I’ve read on a forum tonight that a landlord in receipt of local housing allowance on behalf of one of his tenants has just had to pay back over 10k in rental payments to the council due to a claw back. Claw back may have dropped off since the move from housing benefit the LHA, but its obviously still a threat to landlords.
In the instance I read of tonight, the council paid the landlord directly as the tenant was considered vulnerable, but the council mis-calculated the tenants entitlement and over paid the landlord. After more than 12 months of mis-calculated rent payments the council say the tenants local housing allowance was over paid by more than 70% and requested the landlord to pay it back as he received the money directly from the council. The landlord had no choice but to pay.
A word of warning to all landlords that seek direct payments from the council for their local housing allowance tenants:
The council will claw back the money from whomever they have paid it to. In the above case the landlord was liable for repaying the rent as he received payments direct from the council, in the instance that the council had been paying the tenant then the tenant would have been liable to pay the claw back and not the landlord.
All the landlords that think its a brilliant idea for the rent to be paid to them directly by the council may want to consider this.
Claw back can also go back several years, so be cautious of your tenants circumstances if you are receiving rent payments direct from the council. Ensure they provide you with confirmation on a regular basis that they are still entitled to benefits.
They will receive regular statements confirming their benefit awards which you should ask to see when received.
There are insurances available for both working tenants and LHA tenants.