DWP promises waiting time cut in UC arrears repayments

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The DWP plans to speed up repayment of arrears for tenants on Universal Credit next month, according to safeagent.

Landlords can currently wait up to nine weeks for arrears to be paid, but the DWP has told the accreditation scheme and other stakeholders that it plans to change its processing method and cut the timescale to about seven days. However, the changes will only apply to new rent arrears applications – safeagent reports that Direct Rent payments as well as Rent Arrears payments will continue to be processed separately.

Big difference

Isobel Thomson, safeagent’s chief executive, says the change will make a big difference to landlords who would know that in the event a tenant on Universal Credit falls into arrears that these will be paid quicker. She adds: “We look forward to the detail of the change when it is launched and well done to DWP for their work on this for the benefit of tenants, landlords and agents.”

Bill Irvine, at UC Advice & Advocacy, says there is currently a lag in payments when a landlord is awarded an Alternative Payment Arrangement (APA) or Managed Payment, which is caused by DWP using two separate systems. “One deals with the Managed Payment (monthly housing cost) which is calculated and paid on a calendar monthly basis, whereas the arrears element is calculated monthly but paid on a four-weekly cycle, 12 times a year,” he tells LandlordZONE. “Where an APA is awarded late in the tenant’s benefit assessment period, it can cause the arrears payment to miss the payment cycle and means a further wait of four weeks before payment is received. I suspect that’s what DWP is referring to and, if true, would represent progress.”

Wrongly refused

However, Irvine says landlords are still wrongly being refused APAs without explanation, as well as having APAs cancelled without warning or justification. He adds that the DWP could do much to improve its service including by suspending, rather than cancelling, payment when concerns arise over the legitimacy of continuing payments.

LandlordZONE has contacted the DWP for comment.

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Support grows for calls to include landlords in cladding fund

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More pressure is being put on the government to rethink its decision to exclude buy-to-let landlords from receiving cladding support.

Communities Secretary Michael Gove revealed that landlords would not be included in the cladding remediation fund initiative; instead, funding will be targeted initially at owner-occupiers and that ‘negotiations…will explore whether this support should extend to other leaseholders such as landlords’.

No logical basis

The National Residential Landlords Association has already called for him not to ignore landlords, which Propertymark has now echoed. Timothy Douglas, policy and campaigns manager, says there is no logical basis on which they should be excluded. “Buy-to-let landlords are no more to blame and deserve justice just as much as any other leaseholder to ensure they are not penalised for simply being landlords,” says Douglas. “It’s vital that private rented sector landlords are included in the support.”

Yesterday, Michael Gove met developers to discuss how to pay for works to rectify cladding and fire safety issues; they have told the government they must not be the only ones to pay the potential £4bn cost of fixing fire safety problems in tower blocks. A Department for Levelling Up Housing & Communities spokesperson says: “The roundtable was attended by senior executives from the country’s biggest developers, and these representatives agreed leaseholders should not pay. We continue to engage with them to ensure they deliver a fully funded action plan by early March.”

Unsafe buildings

Nearly five years after the Grenfell Tower fire, 40% of buildings in England with the same type of cladding have not been made safe, new government figures show. In all, 481 buildings have been identified with Grenfell-style ACM cladding and are unlikely to meet building regulations.

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NRLA urges help for tenants as Universal Credit cuts bite

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The National Residential Landlords Association (NRLA) has called for the Chancellor to end the housing benefit freeze and help the growing numbers of tenants who are struggling to pay rent.

A new YouGov poll of more than 1,000 private landlords across England and Wales found that of those who were either currently letting to a Universal Credit claimant, or who had done so last year, 9% had at least one tenant experiencing difficulties as a result of the £20 a week cut, following a temporary increase in response to the pandemic. 

Gap in support

The NRLA points to government figures showing how 1,431,040 households in the private rented sector were receiving Universal Credit last August, with housing cost support (Local Housing Allowance) included in the payment. Of these, 788,832 (55%) had a gap between the support they received and their rent payments. It warns that this will only get worse as a result of the government’s decision last year to freeze in cash terms housing cost support and predicts that as a result, the level of benefit support available will be able to cover the rent on ever fewer properties.

As many households face a cost-of-living crisis, the NRLA argues that a benefits system which properly supports tenants is of critical importance; it wants the government to reverse its damaging decision to freeze the Local Housing Allowance rate and ensure it properly reflects market rents.

Broken system

NRLA chief executive Ben Beadle says it’s a broken system in desperate need of reform. “With households facing a cost-of-living squeeze, it is vital that the benefits system gives the protection that tenants deserve,” says Beadle. “That is why the Chancellor needs to end the housing benefit freeze as a matter of urgency. Without this, many tenants and landlords face an uncertain future about how to keep tenancies going.”

