HB paid to wrong person (landlord instead of resident)

Hi,

Local authority reassessed an HB claim as it had previously been calculated incorrectly. Despite written confirmation from both resident and landlord, backdated HB adjustment was paid to landlord and not the resident.

It’s a substantial amount that has been paid directly to the landlord, it’s roughly £5,000.

Landlord rings HB department to say that they have received this money but it was agreed it would go directly to resident. HB department say just to issue a refund to the resident but then point out if there are ever any further reassessments for the period in question which result in an overpayment, the local authority will seek recovery from the landlord as they were the payee for this period.

Landlord then asks HB department to issue an invoice for the amount so it can be repaid to the local authority who would then reissue it correctly to the resident (as it should have been in the first place). Local authority say they can do this but it will take at least 4 weeks to raise an invoice and then probably at least another 4 weeks before they reissue the payment.

This all seems unfair for the resident, particularly considering the amount involved - personally if I was owed £5,000 I wouldn’t be happy waiting 8 weeks to get my money!

Are there any other options here? I just want to ensure that the resident gets his money as soon as possible but also need to confirm if there is anything to protect the landlord from any overpayment recovery should the situation arise? (don’t think the situation will arise but need to be covered just in case)

Any views/comments, etc as always would be gratefully appreciated.

Cheers

John

Short of complaining and asking for a bit of compensation for inconvenience / stress etc, I don’t think there is ultimately much you can do in practicality.  Perhaps a letter to the LA’s compliance officer / Chief Exec may expedite matters, but I wouldn’t hold your breath.

As an aside, on what basis does the LA “...point out if there are ever any further reassessments for the period in question which result in an overpayment, the local authority will seek recovery from the landlord as they were the payee for this period.”?

If that statement is unqualified and in context, it is outrageous.  Any subsequent overpayment decision will be subject to all the usual caveats as any other overpayment decision.  The LA cannot simply impose some sort of unilateral requirement over and above the law when determining the “target(s)” for recoverable overpayments.

I think you are safe enough to pay the money over to the tenant.

I agree with Kevin that the LA cannot make a decision in advance that a (potential) overpayment is recoverable from anyone, and in any case most overpayments these days are only recoverable from the party that was culpable in causing the overpayment or in the case of official error, the person who could reasonably be expected to realise they were being overpaid.

I can not think of a situation here where there could be a blameless overpayment in the future that would only be recoverable from the payee.

Thanks Kevin and Stainsby for the prompt replies.

I think from what you have both said, it’s pretty safe for the landlord to refund the resident directly, particularly as it’s a past period.

Must admit I was shocked and lost for words with the statement from the LA about what would happen if any overpayment occurred!

Once again, thanks for the responses

John

My understanding is that if a tenant’s rent account is in credit, they can demand that any landlord refund them the excess, which is a problem if there has been a genuine overpayment, so there would be an obligation to refund here.

If the alleged overpayment is caused by misrepresentation or failure to disclose, its only recoverable from the person who misrepresented or failed to disclose the change.

Its therefore possible that such an overpayment may not be recoverable from the landlord in those circumstances

Its the same with official error, those overpayments are only recoverable from the person who could reasonably be expected to realise they were overpaid.

I would argue that the “reasonably expected to realise….etc” test is limited to HBR 100 only.  For the purposes of HBR 101(2)(b), my view is that it’s ACTUAL knowledge that counts - potentially a much easier test for a LL to meet.