Universal Credit paid Housing Costs to wrong Social Landlord

My clients are a couple who moved from one social landlord to another.  They informed UC on their journal.  However, their Housing Costs continued to be paid to their old landlord for the first three months.  My clients only became aware of it when they were contacted by their landlord saying there were around £1500 arrears.  UC are now paying to the correct landlord, with deductions from client’s benefits for arrears.  Their old landlord has confirmed that their is a credit for the same amount sitting on their old account.  However, they are refusing to pay it to the clients or to their new landlord, on the basis that UC may come back to reclaim it.  I’m trying to decide who actually owes my client money - should I first approach their old landlord as money on their old tenancy account is undoubtedly theirs - or should my approach is to UC - my clients had an entitlement to Housing Costs for 3 months and they have failed to pay them that money,  So far, they have just been fobbed off by everyone - old landlord, new landlord, UC.  What do people feel is the most logical approach?

When the same thing happened to us recently (we were the ex-landlord), we received a debt collection letter (with repayment invoice) from the DWP to say we had to pay them the money back. I spoke to the tenant and confirmed what had gone on. We paid it as requested. This was about a month ago.

The (ex) tenant contacted me last week to ask if I could confirm we had paid it as UC/DWP couldn’t confirm they’d had it and so they wouldn’t pay it on to the new landlord.

I will be calling the (ex) tenant this week to see if there’s anything more we can do - like speak to her new landlord, or go through our DWP liaison officer to see if they can help.

Your client’s landlords should have contacts at UC/DWP and I would encourage your client to contact them both and ask if they can help to get it sorted out that way. And I’d probably start drafting some complaints for when it all goes wrong.

Edit: Adding that my preferred solution would be to get UC to agree that there hasn’t been an overpayment - it’s just gone to the wrong place (assuming the amount is correct). And then get the old landlord to pay it to the new landlord. The more involvement UC/DWP have in it, the longer it’s likely to take to resolve.

That doesn’t sound hopeful at all Timothy! I was hoping there would be some very simple solution, but the general lesson seems to be don’t let UC get hold of the money if at all possible! I will try the two social landlords.

The first landlord has no legal basis to refuse to pay the credit back to your client

There can only ever be an overpayment if a decision is made to that effect and there simply no such decision.

I would give the fist landlord 14 days to pay up and then go to the county court if they dont pay.

Stainsby - 10 November 2022 04:55 PM

The first landlord has no legal basis to refuse to pay the credit back to your client

There can only ever be an overpayment if a decision is made to that effect and there simply no such decision.

I would give the fist landlord 14 days to pay up and then go to the county court if they dont pay.

I would respectfully disagree with this approach. The ex-landlord has received money from UC that they know they should not have received but all they can be certain of is that they shouldn’t have the money - not who the rightful owner is.

I don’t think you could realistically expect to win a money claim in these circumstances without providing proof that the money was mis-paid rather than overpaid. In an ideal world it would be possible to rely on the claimant’s UC payment statement, but unfortunately we know that these can change after the event so do not necessarily reflect what was actually paid. That’s why I would suggest getting confirmation from UC that it wasn’t an OP before refunding it or paying it on to the new landlord (or at least emailing UC and putting a note on the journal to say you’ll treat it as confirmation if they don’t respond). Then I’d expect the ex-landlord to pay up quite quickly (and if they didn’t then maybe think about legal action, although a complaint might be a cheaper and less complicated option).

But I will admit I am approaching this from the point of view of somebody who is on the inside and will take ownership of this sort of issue when it arises - I can imagine there must be landlords where the response would be less helpful.

The righful owner is the claimant

I know the rules for UC are not on all fours with HB, not least because all UC overpayments are legally recoverable,  but that does not make HB case law irrelevant

This case has echoes of the cases before Judge Jacobs in R(H)2/08 and before Judge Turnbull in [2008] UKUT 31 (AAC) CH/765/2008

If UC ever did seek recovery from a landlord of a purported overpayment the landlord would have a right of appeal against that decision and can raise any relevant issue in that appeal including the claimant’s entitlement to that benefit (R(H)3/04, R(H)6/06)

R(H)6/06 is important here because it established that unless a single recoverability decision was made and notified to all parties whom the alleged overpayment was recoverable from, there was no overpayment recoverable from anyone.

Recovery action should not be taken whilst an appeal is pending so the debt collection agency’s letter was to say the least premature.

I’m not really arguing about whether the landlord should be paying the money on to the tenant (or their new landlord) if it was just a mis-payment. But without any evidence the landlord doesn’t know whether it was a mis-payment or an overpayment. And without knowing whether the tenant was entitled to the benefit, they can’t rely on being able to appeal any OP. So that’s why I’d advise them to check it with UC first.

