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Landlords celebrate legal win against housing benefit cap

Friday 22 September 2017

Landlords in Doncaster are celebrating after successfully arguing in court that the local council can’t restrict the amount they can claim in housing benefit for common households.  

After the court ruling, the council has also agreed to apply the ruling to all other cases where a cap has been applied, where appropriate, so some tenants and/or their landlords, could be in a housing benefit windfall.

Common households are made up of close family members who live together in one home and share living costs and household tasks to save money, and because benefits are being paid to fund one, rather than several households, they are entitled to higher payments.

But the council wanted to use a rule which allows housing benefit payment to be capped if if it is deemed ‘excessive’ compared to rents for similar local properties, even though the amount claimed was no more than the prescribed Local Housing Allowance (LHA) rate.

Bill Irvine, the Residential Landlord Association’s Universal Credit adviser and trainer,  represented ten tenants at Doncaster Crown Court before a First-tier tribunal. 

He said: "I argued that, while the council looked at rental costs of properties in the area of a similar size, they had not looked at whether the landlords would be willing to let these homes to benefit tenants – many won’t – or whether they would require a deposit or guarantor.

"I said that Parliament had sought to differentiate these type of claims, by making special provision in the housing benefit regulations, and, the landlords were doing no more than simply making best use of the opportunities the scheme offered, whilst at the same time providing good accommodation to people who would otherwise struggle to secure somewhere to live."

The First-tier Judge acknowledged that the council’s 'dislike of the fact that a calculation of eligible rent and maximum rent (LHA)' gives rise to 'an amount payable by way of housing benefit which is greater than the landlord might otherwise achieve on the open market'.

However he added: “As Mr Irvine points out, these landlords are not operating in an open market. They cater for a distinct class of tenant whose occupation and payment of rent depends on entitlement to Housing Benefit. 

"What these landlords are doing is simply maximising their revenue from the letting of these properties, something which they are perfectly entitled to do, and something which, to my mind, the regulations enable them to do.”

Such tenancies don’t require tenants to pay a deposit or provide a guarantor, and as such are much higher risk for landlords.

The ruling ended a longstanding dispute between the council and the ten tenants involved in what was effectively a test case on the potential use of Regulation 12 B (6) of the HB regulations 2006.

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