Universal Credit, Benefit Cap, APAs and DHPs

Has anyone heard anything about tenants who have APAs that pay all of their housing costs not being able to claim DHPs unless the APA is ended as they wouldn’t have any rent shortfall? Seems a bit unfair given that people on UC will be the hardest hit already (as they can lose off other elements of UC whilst those on legacy benefits can only lose from HB).

As far as I know the DFA regs allow a DHP to be made where the claimant has an award of UC the calculation of which includes housing element.  There’s nothing about APAs.

( See definition of “relevant award”  http://lawvolumes.dwp.gov.uk/docs/a8-2405.pdf )

I can see how some local authorities might take that view.  The purpose of DHPs is to supplement benefits in a case where the claimant requires “further assistance” to meet his/her rent.  You can see how a council might argue that you don’t need any further assistance if your rent is being paid in full by way of an APA.  Never mind that you are struggling to meet your living costs with the pittance left over (if sanctioned for example).

I think that is too narrow a view and it is possible to be in need of further assistance to meet your rent even if it is being forcibly deducted at source.  I would read it as “further assistance to meet rent without starving”.  But every local authority will have its own approach - that’s the nature of local discretion.

Thanks for responses.

Just to say its not our LA who have said this….. just in case they are subscribers to Rightsnet.

I think you are referring to a situation where a UC claimant has currently a APA so the landlord is paid direct. The Cap is applied causing the claimants total income to fall. The claimant faced by a income shock decides to request an end of APA, and seek additional assistance with DHP.

The latest HB bulletin

Q17. What support will be available for those with managed payments to the landlord?
The Universal Credit notifications ask the claimant to speak to their work coach if they have a managed payment to the landlord (MPTL) in place so that the work coach can explain how the benefit cap interacts with the MPTL. In some cases this discussion may lead to the claimant asking for the MPTL to be stopped by DWP, so that they can apply for a DHP. If the claimant chooses to do so, the direct payment to the landlord can be reinstated (the landlord cannot ask for the MPTL to be replaced unless the benefit cap no longer applies).

The LA, after the ending of the APA then has to decide pay DHP or not.

Not sure I understood the question.

This is becoming an issue.

An LA writes

“were told that if there’s an APA in place we cannot award a DHP for a UC recipient until the APA is removed
Is this right? Why? Even if their housing element was paid to their landlord it might not cover their contractual rent.
We cannot see the logic of this “rule”“.

Nor me.

It does not seem to matter at all to me whether there is a payment to the landlord .....nor does it matter if there is a shortfall. Provided there are housing costs included.

Maybe that is the problem. Dwp are trying to say there are no housing costs included if the housing monies are paid to the landlord?

Email answer from UC Partnership Manager:

Where Universal Credit has been reduced because of the revised lower Benefit Cap from Nov 16, will APA Managed Payment of Housing Costs to landlord still be agreed even if it leaves the customer short of money to live, and where there are children in the house?

This is more a general UC question rather than a specific Full Service issues. For live UC this would continue unless the claimant asked for a review, if so the managed payment may end and the claimant would have to apply for discretionary housing payments. However this is on a case by case basis as there are several exclusions to the benefit cap being applied in UC.

A letter from (Benefit Cap Changes Project Director) to LA Chief Executives on 19th September referred to managed payments to landlords being cancelled to enable a UC recipient to apply for a DHP.

UC Programme were asked for clarification. The response was:

“Legislation states that in order to claim for DHP the rent liability needs to rest with the claimant / tenant.  If there is a MPTL in place the rent liability is being fulfilled by Universal Credit and not by the claimant.  The MPTL needs to be removed for claimant to resume rental liability and claim DHP.

If a claimant has a managed payment to a landlord in place, (MPTL) there is a possibility that once capped, the landlord is automatically paid, which could then lead to financial difficulties for the claimant.

In these cases we will discuss this with the claimant and we will remove the MPTL if they request it. This enables the claimant to apply for a DHP giving the claimant choice over how they spend their money. We will also prevent the landlord from reapplying for a MPTL so we can protect the claimant, although the claimant can ask for the MPTL to be reintroduced if they so wish.”

I don’t agree with this interpretation but DWP fund the pot…..  I guess they can refuse to pay the monies if the LA does not abide by their rules. DHP’s are not a payment of HB and they could say they are presuming the LA is funding locally any DHP where a landlord payment is in place.

