Local Housing Authority Payments.

Problem:

· The tenancy agreement usually states that the rent is due monthly and payable in advance

· Most LHAs pay 4 weekly in arrears

Remember:

· The rent is “due” when the tenancy agreement says it is due

o You may not expect payment till sometime later – but Rentman generates rent dues and tracks outstanding rent according to the terms of the agreement (this will be important if you go to court or issue a section 21 notice)

· Rentman also provides a parallel mechanism to track and flag overdue payments from the LHA according to their amount and payment period.

So we must track 4 different numbers:

1. The rent “due" as agreed in the contract

· This is a fixed amount and becomes due whenever the agreement says (e.g. first of the month)

· This is the amount a court would want to know and these dates dictate when Section 21 notices can be issued

2. The “LHA expected" amount

· This is what the LHA have decided they will pay on a date that suits them.

3. The “Top-Up amount due”

· This is the difference between these two amounts calculated for each month and so the amount the tenant him/herself is required to pay; it is the amount you would be required to take to court.

· Rentman will calculate the top up amount due as the agreed monthly rent less the amount expected in the month from the LHA.

· Because LHAs operate on weekly cycles that calculation will involve a daily rate and will change from month to month.

· A varying top up amount, whilst being legally correct is not convenient for standing orders, which leads us to number 4

4. The “Top-Up expected amount”

· This is the amount you expect to collect from the tenant. See Appendix 2

Remember… when Rentman (and this document) refers to rent “due” it means the rent due as per the tenancy agreement; “due” has a legal meaning and is defined by the agreement. The rent (and the date it is to be received) from the LHA is referred to as “expected”. The same applies to the tenant’s top up payments.

Setting up LHA and “Top-Up” Amounts on Rentman:

The “due” (#1) amounts are calculated from the information you already entered on the deal screen. But Rentman needs more information to generate the expected amounts; you enter that information for each tenant as follows.

Go to the tenant tab of the deal screen and select LHA under the tenant’s name.

(We set this up on the tenant tab for each tenant because in any one tenancy we must allow for any combination of LHA and non-LHA tenants)

Tick the LHA checkbox and the other options become enabled.

Click on the Add button alongside the LHA amount grid to enter in the amount expected from the LHA (#2) and the date the LHA will begin paying this amount.

If the LHA amount (#2) is less than the agreed rent (#1), the tenant will be required to pay a top up amount (#3).

Remember: Rentman will calculate the top up amount due as the agreed monthly rent less the amount expected in the month from the LHA. Because LHAs operate on weekly cycles that calculation will involve a daily rate and will change from month to month. A variable top up amount whilst being legally correct is not convenient for standing orders so …..

Rentman enables you to enter an expected top up amount (#4) in much the same way as you enter the LHA amount.

Note: With some local authorities the amount being paid may change over time according to the tenant’s status. Use the Add button again to enter the date the new amount becomes effective. Rentman can then keep calculating the LHA’s expected amount.

It is likely you will have to add new top up amounts and effective dates whenever the LHA amount is changed.

Save the changes for each tenant on LHA then, go over to the rent tab of the deal screen.

Under “Rent Outstanding” Rentman shows…

· The total rent due outstanding.

· The “from L.H.A.” figure is the LHA portion of that total outstanding due (based on the expected amount - see below).

· The “from Tenants” figure is the amount the tenants are “due” to top up.

Under Expected Amounts Rentman shows…

· The LHA overdue amount is the sum of LHA expected amounts less what has been received from the LHA for all LHA affected tenants.

· The “Overdue from tenants” is the sum of Top-Up “expected” amounts for tenants less what has been received from tenants. See Appendix 3

Click the LHA schedule button to see the LHA rent expected and received (#2). Options to show the Top-Up amounts (#3 and #4) as well.

When rent is received from the LHA you need to mark it as such on the rent received screen (DSS and LHA are synonymous). You must also select which tenant the rent is for using the tenant dropdown.

If you enter a different amount than expected from the LHA Rentman will prompt you to make this the new LHA amount effective immediately.

Top up rent from the tenants is entered using the same screen but specify bank transfer, cash etc. in the normal way.

Because the tenants are “jointly and severally” liable for the top up amount you do not need to enter the specific tenant for these non-LHA amounts – but it is required if you are tracking each tenant’s top up payments.

On the main Rentman desktop we have two items indicating rent outstanding and LHA rent outstanding.

The LHA rent overdue shows each tenant for whom an LHA payment is overdue with the actual amount expected from the LHA and when it was expected.

The other (not LHA) rent overdue list shows the amounts owed by the tenants using the “expected” amount (#4). This list shows the “deals” because the tenants are jointly and severally liable.

The building screen summary will show both the LHA amount overdue and the expected amount outstanding from tenants.

Appendix 1 - LHA portion calculations

If the tenancy is to be paid monthly and the LHA pays four weekly Rentman multiplies the LHA amount by 13 and then divides by 12.

If the tenancy is to be paid monthly and the LHA pays fortnightly Rentman multiplies the LHA amount by 26 and then divides by 12.

If the tenancy is to be paid weekly and the LHA pays four weekly Rentman divides the LHA amount by 4.

If the tenancy is to be paid weekly and the LHA pays fortnightly Rentman divides the LHA amount by 2.

If the tenancy is to be paid weekly and the LHA pays monthly Rentman multiplies the LHA amount by 12 and divides by 52.14.

So if we have a tenancy with £1000 due monthly and an LHA amount of £500 being paid four weekly - we multiply the 500 by 13 and divide the result by 12 giving us an LHA portion of the monthly rent at £541.67. The tenant’s top up amount due will be £458.33 (1000 - 541.67).

The LHA portions for each tenant are added together to give an LHA portion for the tenancy as a whole.

Appendix 2 – End of Tenancy Top Up amount expected

At the end of the tenancy Rentman must calculate an expected amount that brings the tenant to the amount that is/was legally due:

(Total of rent due (#1) for the entire tenancy divided by the number of tenants on the tenancy)

less

(the total LHA expected amounts (#2) for this tenant during the tenancy plus the total TopUp expected (#4) for this tenant during the tenancy)

Note this is calculated for the entire tenancy not just the most recent term.

Appendix 3 – LHA and non-LHA tenants on the same deal.

The expected amount overdue gets a little complicated if you have LHA tenants and non-LHA tenants on the same deal. Rentman calculates as follows:

Calculate the total sum of rent due for the deal (#1). Divide that by the total number of tenants and multiply by the number of non-LHA tenants. That gives us the amount due from the non-LHA tenants. Add to that the total amount expected from the LHA tenants. And then subtract all rent received from any of the tenants.

Implicit in this is that, at least as far as you and the landlord are concerned, the tenants pay an equal share; and that the tenants are “jointly and severally liable”.