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87% of purchase price and 100% of development costs – HMO Case Study

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Luke Casey, one of Property118’s recommended finance broker team has recently structured a bespoke development loan to provide 87% of the purchase price on day one along with the entire build costs on a portfolio of 10 properties being converted into HMOs.

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HMO Tenant Clarification Scenario?

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I’m thinking about renting out my 2 double bedroom house in the future if we need to move for work. However, I’m trying to plan the economics of it for the different types of tenant make ups.

I am wondering about renting it out as a house share with: one couple and one single adult taking each of the bedrooms and then with shared Kitchen

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Universal Credit cuts hit landlords

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9% of private landlords renting to Universal Credit claimants have experienced at least one tenant having difficulties paying their rent post the Government cut to Universal Credit by £20 a week following a temporary increase in response to the pandemic.

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Legal case: rent repayment orders – honesty the best policy

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A Rent Repayment Order (RRO) is an order that allows a tenant or local authority to reclaim rent or housing benefit where a landlord rents out an unlicensed property such as a house in multiple occupation (HMO).

Rent Repayment Orders are obtained through a residential property tribunal (RPT). Whereas tenants can now apply for a RRO direct to the tribunal, local authorities can only apply for a RRO where tenants pay their rent with the assistance of housing benefit.

In order to avoid evicting all the tenants when a HMO landlord is successfully prosecuted by a local authority for operating without an HMO licence, potentially creating a chaotic situation, the RRO was introduced in the Housing Act 2004 Act. This allows a compromise situation: the Act specifies that tenants’ contracts in an unlicensed HMO must continue to operate, and tenants must continue to pay rent. However, they could then have the right to a rent repayment from their landlord.

In The Housing and Planning Act 2016, the RRO legislation was amended and expanded to include the following situations:

• Breaches of improvement orders and prohibition notices and of licensing requirements under the Housing Act 2004
• Violent entry under the Criminal Law Act 1977
• Unlawful eviction under the Protection from Eviction Act 1977
• Breach of Banning Orders (new in this Act)

The case

In the Leibel v Baird case (May 2021), an application for a RRO was made by one tenant in respect of an unlicensed HMO property, and she included in her application a Rule 13* costs application.

Ms Leibel was one of five tenants in the HMO property, on a tenancy agreement made with Mr Baird, the property owner. The property did not have an HMO license to operate and Ms Leibel realised this was illegal and applied to the Tribunal for an RRO in the sum of £5382. The landlord Mr Baird’s defence was based on his argument that the property did not need a licence as there were only four occupants.

Submitting evidence before the hearing, Mr Baird had sent in a copy of a tenancy agreement which was signed by only four tenants. In response to this Ms Leibel sought and was given permission to submit additional witness statements from two of the other tenants, stating that there were 5 tenants in the property. When the tenancy commenced all the tenants had signed the agreement together and Mr Baird took the document away.

Mr Baird at the hearing gave evidence, insisting that there were only four tenants and he was very unpleasant to Ms Leibel in cross examination. Mr Baird was then asked to produce at a further hearing the original copy of the tenancy agreement, along with his bank statements showing rent payments. He was reminded that he might seek legal assistance given his evidence was being challenged.

The crunch

On day two, around three weeks later, Mr Baird was represented by Mr Des Taylor of “Landlord Defence” who said he had sent in a copy of the tenancy agreement and the relevant bank statements. He said he hadn’t realised that the Tribunal needed the original copy of the agreement, but in fact Mr Baird had destroyed it, which he claimed he did routinely after scanning.

Mr Taylor went on to say that the bank statements showed payments from five people and that his client now realised that he was operating a property which should have been licensed as an HMO.

The Judge asked if Mr Baird now accepted that he had committed the offence alleged of running an HMO without a licence and that he was liable for a RRO? Mr Taylor said his client was no longer relying on the evidence he had originally filed and was withdrawing it, including all his statements and documents filed, save for the bank statements. He stated that his client now accepted that a RRO should be made out in the sum claimed of £5,382.

The Judge asked Mr Taylor to confirm that his client was admitting the criminal offence of operating without an HMO license and that the Tribunal should make out a rent repayment order in the sum of £5382. Mr Taylor confirmed.

Rule 13 costs

The Tribunal then turned to matter of the Rule 13 costs application, made on the basis that Mr Baird had acted unreasonably in defending or conducting the proceedings: lying about the number of tenants in the property, putting forward a false account, forging a tenancy agreement and aggressively cross examining the claimant.