How do APA’s interact with DHP’s and bedroom tax cases, As I understand it, in bedroom tax cases the eleigible rent is the figure after the rent restriction and surely an APA can only cover the eligible rent? Any thoughts?

hbinfopeter - 17 October 2016 11:35 AM

“Legislation states that in order to claim for DHP the rent liability needs to rest with the claimant / tenant.  If there is a MPTL in place the rent liability is being fulfilled by Universal Credit and not by the claimant.  The MPTL needs to be removed for claimant to resume rental liability and claim DHP.

 

I don’t follow this at all. The contractual liability to pay rent, as per the Tenancy Agreement, is with the tenant. Is UC saying it is going to make itself liable for money judgement orders following an eviction for rent arrears? Obviously not.

And how is UC squaring this with rents that are already paid directly to the landlord under HB where DHP is and always has been paid, such as Bedroom Tax cases?

This strikes me as utter drivel

(unless I am misunderstanding of course)

My thoughts exactly Billy.

I think DWP need to look at this again. A world of difference between who is LIABLE to pay rent, and who actually PAYS the rent. So, if the rent wasn’t paid by DWP would the landlord pursue them for the arrears, instead of the tenant? Of course not. The contract is between landlord and tenant, not landlord and DWP.

I think what they are trying to say is that DHPs are for people who require “further assistance” to meet their housing costs and if your housing costs have been paid in full by way of an APA you don’t need any further assistance to meet them.  It is a very narrow interpretation and a surprising one considering the way DWP guidance recommends completely ignoring legal constraints on DHPs in other circumstances (they have no problem with councils ignoring the crystal clear Gargett case on conjuring lump sum payments out of thin air for example).

As I said earlier in the thread, I think “requires further assistance” will stretch to include cases where meeting your housing costs in full leaves you destitute.

Also if the landlord has applied for an APA on the basis of the tenant being in 8 weeks arrears how can they just cancel it (assuming they are still 8 weeks in arrears)?

I agree with what Billy said and what Mark G said.

The DWP can cancel the APA if they consider it in the claimants or families best interests, ie if it leaving them short of money for other essentials.  No clear answer really.

I also suspect that we will see that LAs will only award DHP in Ben Cap cases in exceptional circumstances and not in cases of pure financial hardship as it is no longer unusual, in fact it is becoming normal to be in hardship, and that the policy intention is that you experience hardship as this is what will encourage you to find work.

from the National Housing Federation - DWP guidance on stopping managed payments to landlords where benefit cap leaves claimant with no money -

If a claimant has a managed payment to a landlord in place, there is a possibility that once their benefits are capped the landlord will be automatically paid leaving the claimant with no money.

In these cases, the MPTL will be removed. This enables the claimant to apply for a discretionary housing payment giving the claimant choice over how they spend their money. This will ease the claimant’s financial circumstances and will enable them to fulfil their obligations as a tenant.

If the claimant chooses to do so, the direct payment to landlord can be reinstated but the landlord cannot reapply for the MPTL.

http://www.housing.org.uk/latest-updates/managed-payments-to-landlords-under-universal-credit/

latest edition of HB Direct, issue 173, gives further indication that DWP do not think all claimants subject to the lower benefit cap who have managed payments to landlords (MPTL), can also access DHPs -

’Under Universal Credit, when a claimant is subject to the benefit cap due to the changed cap rates, and a Managed Payment to Landlord (MPTL) is in place, they will be advised to speak to their Jobcentre Plus work coach. The work coach will discuss how the cap interacts with the MPTL and, in a limited number of cases, the claimant may decide that it is in their best interests to end the MPTL to allow them to apply for a Discretionary Housing Payment (DHP) from their LA.

The claimant can reinstate the MPTL at a later point, however, this cannot be done whilst they are in receipt of DHP. The landlord will be informed of a decision to end or re-instate an MPTL. Once a claimant has decided to end an MPTL the landlord cannot ask for it to be re-instated unless the benefit cap no longer applies.’

https://www.gov.uk/government/publications/hb-direct-december-2016-issue-173

Is the work coach the best person for the claimant to discuss the interaction between the Ben Cap and the MTPL??
This would seem to be a fairly complicated and sensitive conversation, requiring a good understanding of how UC is calculated including the role of other income including fluctuating income, how the MPTL works in practice and theory, and a full understanding of the claimant’s financial circumstances, commitments and budget.
Even in the case of the most highly skilled and compassionate work coach, I can only speak as if it were myself, I would not wish to discuss my dire choice between sustaining my tenancy and buying food and fuel for my kids, with the very same person who is closely monitoring my every work related activity and has the power to reduce my payments even further if they wish.

And also the law doesn’t say you can’t have DHP if you have MPTL.

