Rates arrears in temporary homeless accommodation

The question of liability for rates in rental properties continues to be a major concern to our tenants.  Sarah Corrigan, Housing Adviser, discusses a recent case where this issue raised its head for a vulnerable, homeless single mother living in temporary accommodation arranged by the Northern Ireland Housing Executive.

Rates arrears in temporary emergency housing

My client, Fathima, is currently a secure NIHE tenant. Before being allocated this property, Fathima spent five years living in a single let, private housing leased by NIHE from private landlords and used as temporary accommodation to accommodate households to whom the Housing Executive owes a statutory duty.  

Fathima contacted Housing Rights last summer after receiving a court summons relating to an unpaid rates bill of almost £6,000.  The bill related to rates charges on the single-let.  Although she is currently working, Fathima had been in receipt of full Housing Benefit while living in this accommodation.  She did not understand why she had received this court summons.  She told me that she’d received a few letters from Land & Property Services, the agency responsible for collecting rates payments, while living in the single-let and had brought these to the Housing Executive.  Staff at the Housing Executive had assured Fathima that she shouldn’t concern herself with these letters as she was receiving full Housing Benefit.  Fathima accepted this, but continued to forward any letters received from LPS to the Housing Executive.

Fathima originally came to Northern Ireland as an asylum seeker and was granted refugee status seven years ago.  She and her teenage daughter are scheduled to take their citizenship exams in October and Fathima was concerned that any legal action against her could jeopardise her status in the country.

Legal position relating to rates in private tenancies

Unfortunately, this scenario is a frequent occurrence. As discussed before on this site, LPS’s recovery procedures dictate that liability for unpaid rates will be determined by legislation, regardless of what the tenancy agreement may say.

Article 20 of the Rates (NI) Order 1977 holds that the capital value of the property determines who is legally responsible for rates and this legal liability dictates who LPS can pursue for the debt.  A tenant may have signed an agreement stating that the rent includes an amount for rates, but can end up being asked to pay rates again if the landlord has not passed on this payment to the landlord and the law makes the tenant liable for this charge. In cases of this nature, it is often the situation that the tenant has paid the full amount of rates due to the landlord and the landlord has not forwarded this money onto the LPS.

Housing Rights has raised this issue with LPS on a number of occasions as this practice seems to unfairly punish tenants who have adhered to the terms of their tenancy agreement. LPS has agreed that legal action to recover the debt will be postponed in such cases if

• the tenant can show that rates were already paid as part of the contractual rent and
• the tenant is taking legal action to recover the monies already paid towards the rates account from the landlord.

Fathima’s case was further complicated by the fact that the tenancy in question had been secured by NIHE in discharge of its duties under the Housing (NI) Order 88.

Investigation and casework

My investigations confirmed that Fathima had received full Housing Benefit towards her housing costs, including rates. As she had been living in a single let, the difference between the maximum Local Housing Allowance rate payable and the rent charged by the landlord was met by the Housing Executive’s homeless fund and no arrears were outstanding.

I confirmed that a member of staff at the Housing Executive had helped Fathima complete her Housing Benefit application form. The Housing Benefit application form allows applicants to choose whether rates payments will go to LPS or to the landlord. Fathima’s form asked that rates payments were to go to the landlord, and not directly to LPS. The Housing Executive had information on its systems to show that the property Fathima would be living in had a capital value of £180K and therefore, pursuant to Article 20 of the Rates (NI) Order 1977, she would have a liability for rates if the landlord neglected to pass the money to LPS.  

As NIHE had all the information available to them relating to liability for rates, it seemed an unfortunate oversight not to have indicated on the application form that rates payments should go directly to LPS and this oversight had led to Fathima’s current predicament.

Arguing on Fathima’s behalf

My arguments were based on the Housing Executive’s failure to ensure that the accommodation was suitable for Fathima. NIHE is a public body and provided this temporary accommodation to satisfy a statutory duty and must, therefore, ensure that this accommodation is suitable for the tenant and this extends to managing the tenancy.

Fathima had brought the arrears issue to the Housing Executive’s attention in the early stages of this tenancy when she brought the letters from LPS to her local office.  At this stage, NIHE officers should have investigated this issue to establish why LPS was issuing demands if rates were being covered in full by Housing Benefit.  

As a public body administering public funds, the Housing Executive also has a responsibility to ensure that the payment of housing benefit is being managed appropriately.

LPS agreed to write off the debt, acknowledging the points made in my submissions on Fathima’s behalf.

Further work required to ensure this issue does not recur

Upon investigation, it was discovered that the Housing Executive does not place stipulations on the landlords of single lets, as to how to manage the property.  Housing Rights has recommended that the Housing Executive operate a system whereby rates payments are automatically made to LPS when they are paid by Housing Benefit and should carry out periodic checks to ensure that applications for Housing Benefit which include an element towards rates are processed correctly.

Housing Rights is in the process of trying to achieve a change of practice with NIHE in relation to the management of their single let stock. This is a unique problem for temporary accommodation sourced from private landlords and does not occur in homeless hostels.

Housing Rights is also continuing to challenge LPS recovery procedures and we have made our position clear in the most recent review of rating liability for landlords and tenants.

Learning points for advisers

Advisers should ensure that they can adequately advise a tenant about rates liability. It is vital for tenants to have clarity over their responsibilities to pay rates before they move in to the property and tenants should ask that the tenancy agreement be amended to reflect the legal position during pre-tenancy negotiations.

Advisers who are helping a client to complete a Housing Benefit application form should understand how to complete the section relating to payment of rent and rates.  Tenants can choose that any rates payments go directly to LPS, but should get the landlord’s written consent for this arrangement to protect themselves from any dispute.

Where a landlord has refused permission to have the rates paid directly to LPS and the tenant is legally responsible because the capital value of the property is more than £150,000 tenants should periodically check with LPS to ensure that the rates are being paid.  

When advising a homeless person who is temporarily residing in a single let, advisers should speak with NIHE to ensure that Housing Benefit payments are being monitored by NIHE and may also want to speak with LPS to ensure the rates account is up to date.