to think my friend is a benefits cheat

[ljwales]

She has several buy to let properties that are all occupied by people in receipt of housing benefit.she regularly monitors the market and if the housing benefit will ever pay any more money for the properties she puts up the rent as she knows the tax payers will pay the increase. She's done this several times over the last few years, even though her costs have fallen massively with the interest rate drops!

This could be the programme a PP mentioned;

www.channel4.com/programmes/britains-benefit-tenants

Almost all troubled tenants that could do with support from the social housing sector, if there was any left. And probably social work support too. Instead they are profit fodder.

The letting agents discussed sanctions as something that happens purely through claimant flakiness.

The LLs seemed perplexed and outraged when their tenants didn't behave like stable, steadily employed people. It didn't seem to occur to them that stable steadily employed people wouldn't choose to live in their get-rich-quick slum investment property.

Miserable viewing.

As people have said above, Housing Benefit rates are set in the bottom third of private rents in the area. The rents I charge privately are around double the HB maximum. When you factor in the fact that HB tenants tend to be more trouble, and that rent is now paid to the tenant rather than direct to the LL making default very likely, it's amazing that any LLs rent to HB tenants. I can't imagine how it could ever be classed as profiteering in that sense.

I do see the wider arguments about the sale of Council houses and whether there should be such a large Buy to Let sector though, but this is the situation we have and I'm not sure you can really blame individual LLs for it.

Your friend is not a benefits cheat. What she is doing may be immoral but it is not illegal.

You also might want to consider if she is the kind of person you want to be friends with if you are so disturbed by her business dealings.

When you factor in the fact that HB tenants tend to be more trouble

That is a stonking great generalisation you are making there cat.

Most HB claimants are employed and no trouble at all.

There is a sub-market, right at the bottom of the market though, that seemingly involves more chaotic tenants than average but then they are the only people who will (have to) endure the very worst housing. And they are clearly extremely profitable or these slum LLs (as distinct from LLs generally) wouldn't build portfolios in that strata of the market.

^stratum

(I need a cute animal thread to cheer myself up now )

HB tenants tend to be more trouble

I'm curious to know what the evidence is for this.

We were on HB and paid every month by standing order without fail. We put in a new kitchen and bathroom (LL paid for the bathroom though I did most of the work - I paid for the entirety of the kitchen). We planted trees and shrubs and painted the front door, replaced light fittings, replaced the back door, which didn't shut properly, and tiled three floors. We didn't break anything in 6 1/2 years. We didn't cause any neighbour issues though we put up with a few.

So thanks for the generalisation.

We need more landlords that accept HB tbh. I work with many people that claim HB as they are genuinely unable to work. It's nigh on impossible for them to get housing for their families as landlords don't accept HB.

She is doing something immoral with the benefits system in mind, and that is clearly wrong. But tbh, I don't think she's doing anything worse than people who have children they can't afford but know they will be bailed out by the benefits system, or than people who don't work or who work fewer hours than they could I because the benefits system props them up.

As with all these situations, you can't really blame the individuals involved if the state systems are set up to allow them to do these things.

If we're going to have a benefits system that is available to be used by so many people, then it will get taken advantage of. Your friend is just taking advantage in a more original way than most. And it's worth remembering that she isn't the one who is claiming all this housing benefit.

Blame the government for allowing this industry to exist in its current format.

Ban lls who say they won't take hb.
Regulate and inspect lls and letting agents.
Have penalties for illegal eviction.
Have minimum standards for repairs and the condition of properties allowed to be let out.
Build social rented homes!

Arsenic no, you're right. I'm thinking of the 'sub market' you referred to, where people tend to have problems and live chaotic lives.

The problem for landlords is really the fact that HB is now paid direct to tenants. If people are receiving HB then, by defnition, money is short, so it's not surprising that when people are desperate they will be tempted to use the money that should be for rent for something else. I think this is now the main stumbling block for LLs considering renting to HB tenants.

Im not sure what she is doing that is so wrong she lets flats to people on housing benefit around here a lot dont so they have a place to stay she puts her rents up slightly she earns money she is a business not a charity

If she is as scummy as you say she is why the hell is she your friend

If the government was going to ban LLs that won't accept HB, then it would also have to provide some kind of insurance scheme for LLs who only don't accept HB because mortgage companies and insurance companies can prove that statistically they are higher risk, and therefore charge higher premiums for them.

