Landlords avoiding benefit tenants

A survey from an online letting agent confirms what we have known for some time more and more landlords refuse to take tenants on benefits. Some 82% of landlords questions would refuse to let their property to tenants in receipt of benefit. Is this fair or reasonable?

Tenants on benefits don't have money
The facts are that many tenants are on benefits because simply they don't have very much money. It's a simple fact of life that if you let to a tenant that has a limited income, probably no savings that when things get tight something is going to have to give. This normally means not paying some or all of the rent. I don't think that landlords can be criticised for making a rational economic decision when clearly tenants on benefits pose a greater financial risk to their letting business. Having said that many landlords target specifically benefit tenants seeing them as a steady income stream if and when they can get the benefit paid directly to them.

Benefit cuts affecting landlords 
Recent Local Housing Allowance benefit cuts have reduced the amount and attraction of these tenants. The introduction of Universal Credit threatens to reduce the attractiveness of tenants in receipt of benefit still further. Would you let to tenants letting on benefit. Can they make good tenants and is it wrong to tar all benefit tenants with the same brush let us know your thoughts.

 Landlord insurance - niche brokers - professional rates

'Bedroom tax' - arrears

Six months after the introduction of the so called  'bedroom tax' for LHA tenants it has resulted in thousands of tenants going into rental arrears according to the latest reports from the BBC.

The benefit changes, introduced in April aimed at reducing the benefit bill mean that tenants with one spare bedroom have lost 14% of their housing benefit, or £14 a week on average for someone in a council house. Those in housing association accommodation have lost an average of £16 a week.
Anyone with two or more spare bedrooms will have lost 25% of their housing benefit.
 
According to the National Housing Federation 25% of tenants affected by the spare room subsidy has gone into arrears for the first time.  Clearly this will have a big impact on landlords letting to tenants on benefits. Is this affecting you?  Post your views and comments below.

Free property management software, Free tenancy agreements

Universal credit to be delayed

Despite the coalitions original plans to have all claimant on universal credit by April 2014, there now appears to be no confirmed date for universal coverage to be implemented.

Once again this throws more questions into the air of landlords letting to benefits such as the Local Housing Allowance (LHA).

Recent statistics indicate that more landlords are shying away from tenants on benefits as recent changes in rates come into affect.

Here are 7 reasons why landlords are not letting to LHA tenants

Free property management software, Free tenancy agreements

Landlords letting to benefit tenants falls

The proportion of landlords with benefit tenants who receive Local Housing Allowance fell last month to 27% compared to 34% back in March when the poll was last conducted.

The fall follows recent benefit changes which has reduced access of some tenants to the benefit system and also reduced the size of payments for others.

Landlord insurance - expert brokers

Problem LHA tenants

Latest poll figures from website Spareroom reveals that almost 9 out of 10 landlords have had problems with tenants on benefit.

The poll indicated that 87% of landlords who accept housing benefit tenants have had issues with rent not being paid on time, with one in ten (11%) saying they have had tenants who stopped paying their rent altogether.

A warning? Perhaps. A lot of landlords who are prepared to manage their LHA tenants carefully make a damn good living out of renting to people on benefits. The secret is that you need to manage your tenants more actively especially at the beginning to ensure the tenancy proceeds smoothly in the long run.

Landlord Insurance - professional cover available

Research on LHA changes

Jeremy Corbyn (Islington North, Labour) has continued his ongoing spat with Grant Shapps.

He recently questioned the Minister of State for Housing and Local Government on whether his Department is undertaking any research on the effect of the changes in Housing Benefit rules in London and specifically:

"how many people he estimates have (a) moved and (b) been made homeless as a result of those changes."

The Minister confirmed that the Department for Work and Pensions (DWP) had commissioned an independent consortium of academics and research organisations to evaluate the effects of the recent local housing allowance changes. Many landlords have been negatively impacted on the reduction in rents paid to their tenants on benefits and will await with interest the outcome of this research.

Landlord insurance - rent guarantees available

LHA Discrimination

In these days of equality where at the merest hint of bias or unbalanced treatment could result in you being dragged in front of a judge. It's good to know that private landlords are safe from discrimination.

Well unfortunately this is not true.. One Property Hawk regular Kevin makes the point in relation to the Local Housing Allowance changes that:

"What hasn't been mentioned is this only affects tenants in the PRS. Housing associations and local authority housing tenants aren't affected.

So yet another nobbling to private landlords. Seems we are singled out in the rental market for special treatment. Some times it feels like victimisation. Aren't there laws on that?"

