Liverpool City Council (17 012 147)

Category : Benefits and tax > Housing benefit and council tax benefit

Decision : Upheld

Decision date : 21 Mar 2018

The Ombudsman's final decision:

Summary: The Council was at fault when it paid housing benefit to the tenant and not to Mrs X, the landlord. This meant that Mrs X missed out on rental payments. The Council has agreed to pay Mrs X in recompense for this fault.

The complaint

  1. Mrs X complains that the Council wrongly paid her tenant his housing benefit which it should have paid directly to her. This caused her financial loss of two months’ rent.

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The Ombudsman’s role and powers

  1. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
  2. If we are satisfied with a council’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)

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How I considered this complaint

  1. I have considered the information supplied by Mrs X and have spoken to her on the telephone. I have also considered the council’s response to my enquiries. I also provided Mrs X and the Council with an opportunity to comment on my draft decision.

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What I found

  1. Mrs X owned a property which she then placed in trust for her children. Mrs X was responsible for renting the property out. Mrs X rented the property out to a tenant.
  2. Housing benefit is a means tested benefit which helps people on low incomes to pay their rent. The default position is that councils pay housing benefit direct to the tenant, However, Councils can pay housing benefit direct to landlords in some circumstances.
  3. A safeguarding request was made to the Council by the tenant on 1 June 2017. The tenant requested that future housing benefit payments were made to his landlord, Mrs X. At this time, the tenant was in arrears. The Council was not aware of this. The tenant’s mother has since made some payments towards these arrears. There remains some money outstanding.
  4. When this request was made, the Council was unaware that Mrs X was not the owner of the property.
  5. The Council agreed to the request as it was satisfied that it was in the best interests of the tenant and his family to do so.
  6. On 5 June 2017, the Council informed Mrs X that all housing benefit payments for the tenant due from 29 May 2017 would be paid directly to her. She was also told that this was subject to the landlord security protocols being satisfied. A Landlord declaration form was sent to Mrs X on this day for completion.
  7. Mrs X returned the Landlord Declaration Form with supporting evidence on 13 June 2017. During the landlord verification process the Landlord Control Team became aware that Mrs X was not the owner of the property. This lead to some delays as further information was required and authorisation from the owners for Mrs X to act as a representative or agent.
  8. During this time Mrs X says she contacted the Council. She says the Council confirmed to her that payments would not be made to her tenant whilst the landlord verification process was completed.
  9. The Council made housing benefit payments to Mrs X’s tenant in both June and July. Mrs X’s tenant did not make any payments to Mrs X during this period and has not made any payments to her for this period since.
  10. The Council has explained that it should have updated the relevant payee details upon receipt of the response from its Landlord Control Team. That is the normal procedure within the office and doing so would have prevented any further payments of housing being made to the tenant. Payments to the ‘new landlord’ reference would then have commenced once the Landlord Control Team was satisfied that it had received all the required evidence. The Council has acknowledged that the main reason that two payments were made in error to the tenant is therefore, the oversight on 5 June 2017 in not updating the claim payee details, rather than the subsequent decision to de-suspend payments on 29 June 2017.
  11. On 4 August Mrs X contacted the Council as she was made aware that the Council had continued to pay her tenant housing benefit payments directly.
  12. The Council sent a letter to Mrs X on 22 August. This said that “Due to an oversight whilst processing the claim further payments were made to your tenant. Please accept my apologies for any inconvenience caused to you”.
  13. On 24 August 2017, Mrs X complained to the Council. Mrs X sent a further email to the Council on 28 August 2017. It responded on 29 August. The Council said that it would not reimburse Mrs X for the rent because it could not make duplicate housing benefit payments for the same period. The Council apologised for its oversight and for any inconvenience or upset Mrs X experienced because of it.
  14. Mrs X requested to escalate her complaint on 11 September 2017 and received a response from the Council on 3 October.
  15. Mrs X remained dissatisfied and made her complaint to the Ombudsman.

Analysis

  1. Regulations 94 to 97 of the Housing Benefit Regulations 2006 determine who housing benefit payments are to be made to. It is only in the circumstances specified in paragraph (1) of HB Regulation 95 that payments must be made to a landlord. The Council does not consider these applied in this case.
  2. The Council has said that the decision to pay the tenant’s housing benefit directly to Mrs X was made under Regulation 96 of the Housing Benefit Regulations, which gives a discretion to the Council as to who payments should be made.
  3. The Council also says the tenant received the correct award of housing benefit and there are no provisions within the Housing Benefit Regulations 2006 to permit an additional housing benefit payment.
  4. The Council is not responsible for Mrs X’s tenant failure to pay his rent to Mrs X. That is a matter between the tenant and the landlord. However, the Council had clearly agreed to make the housing benefit payments directly to Mrs X from 29 May 2017. The Council did not do so and this is fault.
  5. The Council has said that if sufficient information been provided by Mrs X when she returned the Landlord Declaration Form on 13 June then it is likely the housing benefit payment issued on 30 June to Mrs X’s tenant would have been sent to her. Whilst this may be the case, Mrs X was told that payments would not be made to her tenant during the landlord verification process and ultimately the payment error was still the Council’s fault.
  6. Mrs X’s tenant received £966.56 in benefit which should have been paid to Mrs X, because the Council agreed that it would do so. The tenant did not pass this on to Mrs X and Mrs X has been unable to recover this from the tenant. Mrs X has lost out on £966.56, because of the Council’s fault. Whilst the tenant’s mother has since made some payments towards previous accrued arrears, this has specifically been for monies owed prior to the arrangement being made with the Council.
  7. Where the Ombudsman finds fault causing injustice we seek to put the complainant back in the position they would have been if the Council had not been at fault. The Council should therefore pay Mrs X. I acknowledge that it cannot pay housing benefit twice for the same period. However, Mrs X should be recompensed for the money she did not receive due to Council fault.

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Agreed action

  1. To remedy the fault, the Council has agreed to:
    • pay Mrs X £966.56 in recompense for the money she lost out on because of the Council’s fault.

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Final decision

  1. The Council was at fault when it paid housing benefit to the tenant and not to Mrs X, the landlord. This meant that Mrs X missed out on rental payments. The Council has agreed to pay Mrs X in recompense for this fault.

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Investigator's decision on behalf of the Ombudsman

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