New tenant, possible scam?

[BeckyButters]

I'm showing someone around my rental property today. They contacted me asking if I'd take on someone on HB. Having read various threads on MN I realise how hard it can be to find private rental when you are claiming HB so I didn't want to turn her down immediately.

However, certain things she's said has set my spidey senses tingling and I want to go forewarned and forearmed.... She's offering two months rent up front, offering to bring cash and paperwork for references, saying she's 100% sure she'll like the property as she's lived locally before. I asked in an email how she would cover the (not insubstantial) shortfall between the local housing allowance and the rental value. She's told me she's on £1900 UC a month which seems high but I've no idea. In addition to DLA for one of her two sons and PIP for herself.

I'd get a third party tenant check anyway but wondered if this sounds right, £3500 income per month which also includes £400 child maintenance?

If she was renting from social, council or housing association then she’d may have to provide bank statements for 3 months - ask for 3 months bank statements so you can check the affordability

Thanks for the tip, I will do.

That's £42k a year in benefits! I find that very hard to believe OP sorry. I don't even earn that and I have a degree and work for the NHS!
Like ivy said, I would ask to see bank statements. I've had to provide this to estate agents in the past as well so it is a reasonable request. You could also ask to see her letter of award of housing benefit (not sure if this is legal or not but you could look it up).

I thought the benefit cap was set at £1660 pcm but it might vary if you claim pip/dla I guess

No idea about benefit limits which is why I've asked. I have had a google but still can't get it to add up to £1900.

Yes misty, she's bringing in more than me....

She'll have her standard elements, 2 child elements, either lower or higher rate disabled child element, possibly LCWRA rate for her own disabilities, then I assume she'll have added her housing element at the local housing allowance. Then in addition we don't know what rate PIP she gets or DLA but again could be the highest rates, plus child benefit and the £400 maintenance. Completely possibly to equal £3500 a month.

Entirely possible because she will get disability element for her disabled child plus she could be high rate dla care and high rate mobility for him. Add on carers allowance and her own pip money which could be full rate soon adds up

Hmm that’s an incredibly high income. Even if it’s true I wouldn’t go ahead because someone relying so much on benefits is at the whim of changing govt policy, it’s just not secure enough. I wouldn’t want to be paying a mortgage and relying on someone receiving benefits in order to do so.

Obviously there’s a risk that someone in work could lose their job but if you look at their employment record and references you’ll get a clear picture and it would be unlikely that someone with a good track record is suddenly going to become unable to pay. It’s just too much of a risk with benefits because basically the recipient is dependent on govt whims and so many factors outside their control.

That's reassuring. Thanks for that. It was the pressure I felt under with wanting to bring cash etc. She's also moving from a different area of the same city so I'll ask about schools etc.

On the other hand if her income is what she says it is and you check the finances to make sure - it could be better than someone in work - who knows

What is the LHA rate for your area? She wont get more than that

The offer of two months rent up front is possibly to show that she’s a good payer, obviously isn’t living on the bread line as has the rent money now, UC may take a few weeks to do change of circumstances and this is when rent doesn’t get paid, but you’ll already have the rent paid up front.

Some Housing Associations ask for 4 weeks rent up front so it’s not unusual.

Completely possibly to equal £3500 a month

As long as you see proof of income and are satisfied that it is enough, and a positive rental reference then I'd not worry too much.

Child maintenance is not deducted for UC. I'm not aware of the dla pip rules

There’s no benefit cap for people either on DLA themselves or have children that have DLA. So she could very easily have that amount of money per month.

Benefit cap doesn’t apply if you have someone in your household on DLA/PIP because having someone in your family who is disabled is very expensive.

I think she is trying to be really upfront as it’s so hard to find somewhere if you are on benefits. Especially finding somewhere suitable if you are also disabled.

We have lived in both council & housing association and have never been asked to provide bank statements. In fact the council were expressly not allowed to ask us about income. If she is on UC you could ask for the last 3 months of her entitlement I suppose - that would give you the breakdown of what she gets. That would reflect her housing entitlement which may increase if your place is more expensive than the HLR Also she may be entitled to Extra Housing benefit if they need a bigger place due to disabilities. Likewise she may get a council tax reduction.

For what it’s worth I don’t think you have more stability with someone who works. Anyone can get made redundant, have to take tome off for illness or ill children etc. At least this person is already “in the system” so no waiting for nearly 2 months with no income if they do need to apply for benefits.

Thanks all. I'm going to pay for a tenant check as well. I'll let you know how it goes.

UC personal allowance for her would be £317.82 a month, child element for child 1 £270.00 a month (could be wrong), child element for child 2 £220 a month (could be wrong again), rent element could be anything up to £700 a month, child benefit for 2 children would be £135.50 every 4 weeks so let's say monthly, £400 a month CM. So this totals £2,043.32. The rest could be made up with DLA and PIP?

Seems a crazy amount to get and more than most people earn knocking their pan in all week but then again if she is disabled and so is her child, it's not out of the question that they get enough help to live a comfortable life

I don't know if the figures are right or not, but another possibility is she is being overpaid, UC will eventually realise and stop the money and want it back, and then it could be a nightmare for you both.

If her figures are correct then she's no greater a risk than a working person. Unless your renting to a hospital consultant or someone who is guaranteed high paying work forever (less likely to be private renting) then there is always an element of instability built in. Sounds like you should give her a shot assuming her credit check doesn't show up loads of CCJs etc

Please don't ignore your spidey senses. I did just that and felt sorry for my tenant.

He's been staying there rent free since August and I nearly lost my flat. I'm also about to give birth. The stress is not worth having a bad tenant. He said all the right things etc but my senses prickled big time. If only I'd listened to myself none of this would've happened. I took him to Small claims and he paid an installment the day before an evaluator was coming to view with intent to repossess. I kept my flat by the skin of my teeth!

Reason I rented it out was because I'd lost my job unexpectedly and we moved in with DPs dad in his garden cottage till we got on our feet. Please don't be me.

You also need to factor in that if things go tits up- eg if the disability benefits are reassessed, if she’s relying on an ex for maintenance and he stops or reduces payments, if a change of govt policy impacts on benefits... it’s probably going to be harder to get rid of her because very few private rentals will take people on benefits. She wouldn’t easily be able to move on somewhere else. And if she has kids settled in school, particularly kids with disabilities, as a decent LL you’re going to have the emotional pressure of not wanting to make life difficult for her...

It’s a tough one because on the one hand you want to give her an opportunity - and she could be legit and it could work out well- but personally I’d find there were too many risk factors involved, mainly around the upheaval it would be if you ever did want or need to move her on

Maintenance doesn't effect benefits and DLA/PIP mean that she won't be capped. Therefore she could be on any amount of money really. I wouldn't ask her for 3 months worth of bank statements, though. That seems incredibly invasive if she's already doing the credit checks etc.

I would be asking for a reference from her previous landlord and a clear explanation of why she wanted to move house.

...and I would be doing some due diligence around that and speaking to the former landlord myself.

Be very sceptical about references that someone brings with them. They could have been written by anybody. Also do not accept at face value the line that “ we used to live at 46 Acacia Avenue”. Ask to see old utility bills etc.

Three months bank statements are a must.

Identity check through picture ID to make sure that the bank statements really belong to the prospective tenant.