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Housing benefit and landlords - help please!(13 Posts)
No idea if this is the right place so will repost elsewhere in case that's better! We're acting as landlords of my grandmother's old house (she's in care and the rent goes towards her fees). All decisions made by us.
The tenants have just moved out. We're advertising for new ones, without much success. We'd advertised for no benefits, but someone has phoned who says she gets or will get housing benefit - currently living with parents. I need reassurance - or not - that this would be ok.
My concerns are:
It's a 4 bedroomed house. She's a single unemployed mother with three small children. Would housing benefit pay enough? I know
I think "bedroom tax" doesn't apply as not social housing BUT does a similar calculation go to how much HB you are entitled to?
She says they pay in arrears. She seems to think she could get us the deposit and month's rent in advance that we want. Is arrears correct? No way is anyone moving in without deposit and rent.
She says HB can be paid to landlord direct. I've looked and can't see this on internet, is it true? All seems to suggest goes to tenant.
Finally - I seem to recall stories about how if you're a landlord whose tenant is on HB and then found not to be entitled to it, the historic monies paid can be reclaimed from you the landlord and since tenant unlikely to have assets to repay you if you sue them, you're stuffed. Is this true? Does it apply if money goes to tenant who pays you, or only if paid directly?
Any landlord words of wisdom much appreciated. I know benefits doesn't equal bad tenant, but we need to be sure we're using this asset as safely as possible.
Thanks v much (sorry it's so long)
She would be claiming Local Housing Allowance (the equivalent of HB when private renting). It would be paid directly to her, and she would be expected to pay it to you plus any top up she may need to pay. If you check on your local council's website you should be able to see how much LHA she could claim and weigh it up against how much you are charging. If there is a huge difference you have to decide whether it is worth taking the risk.
You will also need to check whether any letter's insurance you have will still be valid, as there can be clauses with regards to tenants on HB. What you state about benefit fraud and clawing overpayments from landlords is true.
Have you considered trying a lettings agent? They do charge a fee but give a lot more security, may have lists of waiting tennants and save you some of the headache.
Renting always carries risks. I guess you have to decide whether this tennant would be worth it. You could ask for a double bond (two months deposit plus first months rent). Most letting agents would recommend this in light of the fact that she cannot provide proof of earned income. Good luck x
Oh and also yes, HB and LHA are usually paid in arrears. But that is no reason for you to be expected to wait a month for rent because all private landlords will expect the first month's rent upfront, as well as a month's rent by way of deposit.
'Finally - I seem to recall stories about how if you're a landlord whose tenant is on HB and then found not to be entitled to it, the historic monies paid can be reclaimed from you the landlord and since tenant unlikely to have assets to repay you if you sue them, you're stuffed. Is this true? Does it apply if money goes to tenant who pays you, or only if paid directly?'
This is sadly true and applies to the LL no matter if they were paid directly or now.
LHA is paid 4 weeks in arrears.
Some councils' websites are set up so that you may enter your postcode, the one for the property in, and details for family size and determine if LHA will cover the entire rent.
As stated, too, your insurance may not cover a tenant in receipt of LHA.
https://lha-direct.voa.gov.uk/search.aspx You can check LHA rates here.
Thank you very much - you're a great help.
I would use a letting agent.
I am not going to say anything about renting to a single mum of three on benefits, as my story is probably unique, but for sure clouding my thoughts on the issue.
But before you go down the letting agent route, check what similar houses are renting for on Rightmove. Call an agent and pretend you are looking to rent a 4 bed house and what the market is like.
It might also be worth posting this under "Property/DIY" as there are a few experienced landlords on there.
Personally, I don't take HB tenants due to issues with payment in arrears & insurance restrictions.
I assume you're advertising as widely as possible?
I believe that HB USED to be paid direct to landlords, but now goes to the tenants so that they can handle their own money. Unfortunately this means that there is no longer the security that the tenant will actually pay the rent (Any more than there is for anyone else).
bad payers may mean that the HB goes direct to the landlord.
see any red flags yet?
HB is indeed paid in arrears. She may be able to get help with deposit and rent in advance.
you need to speak to your insurers to see if they will cover you for an HB tenant.
no, HB does not equal bad tenant but I would have concerns about this one.
I don't rent to those on hb unless they have impeccable references and credit score. I use a letting agent to help me be as secure as possible as covering the mortgage wld be v difficult if there were rent issues, would love to sell but no chance at the minute.. Don't accept any tenant you are not 100% happy with .
I had a tenant on hb, who stopped paying rent, the council said the tenant had to be 3 months in arrears before they would start paying rent direct to me as landlord.... They were under no obligation to pay me the arrears, that was between me and tenant. Not much good, as I had to foot the mortgage so ended up in a mess myself.
Luckily for me, I did not have to go through the process of evicting her. ... She did a runner and left me with a humongous gas and electricity bill to pay. (not to mention that she nearly demolished the house and it cost an insane amount of money to put right. )
Did you know you can advertise on Rightmove through Visum for about £70. You get the emails etc and manage the viewings. They can also do credit checks for £30. I can thoroughly recommend.
Re HB - thing to consider in addition to above - if you want to sell the house in future and give the tenant notice, Shelter advises the HB tenant to not leave as this is considered making yourself voluntarily homeless and in eligible for housing (housing association etc)
For these reasons, I would not rent to anyone claiming HB. It is a real problem for genuine HB tenants though but I can't take the risk.
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