BTL - tenants with housing benefits

[Maggiethecat]

I've never considered tenants with HB before now and wonder if anyone can share their experiences.

It's a family with 3 teenage kids, parents work but income is supplemented with HB.

There are some horror stories around but it would be good to have some balance as I expect that it's not all like that.

Are there any extra steps above the usual referencing that you take when doing your diligence?

the only thing I would do is make sure your managing agent undertakes the thorough referencing, and makes sure that regular inspections are done to ensure they are looking after the property - I've had a couple of tenants that have been supported by benefits all but one have been fine. And that was related to the lady's ex partner breaking a window and damaging the front door but my managing agents were good with getting all that sorted and not with any cost to me.

I claim housing benefit and rent. In twenty years of renting I have never missed a rent payment.

Current landlord asked for a guarantor. I was lucky that a friend was prepared to do this.

Insurance can be an issue. Our insurance only stipulates working Tennant's so they would qualify and we would just have the agent check the wage slips as per usual.
We had a working mum Tennant claiming housing benefit with no problem at all. In fact she was one of our best Tenants.

We get housing benefit. Never missed a rent payment. Husband works full time but is a low earner. He pays rent direct to the landlord from his wages, then the housing benefit goes into my account. We get less than half the rent in housing benefit so it's really only a top up. Landlord knows we claim but if we didn't tell her, she wouldn't know.

And actually your main market is likely people who are eligible for housing benefit. Why do you think people rent instead of buying a house? Because they will never afford to.

We have a buy to let property and the couple recieve housing benefits. The rent is always paid every month. They have been tennants now for the last 4 years and tell us they have no inention of moving on, they were long term tennants in their previous property and only moved due to landlord selling property. These people though they would love to buy are not in a position to buy so will be long term tennants. The only change we've had in their payents is their housing benefit amount comes to us on one day of the month and the extra payment from them is made later in the month, we are not concerned it works well all round.
One of the bigger heaaches and risks with tennants can be void periods where the property is unoccupied.

Thanks for all your responses.

I raised this on a landlord’s forum recently and overwhelmingly the view was run a mile from people on housing benefit - that I would likely end up having to chase rent payments because of unreliability.

In many years of being a landlord I’ve never had a HB tenant I think because the letting portals usually excluded them but this has changed now.

I’ve started the referencing process with them but I know their benefit won’t be considered for being too variable.

So I’ll have to take a view on the HB element.

I'd have no problem with it. My insurance company won't cover if tenants are on benefits. I was worried in Covid in case they lost their jobs.

Not everyone on housing benefits are scroungers sitting around all day drinking cider and creating anti social behaviour (as is the stereotype). I'm sure some miss payments, just as those in work could if they lose their job or fall behind. I left work for 3 years due to an ill child and LLs were very happy to consider me until I was upfront about getting HB. Thankfully my current LL gave me a chance (I paid him 3 months upfront) and I'm still here 9 years later.

We take out a rent guarantee insurance on our rental properties with the start of any new tenancy, so if the tenant can't or won't pay the rent, the insurance covers the loss (we did this after being knocked for over £5k some years ago). If the tenant passes the checks they are accepted and the insurance kicks in. If that tenant subsequently loses their job, or has partial HB it's totally fine with us. Most of our tenants have been with us for many years and hopefully will be for many years to come.

@freshcarnation - I wonder if rent guarantee insurance is available if tenants are on HB from the outset?

Will have to enquire.

Absolutely worth asking.

Taking on any tenant is a risk you just don't know what you are going to end up with just make sure any prospective tenant goes through proper referencing including credit checks

Would you even know they claimed housing benefit if they hadn’t told you? A reference from previous landlord might give you the best info as to whether they are reliable tenants.

Using a trusted referencing agency to conduct checks should pick this up no problem

I worked as a housing officer (so no idea about landlord insurance etc!).
Is it HB they are claiming or the housing element of UC? Maybe slightly different admin for you to do. Both are paid in arrears, UC further in arrears than HB. But if they are in work then they probably will be able to pay in advance and then manage their money in such a way as to deal with getting HB themselves.
If the tenants seem on top of dealing with paperwork/able to provide timely information when requested then there is very rarely any issues.
Obviously the tenants will have less wiggle room in their budget to deal with a crisis (eg broken car) than someone on a big salary but tbh there are lots of people just above the cut off for benefits that would also struggle with this.

There are a vast amount of working people who are in receipt of HB. Increasing amounts given the way things are going. And in Wales at least, it's illegal to refuse a tenant on the basis of their receipt of benefits.

Have today had referencing check back and husband and wife have both been unsuccessful.

Wife, despite telling me she has income from courier work, has told ref company that she is her son’s full time carer (she told me son is 16 with mild autism).

They are not being upfront and may be gaming the system but either way it does make me uncomfortable.

On one hand I feel that they could be perfectly good tenants who are having a rough time and struggle to jump through the hoops. On other hand they could be a complete nightmare.

FWIW, had a FaceTime call with them and their flat was very tidy/organised and they looked like any other family.

BUT, in their application they said they had no pets but on the call I saw they have a small dog.
When asked about it, she said it was very well trained 🤔

All things put together it is becoming difficult to trust them and I’m thinking I’ll have to put head over heart for this one.

Find someone else to move in, they’ve got a pet they lied about, they’ve failed the referencing & they’ve been vague at best about income, in your shoes I wouldn’t risk it

I would take housing benefit from a tenant who also worked as you can base the rent guarantee on their salary. In essence the HB is a top up to their wages. Failing that, I'd ask for a guarantor. People who claim HB shouldn't be stigmatised. Plenty of people who claim also work, it's based on their circumstances more than anything.

Just seen your update. If they've not been truthful then no i wouldn't rent to them.

"They looked like any other family"

@ThreeFeetTall

"They looked like any other family"

I know, right.

You mean they weren't wearing their 'housing benefit scumbags' t shirts? Quick, alert the authorities.

What a depressing thread.