I work for a Housing Association specialising in Supported Housing. A young woman moved into one of our projects in January this year. At time of move-in, staff were unsure of exact income details, but were told by the resident that she was in receipt of maternity pay of around £400 per month. Therefore, this was stated on the HB application.

A subsequent letter was sent to the resident by the LA requesting proof of income. Bank statements were sent to the LA and subsequently full HB was awarded from the move-in date.

It was discovered in April that the resident had been in receipt of tax credits since January, therefore a 'change of circs' HB app was completed. A request was received from the LA in June for details of tax credits. Written proof of these were sent at the end of June.

As a result, the HB award was substantially reduced backdated to January, creating an overpayment of around £1400 on the account. An HB appeal was turned down. It looks like the resident may have withheld information on tax credit payments so we did not take the appeal any further. Subsequent HB payments to the HA have been reduced by £8.40 per week.

My worry is that, should the resident move out, the LA would invoice the HA for the overpayment leaving us out of pocket by around £1000. I wrote to the LA and have received a statement from the LA that ‘deductions would be made from her future HB entitlement (rather than invoicing the HA) provided that the new address is within the LA area’.

Are they within their rights to claim the overpaid HB from the HA if the resident moves out of area, or should the debt follow the resident wherever she moves to?

Additionally, I am informed that the resident may apply for bankruptcy in the near future – would this cancel the outstanding debt if the bankruptcy application were successful?

Any views much appreciated!!

Thanks

Not certain from your post if;
a) the overpayment is currently being recovered from your tenant from deductions in her HB which just happen to be paid to you direct, or

b) the overpayment is being recovered from you through what is known as the blameless tenant rules.

If a) then if the tenant moves out of the area the LA should invoice the tenant direct. Also, once bankruptcy is discharged any overpayment would also be discharged.

If b) then if the tenant moves out of the area the LA will invoice you for the overpayment. In this case, the debt is yours not the tenants and her bankruptcy will have no effect on the debt.

Thanks.

I think it falls into category a). I'm not very familiar with blameless tenant rules.

The tenant is still with us and the overpayment relates to her. The HA are paid directly by the LA and in this case the £8.40/wk deductions are being made from HB payments for this specific resident, rather than from any other tenant payments.

I guess this is good news for the HA! One concern - I have read in Chris Smith's book that in the majority of cases the LA can invoice the landlord if they want to, the only exception being if the landlord has 'notified the council that an overpayment is suspected'. Is this not the case?

Cheers

To add to jmembery's post and in response to your 2nd post, an LA can make a new decision as to the target for recovery - that would carry appeal rights.

However, even though the appeal rights are restricted to Judicial Review grounds in "target" decisions, the LA will have to go some to show why it was reasonable to seek recovery from the clmt before, but not now.....! My advice would be to appeal against a new "target" decision.

A bit of duplication here, but necessary. As for bankrupcty, o/paid HB can still be recovered up until the point at which the person is discharged from that bankruptcy (R v Birmingham CC ex p Steele).

HOWEVER, the "Steele" decision is being appealed by the Secretary of State (&/or the LA?) and, last I knew, is due to be heard in December this year. The issue is to confirm if overpayment recovery stops after the discharge from bankruptcy, or if it should continue even after discharge from bankruptcy.

Hope the above helps.

Regards

re steele ... yes, DWP are appealing against the decision and it is due to be heard in December 2005

(see rightsnet news 9 September 2005)

To add to Kevin D’s post. If the LA is so sneaky as to change recovery target I would not only appeal against the target of recovery, but also the fact, the amount etc.

If you were successful the LA would have to re-pay to the claimant any monies already recovered. The threat of this alone might persuade then it was not in their best interests to change the recovery target to you.

i dont have info at hand but i have a suspicion that i once read that in the event of a HB overpayment being entered into a bankruptcy petition, even after discharge should the bankrupt person have an ongoing claim for HB, or make a new claim after being discharged, then recovery of the overpayment can be put back into operation.

Johnny,

That was exactly what the Steele decision stopped. Now, the DWP are appealing to get it back to where it was.

Regards