Local Housing Allowance: am I guilty of fraud?

[cobwebivy]

Recently I visited the local offices of the Shelter charity looking for advice re: my rights as a private tenant. They told me that my claim for Local Housing Allowance may be fraudulent and if the local council found out I would have to pay all the money back. (They say they don't know, for sure, if this is true because their senior benefits adviser is on annual leave.) I will explain my situation further:

 

I was divorced from my ex-husband in March 2009. In January 2009 I moved into a small 3 bed terrace house with a private landlord, under an Assured Shorthold Tenancy. As part of the divorce settlement, my ex-husband paid 1 year's rent in advance - as agreed with my solicitor.

(I could not have rented this property without an advance payment because I had to rely on benefits for income and the landlord would not accept DSS tenants without 12 month's advance payment and a guarantor.)

 

I was, and still am, unable to work because of a mental health problem. My sole income is state benefits I receive Incapacity Benefit and Disability Living Allowance. When I moved into the house, my Community Psychiatric Nurse (CPN) encouraged me to make a claim for Local Housing Allowance (LHA) straight away. (He knew I had had a year's rent paid in advance.) Although I am now a single person, I rented the 3-bed house so that my 2 children could stay with me for part of the week.

 

The property I am renting is £575 per calendar month but the LHA only covers £450 per calendar month. This leaves a difference of £125 to make up somehow. However, as the rent has been paid for a year by my ex, I have been saving the LHA in a building society account. My CPN advised me that I could use this money to make up the 'shortfall' in LHA and pay the rent on this property for another 3 years. (This was assuming my circumstances did not change and the landlord allowed me to stay in the same property and pay monthly.)

 

My problem started in November when the letting agents told me the landlord 'mentioned a few months ago' that he wanted 6 - 12 months payment in advance again if I was to renew the tenancy agreement. I pannicked and said I could not afford this - I could only afford to pay monthly. They asked the landlord but he refused to let me do this. Therefore, I informed them I would vacate the property on 15 January 2010 (when my tenacy agreement expires).

 

I looked for another property but all private landlords seemed not to accept DSS tenants ('no pets - no DSS' on all property details). Eventually, about 2 weeks ago, I found another small 3 bed terrace house with a letting agent who accepts DSS tenants with a guarantor. (I have spent the last 2 weeks begging, and reassuring, my father to be a guarantor for me. This has been difficult because he is staying with family abroad until early February 2010.) This property is £550 per calendar month - but I thought I could make up the £100 shortfall with the LHA I had saved, whilst continuing to receive LHA - not being aware, not having been told there might be a problem with this by the Local Authority Housing Benefits department.

 

All this has been extremely stressful - and I thought I had better find out more about a tenant's rights in order to avoid further trouble in the new property I had hoped to move into. I went to the Shelter (advice for homeless) charity and had to show evidence of income in order to receive advice. Immediately, they said they were not sure if I should have been receiving the LHA if I had had my rent already paid (for 1 year by my ex-husband. But then, they said maybe it would be OK because the rent was paid direct to the landlord, by my ex, and not into my bank account (I never received the money myself). I left them a copy of the letter stating the Local Council's decision to pay me LHA.

 

I was left worrying for a week while they (Shelter) consulted other members of staff - and I was called in to see them 23/12/09. They said they were still not sure (their senior benefits adviser was not there) but they still said there could be a possible fraud charge if the Local Council found out. They (Shelter) said they would not tell the Council but the Council may still find out. They said I could be made to pay all the money back, which would mean I could not afford the property I have arranged to move to. (I have had to place a £400 holding fee on this property, money I will lose if I pull out of the deal). Shelter were telling me to 'apply as homeless' (and that I had 'lost my £400'). This would mean going into temporary accommodation because there is a shortage of council/ housing association property in my area. This would mean bed & breakfast or hostel type accommodation. (Even Shelter admitted this was poor accommodation.) This would be likely to be for several weeks - during which time my, already fragile, mental health is likely to get worse. (But Shelter seemed to think this was better than being caught for benefit fraud!) They also told me I had 'lost' my £400 holding fee because I would have to pull out of renting this property. There is no way I can afford to lose £400!

 

Anyway, the advisers at Shelter said they still did not know how to advise me. They said they did not know for sure whether my receipt of the LHA was fraudulent - but there was a risk it could be seen as fraud. (They said that, as the Council had not found a problem with my LHA claim for 12 months, maybe they would still not 'find me out'.) Some of their colleagues had said I should declare the money I had received, other colleagues said I did not need to tell the council. They said they did not know for sure how to advise me and I needed to see a benefits expert. But, they said, there could still be a 'potential for fraud' in my claim.

