Advice for a new, nervous landlord

[BrilliantBetty]

I have a small, unoccupied property in a large city.
It would be suitable to rent out and it is in good condition, recently decorated and clean.

I would like to rent it out not for maximum rent income but at the market rent for housing benefit. So someone relying on housing benefit, or on a lower income in the area could afford it.

In the area that's approx £1250 per month.
Housing benefit for the number of bedrooms.

But what happens if they don't pay. It seems to me nothing? You try to evict them and that takes about 6 months in which time they potentially aren't paying.
And you have to still house them plus deal with court case.

AIBU to think this is V risky?

Can you think of a way to guarantee rent is paid. Am I better off doing something else with the place? It's been empty a few months now and I need to do something with it.

@OhWhyNot

No it is not

I can opt to not insure which I would not do

I also do not have a buy to let mortgage I have to inform my mortgage company that I am renting out my property

No it is not what? If you’re doubting what I said about the illegality of discriminating against benefits claimants, I suggest you do a quick google.

Me neither, and my tenant was nice. I rented for one year whole i tried a new area. Sale fell thro, tenant had left so I had to return. Then covid struck. Imagine if I had kept the tenant in there and she had been laid off work. I was lucky, we went back and lived in it and sold it in the summer last year. I will not do it again.

I can’t get insurance with my mortgage to those that have outstanding CCJ or are on HB

If they apply for HB the day after they sign the contract that’s fine

There is no way I would ever rent out my property without full adequate insurance

So there is a way that they are discriminated against that is not my decision

It’s not so black and white

I can’t get insurance with my mortgage to those that have outstanding CCJ or are on HB

Then your insurance company is operating illegally and should be reported. Sigh

One alternative would be to rent to another group that has a really hard time finding private rented housing - pet owners.

From personal experience finding landlords that accept dogs is an absolute pain in the arse, even on a professional salary - and for that reason I've stayed longer in this property than I've ever stayed anywhere before! Fewer voids between tenants means higher profit.

I had dreadful tenants who made my life a living nightmare for 2 years.

When they finally left, i got an estate agent to be my agent (find tenants, vet them and/or guarantors, do paper work, 6-monthly inspections, and any eviction work if it arises. I also took out landlord insurance that covers legal costs and a small amount of rent cover between tenants.

Touch wood i haven’t needed any of it because the tenants my agents find have been wonderful. More importantly, It is worth every penny of what i pay them and insurers to be able to sleep at night.

No they are not

I was happy to rent out to a potential tenant but he had an outstanding CCJ (for a few hundred pounds) I couldn’t get the insurance to cover him

And it was many companies

As I said the next day they can sign up for HB.

I was happy to rent out to a potential tenant but he had an outstanding CCJ (for a few hundred pounds) I couldn’t get the insurance to cover him

You're just discriminating but justifying it by "oh no my insurance... I'd've loved to have done it", just own your discrimination, don't pretend it was because your insurer.

You discriminated, not your insurer. YOU.

OP - sell the property, invest in something else.

Try to avoid tenants on benefits because they are more likely to cause you problems, the big three being not paying rent, trashing the place and of course antisocial behaviour. You can't be seen to discriminate but there are ways to avoid having them, credit checks and references and so on.

Absolutely this. This is the most important piece of advice you will receive, OP. Take it on board.

No, not all benefit claimants are like that, but they are riskier and you want to minimise your risk. You’ll get a lot of “that’s not fair” and anecdotes where it worked out fine, but life’s not fair.

Also, no pets. They’ll trash your property.

If you rent out properties, you have to completely detach yourself from them emotionally. Tenants can be great or a total pain in the arse (both DSS and employed). Get good insurance and an agency and accept that some tenants along the way will be dreadful (drug dealing, weed growing, hoarding etc). You can get benefit tenants to agree to pay direct to you. They can reverse this at any time, but if in arrears you’ve got more leverage. That said, we have some very good benefit tenants. One thing is for sure: it is NOT easy money!

