Housing Benefit - Treatment of Overpayments

Treatment of Overpayments

The local authority can deduct overpayment debts from ongoing entitlement to housing benefit. As of April 2010, this rate is a maximum of £9.90 per week, plus half of any 'earned income disregard' which applies to the claimant's income. In addition, a local authority can increase deductions by half (50%) of certain disregards, if applicable for earnings regular charitable income or voluntary payments War Disablement Pension or War Widows Pension

This means that the maximum standard deduction from April 2010 could be £22.40 per week, if an earned income disregard of £25.00 would normally apply. The only exception to this is in overpayments where the claimant has been convicted or has admitted to fraud, at which point the overpayment can be recovered at a maximum of £13.20 per week plus half the earned income disregard. However, the recovery amount may be reduced at the Local Authority's discretion if the claimant is suffering hardship.

The recovery amount from ongoing entitlement is affected by the amount of weekly normal entitlement. The minimum housing benefit that can be paid, regardless of overpayment recovery, is 50p per week. For example, if the entitlement is £7.50 and the overpayment recovery level is £9.90, the claimant will receive 50p every week until recovery is complete with £7.00 going towards the overpayment.

If the claimant is no longer entitled to housing benefit, the local authority can also send the claimant an invoice for the balance. If the claimant does not pay, the local authority has roughly the same legal means to recover it as other unsecured creditors, such as credit cards and utilities. Unlike council tax debts, the tenant cannot be put in prison for non-fraudulent overpayments. The Council does have the ability to use an accelerated County Court process for the recovery of overpayments.

A council may also seek to recover Housing Benefit overpayments from other Social Security Benefits or Housing Benefit payments made by other Local Authorities.

If the housing benefit was paid directly to the landlord, and the landlord is expected to have been aware of the overpayment (such as failure to disclose ineligible service charges, benefit exceeding the actual rent, and benefit paid past termination of tenancy or tenant's death), the local authority can hold the landlord liable for the overpayment either instead of or in addition to the claimant.

Housing Benefit overpayments may also be deducted from Housing Benefit paid to another tenant of the same landlord. (Blameless Tenant Recovery). The law requires that the Landlord treats any deduction made against the innocent party as not having been made.

For council tenants, overpayments may only be posted to a rent account where the Council is able to separately identify re-payments of overpaid benefit to payments of rent. In practice, due to system design and internal procedures, Local Authorities generally post to Rent Accounts only at the end of a tenancy and or where there is a credit on the rent account.