ADVISER: Rent rebate for private tenant

Our adviser Severina recently helped a client claim a huge overpayment of rent back from an estate agent.  The client, Lesley, had overpaid her rent account by a sizeable amount during the three years she had lived in her private tenancy.  It can be difficult to reconcile the amount of rent owed with the amount of money paid towards rent.  For this reason, it’s vitally important that tenants keep accurate accounts of all payments they make and get and keep receipts for any cash payments made to their agent or landlord.

Lesley was a private tenant who was in receipt of Housing Benefit.  Like many private tenants in receipt of this benefit, Lesley had to pay an additional amount each month to her landlord to make up the difference between the amount of benefit she received and the amount of rent she was contracted to pay her landlord.

How rent in advance interacts with benefit payments

When Lesley’s tenancy began she paid a month’s rent in advance and a deposit. She lived in the property between 2013 and 2016. Lesley moved into a new property in February 2016 and asked the agent to return both the deposit and the rent in advance to her account.  Lesley was under the impression that both these payments should be returned to her as she had been receiving Housing Benefit from the day she moved in and she had been making up the difference each month in cash.

Generally, rent in advance is not due back to a tenant.  However, tenants in receipt of benefit can, if they are not careful, end up paying their final month’s rent twice.  This is because rent is commonly charged in advance, but Housing Benefit is paid in arrears.  When Lesley moved into the property in January 2013 she paid her first month’s rent in advance, but her first housing benefit payment at the end of that month was also going towards January’s rent.  This meant that the December 2015 Housing Benefit payment on Lesley’s account, and the shortfall payment she made on top of this, were going towards the rent for January 2016.

Understanding and reconciling payment intervals

Severina asked the Housing Executive to supply a payment schedule detailing all the payments made to Lesley’s agent over the last three years.  Luckily, Lesley had kept receipts for all cash payments made to the agent and was able to give these to Severina.   Severina noticed that Lesley’s shortfall payments seemed to be higher than they should have been.  The agent did not seem to have taken note of the fact that Housing Benefit was paid at four weekly, rather than monthly intervals and, as a result of this miscalculation, they were charging Lesley much more each month than she was required to pay.   Severina worked out how much Lesley was contracted to pay over the three year period and reconciled this with the actual payments made.   A closer look at the figures revealed that Lesley had overpaid her rent by over £1000 during a three year period.

Adviser secures rebate for client

Severina wrote to the agents, enclosing evidence of the payments due and those which had been made.  Acknowledging this error, the agents wrote back confirming that they would be issuing Lesley with a cheque for over £1100.  Lesley had originally come to Housing Rights hoping for assistance in getting her £500 rent in advance back.  She was shocked to find out that she’d overpaid her rent, but was thrilled that Housing Rights helped her to get this money back.

Points for advisers

This case demonstrates perfectly how complicated the benefits system can be and how easy it is for someone to make a mistake when trying to work out how much money they have to pay to cover a shortfall.  It is important to work out how much money has been paid towards rent on a monthly basis, as this is generally the frequency used for rent payments in the private sector.  It can be complicated to reconcile this with the four-weekly intervals used for welfare payments, but failing to do this properly could lead to a tenant either under or overpaying their rent.  

Housing Rights is running a course on the private rented sector in August 2016.  This course, The Definitive Guide to Renting Privately in NI, will include a look at how Housing Benefit is calculated and paid to private tenants.