Advice needed from go it alone landlords.

[MrsJRT]

We have a property that we used to live in and now rent out to a tenant who has been in from the start. The tenant looks after the property well, has no designs on moving elsewhere and aside from a couple of missing rents early on in the process which he has now paid back has not caused us any issues. The tenant is a DSS tenant and has his rent paid directly to the letting agents every fourth Friday (used to get the cash in hand but due to the earlier issues this was changed).

The problem we are having is that despite the money being paid by the council every fourth week, we are still sometimes left without regular rental payments, it is now 6 weeks and counting since we had a rental payment as the letting agency appears to be run by clowns. (Actually it is run by clowns, we know the people on a more personal basis and they are useless). They keep saying the tenant is not paying his shortfall but I have spoken to both the tenant and the council who have both confirmed that there is not a shortfall to be made up and presumaly the issue lies in that although the council pays rent four weekly we charge it PCM, meaning the letting agents get 13 payments per year whereas we only get 12. I have a feeling the letting agents are trying to bamboozle the tenant into paying a small shortfall and thus leaving themselves one full rental payment per year to tuck into their bank account. I can't be sure but I believe this to be the case.

Anyway, what we would like to do is cut the letting agent out of the picture, get the rent paid by the council directly to us and stopping any issues we might have. What I want to now is whether this is feasable and what we need to do from a legal POV in order to make sure everything is above board and we are protected as much as we can be.

As a first step, ask the letting agents for evidence of payments to them, which they should be happy to give, if there is indeed the "shortfall" they claim.

Thank you, they are sending out a statement this week so I'll see what it says but I know for certain that the council payments cover the rent so any shortfall is mythical.

If your tenant has not yet been in for 12 months there will be a shortfall as the 13th payment makes up all these little shortfalls. In this situation the yearly rent should be divided by 13 so that each payment balances with each rent demand. The other situation is that the council does pay 12 payments, but they vary in size depending on the number of days in the month then you need to divided the annual rent by 365 and bill days per month. A good rental agent should be sending you statements each month showing you rent charged, income, costs and agency fees to allow you to do your tax return properly.
IMO housing benefit is rarely for exactly the amount of the rent, but is assessed on the individuals needs in relation to local market rents. In some cases the housing benefit is actually greater than the rent, I have had this situation and as a landlord you should be carefully refunding the difference each month.
You need to check your contract with the letting agent as to how you are tied in to them and when you can get out with how much notice. Yes you can have the housing benefit paid direct to you, this is usually done for 6 months intially and then reassess. Beware that if they feel that the tenant is managing their affairs they often start making payments to them again - this usually means not in rent arrears.
Personally I like tenants to have a standing order out the bank to me for the day after the housing benefit is paid.

The tenant has been in for almost 3 years, I've spoken to the council and the amount they pay out is pence short of the actual yearly rental amount. We don't actually make any money on the rental, it just covers the mortgage. He is entitled to more benefit than we charge rent, so in theory we could up the rent by about 40 quid per month and his benefit would be increased to reflect that but this is not something we wish to do. The benefit has been paid direct to the letting agent for almost a year now with the tenants permission. What are my legal obligations in terms of contracts renewed etc? To be honest I know what you are saying about what a 'good letting agent' would do but I long ago came to the conclusion that this is not what I am dealing with.

I've a couple of properties that I used to have managed by an agent but came to the same conclusions you seem to have, and started managing them myself a year or so ago. One has HB tenants and one not.

My tips are:

1. You need to look at the initial contract you signed with the letting agents to see how you terminate your agreement with them and whether there would be any penalty to pay.
2. In my case it was as simple as contacting the council who paid HB to the letting agents, giving them all the details of the tenancy and my bank details and the payments then came through to me.
3. The things you need to make sure you do (which your letting agent will have done for you) annual gas safety inspections; arrange prompt repair / maintenance works; let the council know of any changes in the tenant's circumstances.
4. You may want to set up a new tenancy with the tenant. In my case I continued with the one the letting agent had set up but contacted the tenant to let them know that I was managing the property myself.

That's all I can think of for now. Good luck.