@OhWhyNot

No they are not

I was happy to rent out to a potential tenant but he had an outstanding CCJ (for a few hundred pounds) I couldn’t get the insurance to cover him

And it was many companies

As I said the next day they can sign up for HB.

blog.shelter.org.uk/2020/07/no-dss-landmark-court-ruling%E2%80%AFdeclares%E2%80%AFhousing-benefit%E2%80%AFdiscrimination%E2%80%AFis%E2%80%AFunlawful%E2%80%AF/

Legal victories over 'No DSS' letting agents www.bbc.co.uk/news/education-51642316

@emilyfrost

Try to avoid tenants on benefits because they are more likely to cause you problems, the big three being not paying rent, trashing the place and of course antisocial behaviour. You can't be seen to discriminate but there are ways to avoid having them, credit checks and references and so on.

Absolutely this. This is the most important piece of advice you will receive, OP. Take it on board.

No, not all benefit claimants are like that, but they are riskier and you want to minimise your risk. You’ll get a lot of “that’s not fair” and anecdotes where it worked out fine, but life’s not fair.

Also, no pets. They’ll trash your property.

Now illegal to discriminate against people on benefits

Tenant with pets likely to be keen to stay long term, as so many landlords won't allow pets

Another target group might be families. Once children are in school, they won't want to move on

My tip would be trust your instincts. Don't take the first tenant that comes along

I'd sell the place- you may not be cut out to be a landlord, or fully aware of the risks.

Now illegal to discriminate against people on benefits

@notanothertakeaway It would be exceptionally hard to prove you’re not choosing them simply because they’re benefit claimants.

With more renters than there are properties, OP will have her pick. She just doesn’t pick the ones on benefits or with pets. Benefit claimants aren’t going to be the only options.

I asked the agency to help me find an insurer

They couldn’t

I have rented for years myself and at one point single parent on HB I know how hard it is. I am not in a position to not have insurance. My insurance would also cover costs should I need to put up tenants in a hotel for a period of time ie. if there was a flood and flat was unliveable. I am a responsible landlord I’m tied in with what my mortgage stipulates and my insurance company (or companies have changed over the years)

I also was happy to rent my property to the local council but the minimum was four years I was not prepared to sign up for four years I wanted a two year contract which I always sign unless tenant wants one year or a rolling contact after the current tenancy agreement ends

But yes go on trash all landlords

@OhWhyNot, I haven’t trashed anyone. I was a landlord myself for a while. I’ve simply pointed out that since the middle of last year any insurance company which refuses to provide cover for DSS tenants is acting outwith the law.

Be aware you will need gas certificate, electricity certificate and may need to upgrade to metal fuse box to comply with new buildings regs and energy certificate. You can insure s property against tenant not paying rent but it would mean in order to claim if a tenant did not pay rent you would have to start court proceedings against them. If you did that insurance pays out until they are evicted.

I am LL and vet people very carefully. I tend to let to a couple who both work so if one loses their job the other still earning. If you are a LL you will be demonised and dispised no matter how well you treat tenants.

@emilyfrost

Now illegal to discriminate against people on benefits

@notanothertakeaway It would be exceptionally hard to prove you’re not choosing them simply because they’re benefit claimants.

With more renters than there are properties, OP will have her pick. She just doesn’t pick the ones on benefits or with pets. Benefit claimants aren’t going to be the only options.

@emilyfrost

I wasn't suggesting OP's options were limited

The points I'm trying to make are (1) it's illegal to discriminate against people on benefits. That may not bother you, but I'd like to think most people, knowing that, woukd stop and think twice before automatically rejecting a potentially great tenant who happens to be on benefits and (2) tenants with pets and / or children may be looking for a long term home, therefore less likely to trash the house, not pay rent, or anything else which might lead to eviction

It’s a landlord that can’t discriminate

So thats me

I can choose to rent my property without insurance against what my mortgage stipulates (I do not have a buy to let that limits me regarding insurance) but I won’t let without insurance

My only rule is I can get insurance so I choose what tenants I can insure

Its a way around it.

I'd like to think I'd be open minded in your position. Though this is more a response to the benefit comments from pps. I'm not naive and do understand some people will always treat other people's property badly.