 

All this has made my situation worse! I am frantic with worry and do not know where to turn for advice. No way was I trying to defraud the Council. All the advice I had, whilst reaching the end of my divorce process, was to start claiming LHA straight away (as soon as I moved into my new address) - or I could have lost benefit (I was told). The Local Council assessed my claim - they saw a copy of my Tenancy Agreement and they know the LHA they pay me does not cover the full rent on this property. They saw copies of my bank statements and saw I had savings of less than £6,000. The divorce process was stressful enough - I thought I was facing homelessness then - and I don't remember whether or not I declared my ex's up-front payment of my rent. (I was the respondent in the divorce - before then, I thought I had a secure home but was forced out of it because of my ex's decision to divorce. I could not stay in the ex-marital home because I could not work and afford to pay the mortgage. There was not enough equity left for me to purchase another home.)

 

Now I feel I am on the 'slippery slope' and sliding into the gutter and cannot stop it. For me, homelessness and moving into a hostel is very much a last resort - I don't think my mental state can take it. (Also, I have a 'house full' of property that will have to be put in a storage facility - more expense.) I fear I will lose touch with my children because of this, they will not like visiting me at hostel if they do not feel safe. When I talk to other people - like Shelter - about this, they do not seem to understand how hurtful is the break-up of a family. I really miss being able to live as a complete family, under the same roof as my children, all the time.

 

I am afraid of having to 'go homeless', afraid of having to live in a hostel, and terrified the Council will prosecute me as a 'benefit thief'. Has any member been in a similar situation - or can offer advice? It just seems that the agencies that are supposed to help are only making things worse (Shelter can't find me anywhere to live, they are only interested in shoving me in a 'doss house' and labelling me a thief.) All this is too much worry, especially over Christmas and New Year.

 

Sorry this message is so long. I would be very grateful for any comments or advice. Many, many thanks

[postggj]

if the council call you in, and thats a big if

 

be totally honest with them and you should be allright

 

its the deliberate fraudsters they are after

[RaeUK]

Hi hunni. First and foremost I can only give you my general gut feeling from reading your post. When daylight comes no doubt others far better than I will pass this way. [sorry postggi you posted whilst I was writing this!] But I think you were given really bad advice from your CPN.

LHA is Housing Benefit paid to a private landlord. Your rent was paid for a year therefore there was no rent to pay for a year and no reason for an HB claim for a year.

I'm assuming you didn't mention on your claim form that your rent had been paid up front for a year. If you did, fine, no worries. But I don't think you would have received the benefit under those conditions other than by their error.

Personally, I'd be seriously considering making an appointment with the council for a bit of a heart to heart chat. You clearly have a lot of local NHS support and can prove your illness. That should help. You would have to repay the money but your co-operation and honesty will go a long way in your favour. And I wouldn't expect you to have to repay at a higher rate then you can genuinely afford. Remember no-one will be blaming you for taking bad advice. You were doing what you thought was best to get a roof over your head big enough for your children to stay.

I'm sure someone who knows better will comment, but this will not preclude you from claiming again legitimately.

As for LHA, I'm afraid I'm a Housing Association tennant so know little about it. As far as I'm aware they will pay what they think you need. For example, if you are single it will be the equivalant of a one bedroom property. I am sure there must be provisions where you have partial custody of your children and they each need a seperate room. You need to take better advice on this. That there is a shortfall indicates, to me, that they feel you are renting a more expensive property than you need.

Do keep us informed and my best wishes to you.

Rae.

Edited December 31, 2009 by RaeUK
tie poo

[fairclaire]

i totally agree with post ggj. From what i know about LHA it is a means tested benefit, just like the old 'housing benefit'. I'm not sure where the settlement from your ex comes into that?

 

I myself was once 'called in' to undertake a taped interview over housing benefit. it was their fault and not mine as it turned out but it was nerve wracking nevertheless! Postggj is right, they are looking for deliberate fraudsters. If you have claimed in all good faith (and you don't even know yet that that's wrong). If (and it is a big if) they question you, tell the truth. you acted on advice given to you in good faith.

 

And please don't be embarassed to tell them of whatever problems you are experiencing if it does go that far. I think you will be ok on this, although I appreciate it won't make you worry any less. You haven't done anything wrong here.

 

let us know how you get on. And try have a good new year x

[honeybee13]

Guys, is it worth the OP contacting the CAB?

 

Happy New Year to everyone and good luck cobwebivy

[Emma1973]

Hi cobweviy

 

Hopefully you should see the Senior Advisor soon and they will tell you there is nothing to worry about.

Claiming HB is dependent on having a liability to pay rent, which you obviously do, the fact that the liability has already been met in advance should not stop you claiming.

As long as you have a proper commercial tenancy and satisfy all the other grounds for claiming HB, i.e income,etc, theres nothing to stop you claiming or receiving it!