Tuesday, 02 September 2014

Rent of decanted tenants still being counted as rent arrears

Posted in: Need to Know | Ask the Experts

30/10/2011 10:26 pm

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Anonymous

Anonymous

31/10/2011 7:34 am

From a landlord point of view there is no certainity that your insurance is going to pay out, therefore you need to be making some sort of contribution towards your arrears on the fire damaged property. I am slightly confused why you are still paying rent on a property which you have been decanted from, are your private renting or in social housing?

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31/10/2011 1:46 pm

nonny - re-read the post. I know we are used to tenants asking questions in ask the experts but this is a housing professional asking for advice on how to remove a decanted property from the arrears records.

Ian - the decanted property should be listed as void and therefore appear in the rent loss through voids stats rather than your arrears stats. After all it is a void and will be for some considerable amount of time.

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Rick Campbell

Rick Campbell

Location: Macclesfield CHESHIRE
Posts: 424

31/10/2011 3:27 pm

Is it not the case that the fire damaged flat remains the 'live tenancy' whilst, technically rhe flat the tenant was decanted into is the 'void tenancy'?

This being the case then, the situation regarding the 'live tenanct' does not alter in respect of it reappearing on the list?

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Spellbinder

Spellbinder

Posts: 11

31/10/2011 4:40 pm

Ask your line manager.  You need an adjustment to show nil rent. 

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01/11/2011 1:26 pm

Hi Rick

No the live tenancy is the property the person is currently living in, I believe that the decison for that is because it is something to do with housing benefit and the tenant only being able to claim for the property that they currently reside in.

A number of decanted tenants in my experience choose not to return to their previous property and therefore it is more appropriate anyway to void the property that is damaged.

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Pele Pele

Pele Pele

Posts: 6

01/11/2011 3:22 pm

As far as I know, a decanted tenant can not refuse to return to their property, that is, if you've done the paperwork correctly.

When you decanted them, did you offer them a new tenancy?  You shouldn't have done so.  You should ensure no rent is charged on the new property.  They should remain the legal tenant of the fire damaged property, with an intention to return, which is sufficient for Housing Benefit to pay on that rent account.

The void into which you have moved them should not have any rent charged.  If you do this, you are creating a tenancy, and they can not be reasonably asked to leave it to return to their former home.

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Spellbinder

Spellbinder

Posts: 11

02/11/2011 12:38 pm

Why on earth would HB pay for a property that isn't being occupied and isn't fit to live in?

You should levy a use and occupation charge for the property they are decanted into, equivalent to the rent for their original property.   This doesn't create a new tenancy and is eligible for HB.  You should adjust the original rent account. 

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Pele Pele

Pele Pele

Posts: 6

02/11/2011 12:53 pm

Spellbinder - forgive me if I'm wrong, but HB will pay if there is an intention to return, which there clearly is.

My understanding is that a tenancy is formed if three vital ingredients can be found.  Rent or any other charge, a period (so if charges are made with regularity this would apply) and a piece of land with exclusivity of use (the property).  This would form a tenancy wouldn't it?

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Spellbinder

Spellbinder

Posts: 11

02/11/2011 1:32 pm

You're charging them for a property that they cannot occupy because of its condition: that isn't not reasonable. They should be charged and receive HB for the decant property.

A tenancy also requires "an intention" for it to be created. 

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Derren Cooper

Derren Cooper

Posts: 56

03/11/2011 3:08 am

Most councils and housing associations will have different types of voids, and it all depends on which software you're using on how you manage it for your reports.

While the tenant is decanted they are still linked to their original tenancy, so you may need to create a weekly "decant" rebate on their charges in the new property if the rent is higher, and this should be reflected in the HB collected as well (depending on service charges and whether they are rebateable, you may need to make two separate rebates per week)

The original property is then voided as a "repairs void" so that you're able to budget for this correctly.  I'm not sure what the insurance will pay out on, but remember that you are receiving rent for one property as opposed to two, so you have that rent loss to factor in.