Again it looks like the State looks after their own and private landlords are left to fend for themselves!

Landlord insurance - are you fully covered?

LHA landlords - go fishing!

Have you ever been driving some where in a hurry and; then you get stuck behind a car with a fish sticker in the back window!

You can't overtake and you know that the law abiding driver is going to be following every speed restriction and highway regulation known to man.

This brings me on to a meeting I had the other day with a savvy landlord who was also a Christian as it happens.  She told me with great glee that her tip for getting in good LHA tenants in was to get in with the local church.  She has a number of contacts that have given her a steady crop of honest, reliable tenants that have fallen on harder times and who make ideal tenants. I guess an advert on the church notice board could work as well.

The moto of this particular parable is that if landlords want to get good reliable LHA tenants is that they need to have faith and go fishing!

As I'm a atheist I guess this also applies to the temple and the mosque too.



Landlord insurance - best rates

LHA - age changes

Landlords still realing from the changes to the Local Housing Allowance (LHA) that came into force from the 1st April should be aware of a new change affecting younger single tenants in receipt of housing benefit.

This is potentially bigger for landlords letting to younger tenants who currently rent self contained accommodation than the recently announced LHA regime.

The government has already revised it's changes to the benefit system which means that young singles up to the age of 25 living on benefit would only be eligible to claim benefit for shared accommodation and not self contained units by extending the age category up to 35 year olds.

The change of the age limit had originally been intended to take place from April 2012 had now been brought forward to January 2012.

The governments own figures indicate that up to 88,000 claimants could be affected by the broadening of the age range.  Many commentators have suggested this to be a vast underestimate of the real figure.

Landlord insurance - professional rates available

Housing Benefit reversal

Government changes to the Housing Benefit system which would have impacted on landlords letting to tenants on long-term housing benefit have been reversed after a last minute intervention by Nick Clegg.

The proposal which would have involved a 10% cut to benefit levels to tenants who had been unemployed for over 1 year was scrapped after 'Old Cleggy' voiced concerns that such changes would act as a disincentive for landlords to let to unemployed tenants in areas of high unemployment.

From a landlord letting to unemployed tenants this has to be good news.  As a citizen who feels the state has created an underclass of benefit seeking scroungers.  I can't see how this will help reverse the situation.  Nick what ever happened to tough love!

For more details.



Landlord insurance - expert advice & rates

Londoners start HA cap exodus

London councils are starting to relocate housing benefit families out of London before the restriction in housing benefit payments come into effect in April next year.

Thirteen London councils say they have already started to rehouse tenants outside London because of the £400 a week housing benefit cap.

Read more in the BBC

Landlords get direct payments

An internal Department Work and Pension (DWP) memo to staff has been unearthed by Property Hawk showing that the new coalition government are keen to give the power back to Local Authorities to allow them to make direct payments to landlords.

The December copy of HB Direct advices local councils to allow direct payments when it is perceived to help tenants retain or secure a tenancy.

Given the importance to landlords of this type of payment I would have thought that this should cover practically all tenancies receiving benefit.  The discretion on whether this happens still remains with the LA though.  The government will issue more detailed guidance on this matter very soon according to the same advice note.

To read the full amendment to the Housing Benefit regulations in their entirety then go here.


Landlord insurance professional rates

LHA landlords told to cut rents

Minister calls landlords to cut their rents prior to the implementation of the Local Housing Allowance (LHA) changes due from April 2011 for new tenancies and from Jan 2012 for the capping of existing tenancies.

Lord Freud the Welfare Reform Minister said:

“We are looking for private landlords to respond to the need for lower rents and in return we are prepared to permit direct payments from the state.

“This incentive will bring an overall downward pressure on rents in the private sector. As these rents come down, more properties will become available to claimants and landlords will have certainty that their income will be protected.”

The changes in housing benefit are being laid before Parliament in New Housing Benefit Regulations which will restrict the total amount paid to any landlord for new tenants to £400 per week per rental property.  The overall rate will also be cut from the 50 percentile rent in the BMRA to the 30 percentile figure.  In some cases this could lead to a significant fall in the benefits paid to the tenant.

Landlord insurance - professional rates

Minister sexed up stats

It appears that the Work and Pension Secretary IDS (apparently not a digestive complaint) has been sexing up his statistics in relation to the changes in Housing Benefit.

He told MPs: “We now know that, according to the Office for National Statistics, the private marketplace in housing fell by around 5% last year. At the same time, Local Housing Allowance rates had risen by 3%. There is thus a 7% gap with what is going on in the marketplace.”