Anyone have a link/reference to the regs that supposedly provide for this? They’re not referenced in the HB circular and I can’t find them….

here’s the link to the Discretionary Financial Assistance Regulations 2001. I am guessing DWP are basing their approach on regulation 2(b) - for someone getting UC they must -

‘appear to such an authority to require some further financial assistance (in addition to the benefit to which they are entitled) in order to meet housing costs.’

and giving a very narrow interpretation of ‘require some further financial assistance’ to exclude cases where managed payments meet all (or some?) rent liability.

past caring - 08 December 2016 11:36 AM

Anyone have a link/reference to the regs that supposedly provide for this? They’re not referenced in the HB circular and I can’t find them….

You won’t find any regs to support DWP’s assertion that MPTL means no DHP.

The correct test for DHP for UC is a “relevant award” - reg 2 DFA Regs http://lawvolumes.dwp.gov.uk/docs/a8-2405.pdf

“relevant award of universal credit”  means an award of universal credit the calculation of which includes an amount under section 11 of the Welfare Reform Act 2012 [ie a housing element]  calculated in accordance with Schedule 4 to the Universal Credit Regulations, or would include such an amount but for paragraph 3(e) of Schedule 1 to those Regulations [exempt accom]

In some of their ‘explanations’ of this nonsense DWP have correctly identified the relevant regs but don’t appear to have read or understood them.  The question of liability doesn’t arise at all ( although I think DWP are wrong there too).

Agreed - reg 2 of the DFA Regs only requires a person to be entitled to UC housing costs and appear to require further financial assistance with housing costs. The latter test is purely financial and cannot be assumed to be not met just because housing costs are being paid to the landlord rather than the claimant.

Thanks.

But I’m still failing to see anything there that would prohibit a person receiving a DHP whilst also having managed payments/APAs in their UC. Liability to pay rent/housing costs doesn’t shift simply because they are being paid directly by UC. It would not be the case, for example, that where an APA was in place but accidently broke down because of DWP error, that the claimant ceased to be liable for rent during that period…..

ETA - sorry, I was typing that whilst simultaneously reading the regs and then didn’t see that others had posted in the interim.

I gather DWP’s position has now shifted and they are saying that the calculation of the UC award does not include a housing element if there is an MPTL in payment. They have lost the plot. Local authorities are openly laughing at them.

Good. But are they paying DHPs in such circumstances?

Problem is that whilst some LAs might be (correctly) ignoring the guidance, others won’t be.

Am unsure at present whether to make representations to the policy/legal guy in our HB department so DHPs are paid, or ask for a clear decision on a relevant application to the effect that a DHP would be paid but for the DWP guidance so as to be able to refer the case outward and upward…..

We’re planning to write to DWP querying this whole thing.

Thanks for putting the links and extracts in this thread Stuart and Jon

On the liability issue, I don’t think I’ve come across such legal nonsense in my life, as the DWP’s position.* The liability to pay rent (barring assignment) rests absolutely with the tenant.  How the tenant meets that liability is neither here nor there.  If I ask my brother to pay my rent for a while does he become legally liable for it, and I no longer?  Of course not.  If I tried that defense in court I would get laughed at, and rightly so.

*Of course, the legislator, primary legislation permitting, could have enacted a deeming provision for a specific purpose.  That is, to treat the person as not liable for rent, for the purposes of entitlement to DHP’s, where the landlord receives rent payments directly from the DWP.  But I can’t see anything like that in the legislation.

And I don’t need to add to HB Anoraks post at 23 (above)

The other thing, from a practical angle thinking about benefit capped families now is .........

How about instead of cancelling the MTLP (APA) which could put the tenancy at risk (especially in cases where the tenant already has significant rent arrears) the DHP application is made and treated by the LA ‘as if there was no MTLP’ based on the claimant’s financial hardship in meeting all their essential expenditure (if the LA cant get their heads around the issue of housing costs liability being ‘met’). 

The LA then expedites the DHP assessment in these cases and makes a decision within days (rather than weeks or months)

If requested to review LA also expedites a ‘review’ decision within days.

Depending on the outcome of that process - ie whether DHP awarded and for what period and for what amount -  the claimant can consider whether or not to ask DWP cancel their MTLP, consulting with an experienced independent adviser (and the work coach if they feel this would also be useful).

We have no cases of this nature here at this moment so cant take it any further with our LAs

DWP has completely failed to reflect any of this in the actual DHP Guidance Manual which they only updated this month.  Indeed para 3.18 states -

“If you are already paying HB to the landlord and later award a DHP, it may be appropriate to advise the landlord that the DHP is also being paid directly to them. This may equally apply where a person is receiving UC and some of that award of that is being paid to the landlord in respect of housing costs.”

So….just follow the manual!