I had a case a couple of months ago where a tenant suddenly found she was about £1,000 in credit on her rent account. She asked for a refund of the balance. But then we noticed that we had been receiving two lots of APA for the past three months. UC had evidently set up another tenant with an APA and put the wrong rent reference on the payment. The money was in her rent account, but we knew it shouldn’t have been there, so should we have paid her the refund regardless?

Coming back to Ruth’s question; she was asking for a “logical approach” and it just seems to me that it makes more sense to be trying to get everybody onside working together rather than going straight for threats of legal action. The client is dealing with two social landlords and the DWP - all of whom can be held to account if you don’t eventually get the right answer. And crucially there shouldn’t be any danger of possession action while it’s being resolved, because of the Pre-Action Protocol.

I may have misinterpreted this but if the payments were made straight to the landlord then any overpayment can be recovered from the claimant or the landlord and as the claimant has not failed to disclose something then it may be that UC would opt for recovery from the landlord?

see https://www.legislation.gov.uk/uksi/2013/384/regulation/4

This seems to parallel the old ‘no fault ’ recovery process in HB which many landlords were very exercised about?

Pete at CAB - 11 November 2022 04:20 PM

I may have misinterpreted this but if the payments were made straight to the landlord then any overpayment can be recovered from the claimant or the landlord and as the claimant has not failed to disclose something then it may be that UC would opt for recovery from the landlord?

see https://www.legislation.gov.uk/uksi/2013/384/regulation/4

This seems to parallel the old ‘no fault ’ recovery process in HB which many landlords were very exercised about?

The problem with this is that we think it’s probably not an overpayment (it’s a payment that the tenant was entitled to but it was paid to the wrong landlord).

Thanks for all the discussion which is helpful in clarifying some issues for me. I did think of the straightforward approach that the money in the old tenancy account belongs to the tenant, who should simply claim it and pay it to the second landlord.  However, I think Timothy’s points on this are valid, but also, I can see UC getting things half right and suddenly deciding there was an overpayment which they then rreclaim from the tenant.  Although my clients don’t face eviction, they do want to move to somewhere nearer one partner’s work, and they can’t go on our local property pool until their rent account is clear, so it does have an impact on them.  And in the meantime, getting deductions from their monthly benefit to clear the arrears.

My plan at the minute is to try to get both landlords to send a joint letter to UC (or at least to send two separate letters at the same time) whilst I also send one on behalf of the clients copying them in. But it does show a weakness in the system - it must happen frequently enough for there to be a need for a way of dealing with it.

You probably don’t want yet another view on this mess but here’s mine anyway, for what it’s worth.

The Secretary of State has made a UC award, which includes HCE. He has also agreed an alternative payment arrangement, which is to pay the HCE to the claimant’s landlord. He has then failed to make those payments. The claimant is entitled to insist that the payments are now made to the right landlord, and UC cannot refuse to do that.

The fact that everyone knows where the payments actually went is to my mind irrelevant.  Suppose the payments had gone to a fraudulent account, or that UC could not trace where they had gone? The obligation on UC would be the same. If they have so far refused to sort the mess out I would be inclined to send them a pre-action protocol letter threatening judicial review of their failure to pay either the claimant or the correct recipient.

No doubt the DWP accounting system requires them to recover the money before they can pay it out again but frankly that’s their problem, and doesn’t override the clear duty.

I think Reg 9 of the Overpayment Recovery regs is relevant here: https://www.legislation.gov.uk/uksi/2013/384/part/4. This mirrors Reg 104A of the HB Regs.

These regulations work if you accept the premise that the claimant can be overpaid for address A and underpaid for Address B at the same time.  The money paid to landlord A should be seen as an overpayment, recoverable under the normal rules governing overpayment recovery; but that is without prejudice to the claimant’s entitlement to receive UC in respect of Address B for the same period.

A direct offset of A against B is only allowed where UC would be payable to the same person before and after the move, in which case that person has in effect already had the money.

In Ruth’s case, any UC for Address B is clearly not payable to Landlord A, so the direct offset does not apply.  The overpayment for Address A is recoverable from both the claimant and landlord A in accordance with O/P Reg 4(5), which means DWP may choose to recover it from the claimant rather than Landlord A, but subject to the normal monthly limits on deductions and subject also to payment of UC for Address B from the date of the move (minus deductions perhaps).

As far as delay in reporting advantageous changes goes, this could act to limit the amount of the housing element for Address B if it would otherwise have been higher than that for Address A for any AP before the move was reported, but it doesn’t disentitle the claimant to any housing element for Address B at all.