Mr Taylor tried in vain and at length to defend some of Mr Baird’s actions but the Judge reminded Mr Taylor he had on behalf of his client already admitted the offence. Mr Taylor accepted this but questioned the amount of the legal costs (£22,000) being claimed. He suggested it was not reasonable to apply such high costs to the claim of £5832 and that the solicitor’s hourly rate was excessive.

The Tribunal made out the RRO in the sum of £5,832, plus a £300 application fee. In respect of the Rule 13 costs, the Tribunal found that Mr Baird had deliberately obfuscated matters and in signing the statement of truth he had deliberately misled the Tribunal – “It would now appear that there is nothing within Mr Baird’s statement which can be said to be true… and Mr Baird has treated the Tribunal with contempt.”

Costs were awarded on an indemnity basis, the Judge stating that the legal costs were reasonable and costs of £21,512 was ordered.

The Lessons:

By trying to hoodwink the Tribunal and defend the indefensible in this way Mr Baird’s conduct exacerbated matters and brought down the wrath of the Tribunal on his head.

The case shows not only the importance of being honest in these matters, but of following the rule of the law in the first place, and of keeping and producing accurate documentary evidence. Rule 13 costs on RROs are not commonly applied by claimants. This claimant it seems was very well advised.

*Rule 13 permits the Tribunal to make an order for costs if a claimant or defendant has acted unreasonably in bringing, defending or conducting proceedings. The rule was introduced under the new First Tier Tribunal (FTT),lifting the previously capped costs ceiling of £500.

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Jail threat for wealthy landlord who ignored demolition order

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A landlord must demolish two penthouses that he built without planning permission – or face a four-month jail sentence.

Munjit Dulay, whose company MB Estate owns property worth millions of pounds, bought St Clement Court in Fosse Lane, New Parks, Leicester, in 2012 and turned the former old people’s home into 74 flats, Leicester County Court heard. He then built two penthouse flats on top of the buildings without permission and ignored a notice from the city council, followed by a court order, to remove them in May 2019. Leicestershire Live reports that instead of evicting the tenants, he re-let both penthouses – at least once – continuing to collect £455 per month on one and £600 per month on the other.

Bad advice

Representing himself, Dulay, 55, said he had taken bad legal advice and failed to demolish the apartments because his previous team of solicitors had advised him they could get the demolition order overturned. He said: “I wish we would have complied with the order but unfortunately that’s not the case.”

Last August he admitted that MB Estate had breached the injunction and that he had committed contempt of court by ‘breaching undertakings’. Dulay was given a four-month jail sentence, suspended for the next six months. MB Estate was fined £25,000 for breaching the injunction and Dulay was ordered to pay costs of £4,129. Judge Richard Hedley told him the flats must be gone by 17th July or the jail sentence would be activated.

Poor standard

Deputy city mayor, councillor Piara Singh Clair, says: “This was a very poor standard of development, built without planning permission in a flagrant breach of planning control. This case shows that ignoring and seeking to evade enforcement proceedings will lead to consequences such as large fines and potentially a prison sentence if the council’s requirements are not followed.”

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Right to rent checks go digital for British and Irish tenants

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Landlords and letting agents will soon be able to carry out quicker right to rent checks on British and Irish citizens.

From 6th April, Identification Document Validation Technology (IDVT) can be used to conduct the checks, allowing people to verify their identity remotely and prove their eligibility to rent. Digital identity checking platforms should simplify the process by removing the need for landlords to check and record copies of original documents. Tenants and applicants will be able to upload images of their personal documents to IDVT, instead of presenting physical documents. Landlords can secure an excuse against a statutory penalty by recording the outcome of a check made using an approved system.

Real-time checks

Overseas nationals with an immigration status are issued a share code which can be used to carry out real-time checks on their eligibility using Home Office systems. However, although COVID-19 restrictions currently allow everyone to undergo a check based on hard copy documents via video call, this was not considered a sufficiently robust system going forward. A consultation demonstrated the need for a remote solution for British and Irish citizens, particularly because of the difficulty in persuading tenants to attend in-person checks, according to Arla Propertymark.

Game-changer

Minister of State for Media, Data, and Digital Infrastructure, Julia Lopez, says: “Trusted and secure ways for people to confidently verify themselves online will be a game-changer and offer an alternative to time-consuming and complex paper-based processes.”

The most up-to-date government guide can be found here: Right to Rent Checks: A user guide for tenants and landlords.

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Supply shortage holding back housing market and pushing inflation

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A continued shortage of new properties being listed for sale, despite a rise in new buyer enquiries, is still preventing a pick-up in sales volumes and house prices continue to increase, according to the December 2021 RICS UK Residential Market Survey.

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