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Mike Wilkins

Mike Wilkins

Posts: 45

15/11/2011 11:58 am


I would suggest that the way to treat this is to re classify the fire damaged propoerty as a 'management void', so this would fall into the
same category as properties which are undergoing major repairs or in a major works programme or similar. If this is not something that you
have come across thenit would be worth checking with colleagues or your boss  - it might be that this would usefully apply to other
properties that you manage. One definition of a 'management void' might be a void that for some reason, falls outside the normal re-let
arrangememts or is void because you want, or have to, do some work that necessitates it being empty for longer than normal.
Whether you can eliminate the rent due on the fire damaged prpoerty I would doubt, it will still rack up a charge until it is re let, but
at least it will not count against your performance, as the matter is in the hands of the insurers. It would be sensible to check that
the insurance money, when it is recieved, is in two pots, first the cost of the capital works and second, the lost rent and service charge
income.You might also want to think about whether to re let the damaged flat to another tenant, once the works are complete, and leave the
decanted tenants in place. This is up to you and a lot more information required before I could comment, but, a one way move only
might suit you and the tenant. If they are moving back, then check that the legal position is tied up and their occupation of the decant
house or flat is a temporary one.

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TC

TC

Posts: 22

15/11/2011 4:00 pm

It's amazing reading this thread just how varied approaches to this relatively simply situation are.

Firstly, a tenancy continues until it is terminated; therefore, the concept of 'voiding' the property or moving the tenancy to another property is not appropriate.  A tenant can hold more than one tenancy, it is usually the organisation's IT system that prevents this from happening for various reasons.

What should happen is that the tenancy of the original property is left to continue, albeit no rent should be charged to the tenant while the property is uninhabitable and they reside elsewhere.  For accounting purposes, you either zero the rent charge and submit the total amount of rent lost as part of the final insurance claim submission, or, you transfer money from a budget to cover the rent then replenish that budget with the settlement amount.

The tenants should be given a licence to occupy the decant property, with that a condition that once they are notified that the original property is available to return to, they do so.  Failure would result in the termination of the licence, and as their tenancy remains available to them they won't fall into a homelessness situation.

If you grant a tenancy of the decant property then you run the risk of their occupation having greater security than you intend, and if you end the original tenancy, on what basis do you do that without a surrender or NTQ?

Just more food for thought on what has been an interesting thread.

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Shaun Aldis

Shaun Aldis

Posts: 26

16/11/2011 10:11 am

When we decant tenants due to fire damage their original secure tenancy is usually maintained. The rental liability and rent payments continue on their original tenancy and any housing benefit entitlement also applies to that tenancy.

Where a temporary decant is arranged to another council tenancy this is on a licence arrangement. We wouldn't create a tenancy and rent liability at the decant property (unless the tenants are decanted to a non council property). The decant property remains void, and rent loss on the decant could be part of the insurance claim.

If the decant property is a non Council tenancy it is quite reasonable for the landlord thereof to expect payment in which case arrears would accrue on the original secure tenancy similarly to the circumstances you have described. We would suggest a book keeping entry to move the arrears of the secure tenancy into a suspense account pending settlement from insurers.

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Adrian Waite

Adrian Waite

Posts: 28

23/11/2011 12:54 pm

I would have thought that the decanted house should be treated as a live tenancy and the fire damaged house as a void. The cost of the untenanted fire damaged house would therefore show in the accounts as a void loss rather than rent arrears. The insurance claim would presumably include a claim for rent lost because of the void.

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Anonymous

Anonymous

23/11/2011 1:44 pm

Technically you need to have to live tenancies - the costs which are being incurred in the decantproperty should be journalled onto the control account for the insurance claim as these are eligible to be claimed back from the insurer - the costs for teh original property are then treated as would be the normal rent debit.

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