There should be well enforced minimum standards for rental properties, and I can see the benefits to society of not allowing landlords to refuse HB claimants, but for that to be fair, you also have to give landlords some state protection and prevent them from being in a position where they have to pay out large sums of money to evict non paying or damaging tenants, and help them to recover unnecessary costs that come from bad tenants.

Energy companies have their profits capped, same should be for ll.

"I'd like someone to explain how a landlord who only puts the rent up as much as LHA will pay is profiteering, given that to do so they must be charging up to 70% less than other landlords in the area?"

They're not necessarily charging 70% less. Say there are 100 two-bed houses in an area worth from £500 per month to £800 per month on the open market, LHA would be enough to for someone on HB to afford the 30 cheapest houses, for example, £600 per month.
If OP's friend owns the cheapest house which would be worth £500 per month privately, she's instead renting it out for £600 per month to those on HB because that's the maximum that the government will pay.

She is doing something immoral with the benefits system in mind, and that is clearly wrong.

this is an obvious consequence of having housing benefit - they are trying to solve a housing shortage problem by giving people money, which of course doesn't increase the house supply.

I don't get what's immoral about this. Your friend is not a charity. She is a landlord getting the best price for her place. I don't understand how she could be teetering on losing her business if interest rates rise, and simultaneously be told that she should charge less than she can get.

It drives me mad that people like her can make huge profits at tax payers' expense.

Funny how those receiving Housing benefit are vilified, but those who actually end up with it in their pockets are praised......

Funny how those receiving Housing benefit are vilified, but those who actually end up with it in their pockets are praised......

I am not sure who this is aimed at, but I think that housing benefit is just entirely misguided and won't solve the housing problem (in fact, there is evidence that it exacerbates it).

However, I think people who collect housing benefit should do so. I also think that landlords should charge what they can for their place within the law. it's obviously the law that stinks. we should push to fix it.

I don't get what's immoral about this. Your friend is not a charity. She is a landlord getting the best price for her place. I don't understand how she could be teetering on losing her business if interest rates rise, and simultaneously be told that she should charge less than she can get.

One of the immoral aspects is that it makes it very much harder for a tenant to ever reach the point where they are self-supporting and free of the need to claim HB (or, if they are unemployed to find work that will cover the rent).

So it fosters dependency.

Or, looked at another way, it's artificial rent inflation and it's greedy.

Presumably she is charging market rents anyway (not 'charitable' ones) so actively tracking ;ocal LHA rates to raise the rents in line with them ASAP is not a question of keeping afloat. It's plain grabby.

And OP can comment, I'm sure, but I'll eat my hat and my handbag collection if she's 'teetering'.

There's a reason why 'investors' choose to build these portfolios right at the bottom of the rental market (HMOs and studios, undesirable areas and unglamorous properties, despite the hassle factor of LHA red tape, high turnover, and - yes- more social problems from SOME tenants) and that's that there's more profit to be made there than in renting well maintained 2 bed flats in naice areas to young professionals.

She'll be doing very well indeed. I have no doubt.

I agree that it isn't admirable, but the OP didn't ask that. If the properties are not suitable for habitation, then environmental health should be called. If they are just not ideal then lots of properties aren't.

Its immoral, because she isn't charging what the house is worth. She is charging above that because the Tennants are receiving hb. It leads to all sorts of problems and is done to make the maximum amount of money out of the tax payer on a property that isn't worth it.

Its inflating the rental property and the housing market, which comes with its own set of problems.

One of the immoral aspects is that it makes it very much harder for a tenant to ever reach the point where they are self-supporting and free of the need to claim HB (or, if they are unemployed to find work that will cover the rent).

is the landlord the tenants mother? I don't see why that's her responsibility.

Or, looked at another way, it's artificial rent inflation and it's greedy.

so, you are saying that when HB landlord does what every landlord is expected to do (get the most rent for their property), it leads to artificial rent inflation? that seems to be a criticism of the system of HB, not the landlord.

Its immoral, because she isn't charging what the house is worth. She is charging above that because the Tennants are receiving hb. It leads to all sorts of problems and is done to make the maximum amount of money out of the tax payer on a property that isn't worth it.

again, it sounds like you are stating flaws with HB. I think I read an article (guardian I think) that said this scenario was quite common and explained why HB rent increases faster than other rent.

Every individual is responsible for their own ethical conduct keep.

No LL is obliged to set their rents with reference to LHA levels. Or to frequently check LHA levels so as not to miss out.

There is a difference between it being legally permissible and it being morally defensible.