant either knowingly or deliberately obtains benefit to which
there is no entitlement. The most common examples of this are;
- failure to declare earnings, income or savings,
- failure to declare a partner, or
- claiming benefit whilst not residing in a property.
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4. As a landlord, why should I care?
- Your tenant may be committing a criminal offence,
- Your tenant may bring “bad publicity” for a landlord / property,
- Benefit fraud is an abuse of public funds,
- Future financial problems may arise with your tenant once they have to repay overpaid
benefit.
As a landlord, what can I do?
- Being aware of your tenant’s circumstances,
- Listening and watching for evidence of fraud,
- Carrying out tenancy checks on the property.
If you have any suspicions please contact the Council’s direct dial number on 886 320.
Questions / comments for the speaker
Q: I had assumed that a tenant would have to be unemployed to receive benefit.
A: No – it is a means tested benefit which means that those on low income can also get varying
portions of HB paid to them. 60% of our HB claims are in receipt of the full amount as they are in
receipt of Pension Credit.
OIC administers £2.2m / year in Housing Benefit therefore it is a valuable help to those who need
it. Although fraud occurs in a relatively small number of cases it is a serious offence and cannot be
dealt with lightly.
Q: If, as a landlord, I am NOT aware of benefit fraud – am I still responsible for it?
A: No. If you were aware of it e.g. you know your tenant has moved out of the property but you are
still accepting rental payments from HB, then you may be guilty of collusion. Sometimes the money
will be recovered from the landlord.
General Question and Answer Session
Q: Can I include a clause in my tenancies that allows for the rent to be put up?
A: Yes – as long as it does not increase more than once a year.
Q: I notice that you offer advice to landlords on dealing with Anti-Social Behaviour – why should
landlords be responsible for this?
A: Under Anti-Social Behaviour legislation, local authorities can penalise landlords who refuse to
co-operate with us in tackling the anti-social behaviour of their tenants. This is because in a private
tenancy the local authority has little options to address the behaviour and would rely on the co-
operation of the landlord. We would offer all the advice and assistance that a landlord would need to
be able to meet his legal obligations and we would not be expecting the landlord to be responsible
for the behaviour, only to be responsible for addressing it rather than ignoring it. If any landlords are
not happy with the legislation as it stands they should contact their MSP.
Q: Can I add to my lease that I am to receive rent once the housing benefit is received?
A: You can have a clause which specifies when and how rent is payable. You can phrase this to
include the receipt of housing benefit but it can cause complications due to the fact that HB tends to
be payable fortnightly in arrears, whereas rent is generally payable monthly in advance.
Thank you to everyone who was able to attend and thank you to our guest speakers.
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