When the debt is not due to any mismanagement by the landlord, the landlord is left carrying, administering and monitoring a debt over which it has had no control – it was not a party to the debt and could not have prevented it arising. Such debts can often remain, unpaid or paid off very slowly, for many years. On the other hand, the authority, having recovered its money, benefits from the extra subsidy it receives from the government – 25% if the overpayment was classified as claimant error, or 80% if it was classified as fraudulent.
Most housing associations think they can do nothing about this, but this isn't always the case.
The Court of Appeal has ruled that landlords can use the formal appeal process to challenge overpayment recovery decisions, so it can be in associations' interests to be more proactive in arguing that the money should be recovered from elsewhere.
If the overpayment was caused by claimant error – for example, a failure to report a change of circumstances – the benefit claim has to be retrospectively cancelled and a new claim invited. Many local authorities will notify the landlord of the overpayment – and of its decision to recover the overpayment from them – at this stage, before any underlying entitlement has been established and before a new claim has been assessed. It is not clear whether or not this practice is lawful – in some cases, the overpayment will be entirely offset by underlying entitlement and there will be nothing to recover. In other cases, the overpayment, or a residual overpayment, will then be recovered by deductions from the claimant's ongoing benefit, in which case the landlord is not a "person affected" by the overpayment and its recovery and, it can be argued, should not have been notified in the first place.
The most important issue, however, arises where an authority is insisting that a landlord repays such an overpayment. The money involved can run into thousands of pounds, and the question then arises as to whether it is reasonable to ask the landlord to repay.
If the landlord is unhappy with the authority's decision, it can appeal or it can ask the authority to revise its decision and then appeal if the authority refuses to do this. In general, the first option would be best, as it will be the fastest way of resolving the issue.
The landlord can ask for an oral hearing, or allow the appeal to be decided by a tribunal on the paperwork alone.
In all appeals, the landlord should submit as much written argument as possible, with a view to establishing that being asked to repay a particular overpayment is unfair. The circumstances that surrounded the overpayment should be spelled out, with an emphasis on the fact that the landlord knew nothing about it and did not cause or contribute to the overpayment in any way.
It should also be emphasised that the issue should be one between the council and claimant – the landlord is, in effect, an entirely innocent third party. If the landlord was to repay, it would create a debt between the landlord and the tenant that has nothing to do with their tenancy agreement. In most cases, this debt would be treated as rent arrears, and the tenant could find themselves facing possession proceedings when they have not broken any of the terms of their tenancy. Such a debt could also prevent them being transferred, or being moved from temporary accommodation.
Housing associations have nothing to lose by reconsidering their response to overpayment demands and could find themselves in a healthier financial position if they do so.
Source
Housing Today
Postscript
Bob Kirkpatrick, author Housing Benefit Overpayments – a Guide for Housing Associations, London W6, BKirkpatrick@nhhg.org.uk
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