A spokesmen for the Department for Work and Pensions has accepted that the figures are not correct.

IDS statement was made in justification to the governments announced cuts in housing benefits.

Landlord insurance - professional rates

Exodus of London benefit tenants

The Guardian warns about the changes in Housing Benefits driving out low income London tenants from high value parts of central London.

This could impact on the business of some landlords who have exploited the anomalies in the BMRA designations for the Local Housing Allowance (LHA).

Councils have warned that up to 82,000 households could be forced out of central London as private landlords replace tenants on benefits with more lucrative professional tenants.

Whilst I sympathise will anybody that might potentially loose their home.  Equally, I think that there is something a little perverse of the state paying for people to live in areas that most working people in the UK could not afford.

I'd love to live in penthouse apartment in Kensington.  Unfortunately, the modest income from rents on my buy-to-let properties and Property Hawk won't quite stretch that far.  Oh well - there's always the lottery.

Landlord insurance - get professional rates

Landlords ripping off taxpayers?

A study by the Department for Work & Pensions entitled 'Low Income Working Households in the Private Rented Sector’ found that despite offering worse conditions landlords were charging higher rents to housing benefit claimants than to low paid working adults.

The Study concluded that private landlords with housing benefit tenants were charging the maximum amounts of rent possible – the implication being that landlords were ripping off the taxpayer.

Another aspect of the research highlighted the fact that benefits paid to private sector landlords have risen much quicker than the charges paid by tenants in the social sector.  The rises above inflation over the last decade have been 36% and 19% respectively.

Shock horror!
Well shock horror - landlords are trying to maximize their profits.  There was me thinking I was running a charity!

There are a number of issues which I would highlight from this research:

Firstly, £8.5 billion does seem an awful lot of money.  However, how much would it cost the public sector to build and then manage the number of houses to provide the accommodation provided by the private rental sector for those tenants receiving benefit.  The answer I suspect is a hell of a lot more than this.

Secondly, the changes to the system of housing benefit under the LHA were bound to encourage landlords to seek out the cheapest property in each BRMA that they could then let to a tenant.  This only makes good business sense for a landlord looking to maximise their rental yield.

Thirdly, rents for tenants on benefit need to be arguably higher to compensate landlords for the greater risk a landlord takes on for renting a property to tenant on benefit in that they will not be paid or that the tenancy will be problematic.

The reality is if there is a problem with the current Local Housing Allowance system which we think there is.  It is not reasonable to blame landlords for working within the system designed by government and their minions.  Research like this is easy fodder for those elements of society who wish to vilify landlords and exploitative individuals feeding off the misfortunes of the poorest members in our society.  In reality the blame lies with governments who seem unable to produce a benefit system which incentivize landlords to provide quality accommodation whilst making a reasonable return.

Landlord insurance - portfolio rates

Landlords face LHA freeze

Citywire article reports on the outlook for landlords over the coming years.

Outlining the issues of the Local housing Allowance cap and the predictions on supply and demand ratios.

Read article in Citywire

Dave comments on LHA

The latest housing benefit 'mouth gogger' in the Daily Mail to get the 'average man' hot and sweaty was the tale of the Somali asylum seekers who are receiving £2000 a week for their £2 million Kensington 5 bed rental property.

The story has lead the PM to join in on the head scratching and red faced blustering, commenting that the housing benefit system was ‘completely out of control’ thanks to Labour.

Dave went on to say that:

‘The idea that a family should be able to claim £2,000 a week for their house is an outrage for people who go to work every day, pay their taxes and try to do the right thing for their family.

‘That is why we will cap housing benefit levels from April next year so the maximum that can be claimed will be £400 a week for a property with more than four bedrooms.'

All those landlords out there receiving more than £400 per week from local housing allowance need to start searching out their 'plan b's' from the filing cabinet'.

Read more in Inside Housing

Get tenant checks for £9.99

LHA new rates chart

Here's a useful chart of all the Local Housing Allowances after Boy Georges emergency budget.

He "didnt really want to hurt you."

The chart provides indicative figures showing how the planned changes announced by the Chancellor of the Exchequer on 22 June could affect Local Housing Allowance rates.

See full geographic chart here at the Valuation Office Agency (VOA) site.

More on LHA price limits

More detail on the news that housing benefit is to be capped by the coalition government to £280 per week for a 1 bedroom flat and £400 a week for a four bedroom house.

It will be interesting to see how these changes will be implemented on existing LHA tenancies.

It seems that its time for us all to stand on our own two feet.

Read more in the BBC
Read more from Inside Housing

Tenant referencing online for £9.99