I've been on some form of benefit throughout the last 12 years while renting 3 properties. I've worked for pretty much all of those years. Full time for much of that time too. I've always left properties in a better state of repair etc than they were at the start of tenancy. Often paying for small jobs myself. And have always had good feedback and received deposit back in full. I normally like to stay for long periods too. I was in the first house for 10 years. Only leaving because it really had a major damp problem. And we only left the second because we are now renting from a relative who had to leave their home to provide live in care to a family member. Myself and my partner both work, full time and near enough and we still receive benefits.

I spent much of my childhood living in rented accommodation. I was taught that it may not ever be my house but it is my home. And I've always looked after the houses I live in as if they were my own. Benefits or not.

@emilyfrost

Try to avoid tenants on benefits because they are more likely to cause you problems, the big three being not paying rent, trashing the place and of course antisocial behaviour. You can't be seen to discriminate but there are ways to avoid having them, credit checks and references and so on.

Absolutely this. This is the most important piece of advice you will receive, OP. Take it on board.

No, not all benefit claimants are like that, but they are riskier and you want to minimise your risk. You’ll get a lot of “that’s not fair” and anecdotes where it worked out fine, but life’s not fair.

Also, no pets. They’ll trash your property.

OP I absolutely salute you, so many landlords are just greedy and rents are increasingly unaffordable, not just for benefit claimants. I think your idea is wonderful and please don’t be put off by this kind of remark.

“Benefits” aren’t just claimed by people out of work, they’re relied upon by all kinds of people on low incomes - particularly families, lone parents and those with disabilities. The reason so many vulnerable people live in awful conditions is because of attitudes like Emily’s. It’s pure snobbism.

And DO allow pets. Thousands of cats and dogs are handed into rescues every year due to private landlords not allowing them. Imagine having to give up your beloved family member because you couldn’t find anywhere to rent that would allow them? A child’s dog? An elderly disabled lady’s cat?

Responsible tenants will be responsible pet owners. Bad tenants are bad tenants with or without pets.

Ask for references from previous landlords. Don’t let yourself be swayed by this kind of prejudice.

Don't rule out tenants who are on benefits. Morally horrible, and also they're actually
a safer bet than someone in an insecure job, especially over the last year. My tenant is a single mum on benefits and has been great. My friend's tenant lost his job during the pandemic and pays what he can, which is bugger all, but she doesn't have the heart to throw him out. Worth getting a good agency who can vet tenants for you (mine has her dad as a guarantor).

"Also, no pets. They’ll trash your property."

Not in our experience. Nearly all of our tenants have pets and they are so happy to find properties that take them in they always without exception look after the places well.
We have had people at work who also claim hb etc never any problem.
Also accept tenants that don't quite meet the income requirements.
Common sense is required.
Wouldn't want a ccj though.

You can get insurance that covers unpaid rent.
Property is a great investment I would always keep it unless I had to sell.

IME get a nurse, teacher or civil servant. They tend to stay in work. Meet them at the property, see how they act towards your property, their kids, your kids, you. Talk to them, ask them stuff about what they enjoy doing. Single parent vs couple is not a worry for me. I find women easier to deal with and single mums tend to have their shit together but a couple likely has 2 income streams. How are they dressed etc. I don't think richer people make better tenants, just as long as they can pay the rent. Allow a pet, the tenant will value the tenancy more because most LLs dont allow them.

A good tenant is gold. Don't pester them or put the rent up if you don't need to. I'd always hang on to property in this day and age because savings are shit and decline in worth.

Good luck! I hope you get someone great.

Use a reputable agent and keep an eye on what they are doing.
Make sure you take out landlords insurance. Sometimes the agents include it in their fees, which is handy because they should act immediately to inform the insurance company if your tenant stops paying. Decent insurance will pay you rent if your tenant isn't - as long as they have a lettings agreement in place and are still in the property.
Prepare for "void" periods. If you can't pay for the place with no rental income for 3-6 months at least don't bother. (Many landlords are desperate at the moment because they have been financially supporting properties with tenants in situ who can't pay rent due to covid related job loss).
Prepare for the fact that if you're unlucky you might need to carry out repairs in excess of the value of any retained deposit.
Have a look at Landlordzone forums - to give you an idea of the challenges you might face forums.landlordzone.co.uk/
Think once, twice and three times before doing this. Selling and careful investment might be safer and less stressful.