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Birmingham City Council (18 017 737)

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

Decision : Upheld

Decision date : 28 May 2019

The Ombudsman's final decision:

Summary: The Council paid housing benefit to a tenant when it should have paid it to the landlord. The tenant did not pass the money on and left the property. To remedy the injustice it caused, the Council will pay the landlord the same amount it paid the tenant in housing benefit.

The complaint

  1. Mr X is a lettings agent. He manages a property for Mr L, the owner. Mr X complains the Council paid the tenant (Ms T) a large amount of housing benefit when it should have paid him. He says because of this Ms T disappeared leaving over £2,000 in rent arrears.

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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 considered the complaint made by Mr X and discussed it with him. I considered the Council’s response to Mr X’s complaint to it.
  2. Mr X and the Council had the opportunity to comment on a draft version of my decision. I considered their comments before I made a final decision.

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What I found

  1. Housing benefit is a means-tested benefit for paying rent. The council manages the scheme. For private tenants the council generally pays the tenant. (Regulation 94(1))
  2. Where a tenant is more than eight weeks in rent arrears and the council knows this, it should pay the benefit directly to the landlord. (Regulation 95)
  3. Where a tenant has less than eight weeks arrears, a council may still pay the rent arrears to the landlord if the tenant asks it to; or, if it is in the interests of the tenant. (Regulation 96)
  4. A council can suspend payment of housing benefit where there is a question about entitlement or when it might need to change a decision. (The Housing Benefit and Council Tax Benefit (Decisions and Appeals) Regulation 2001 Regulation 9)

Housing Benefit and Council Tax Benefit Manual

  1. The Department of Work and Pensions’ Housing Benefit and Council Tax Benefit Manual states:
      1. Councils ‘have the discretion to make the first payment of any new or review claim payable to the landlord or their representative but sent to the claimant. This is to avoid the possibility of a claimant misusing a first payment covering several weeks’ entitlement’. (6.163)
      2. ‘You may consider making the first payment payable to the landlord if in your opinion;”
  • “the claimant has not already fully met their rental liability, less ineligible charges, for the period covered by the benefit payment, and
  • it would be in the interests of the efficient administration of the HB scheme because of an LA’s duty to safeguard the public purse by reducing opportunities for fraud or abuse”. (6.164)

What happened

  1. Until July 2018 Ms T received housing benefit. The Council paid this directly to Mr X’s company.
  2. In July 2018 Ms T’s housing benefit claim ended. In October 2018 Ms T made a new claim. She asked the Council to pay the benefit directly to her but suggested on the claim form she had large rent arrears. The Council says it overlooked this information from Ms T and paid her £1,269.20 housing benefit. Ms T did not pass this to Mr X.
  3. Mr X started possession proceedings against Ms T for the arrears. He says Ms X has abandoned the property and he does not know where she is.
  4. Mr X complained to the Council. It said it should have paid him the housing benefit and apologised for this. It said it would not pay Mr X the £1,269.20 because it cannot pay housing benefit twice and Ms T was responsible for paying her rent.

Analysis

  1. The Council has accepted it is at fault. It should have paid the housing benefit to Mr X’s company. The Council is right; it cannot pay housing benefit twice and Ms T should have paid her rent. However, this does not mean it has not caused injustice. It should remedy that injustice. If the Council had acted correctly it would have paid Mr X £1,269.20 towards Ms T’s rent. Mr X has no ability to reclaim this from Ms T.
  2. We publish guidance on remedies. This says where a council has paid benefit to the tenant instead of the landlord, and the tenant cannot be traced, the council should pay the equivalent amount to the landlord.

Agreed action

  1. To put matter right within one month of my final decision the Council will pay Mr X’s company £1,269.20.

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Final decision

  1. The Council is at fault and has caused injustice. The Council has agreed to the remedy I recommended to put this right. I have completed my investigation and closed the complaint.

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Investigator's decision on behalf of the Ombudsman

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