DSS Tenants – another issue
Published 18/07/2012 
The good thing about being a landlord is that I not only generate a fantastic monthly income from my property investments but I also have the power to make a positive impact on the lives of some vulnerable people ”DSS Tenants” living in my community by providing them with a home (when other landlords might not).
Single parent families (who have recently divorced) and ex-services personnel (who must give up their military quarters within 90 days of leaving the Armed Forces) have proven themselves to be excellent tenants for me over the years.
However – all of these tenants are claiming DSS benefits!
Most landlords and letting agents actively discriminate against “DSS tenants” because they are in receipt of state benefits and they are perceived to be bad. Yet the landlords largest cost is the loss of rental income during void periods and there are literally thousands of DSS tenants queuing at the local Council that need housing.
So is it financially wise or foolhardy to deliberately keep an investment property empty (waiting for a working tenant) rather than accepting a benefit claiming tenant?
Discriminating against someone because they claim a state benefit is not illegal but it is ironic as most landlords and lettings agents are claiming state benefits themselves (e.g. child benefit, child tax credits, working tax credits etc) as well as using state facilities such as schools and the NHS.
In difficult economic times we should reflect that we are only a negative life episode or two away from needing state help ourselves; maybe a failed relationship; a few missed mortgage payments; a lost job; the death of a loved one.
“No DSS” is a phrase that accompanies most rental property advertisements although it is technically incorrect as the DSS never really existed and is a malapropism quoted by landlords!
The DHSS (Department for Health and Social Security) did exist but this was renamed to the DWP (Department for Work and Pensions) about seven years ago – so if you don’t want benefit claiming tenants then the correct wording is “No DWP” not “No DSS/DHSS”.
I’m not advocating that every DSS tenant is good (as they are clearly not) but I also think it is wrong to assume that every DSS tenant is bad. Landlords will always tell you about their bad DSS tenant – but keep quiet when they have found a good one!
Surely, if we could find a way of selecting the good DSS tenants, whilst avoiding the bad ones, then we would be able to eradicate our void periods forever and maximize our overall investment income. I’ll write a future blog on some of the strategies that I have used to try and achieve this.
Personally, I judge my DSS applicants on a case by case basis.
I seem to have specialised in helping single parent families who were previously buying their own home before their relationship broke down and were forced to sell as they separated. The local primary school secretary (who rented from me when her relationship broke down) often recommends me to divorcing mothers as they share their marital strife with her at the school gate!
I also try to help ex-services families as they become unemployed (when they leave the Armed Forces) as they are well known for the immaculate way they take care of their military quarters as they are “marched in” and “marched out” after each tour of duty.
I know that we can’t help every DSS tenant – and many don’t deserve our help – but if we are selective then we can radically improve our return on investment as well as helping some local families in your community.
About Mark Trenfield
An enthusiastic property investor/landlord with investment properties across Wiltshire and Dorset. Started investing in property back in 1998 when I became disillusioned with the stock market and then created his own letting agency - mlettings - in 2002 Member of UKALA)
A regular columnist in the Swindon Advertiser as well as providing expert landlord commentary to BBC Radio Swindon and BBC Radio Wiltshire since 2006. Never afraid to raise and discuss highly controversial topics that affect landlords and tenants.
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Paul Barrett says:
19/07/2012 at 10:39
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ian.goode says:
19/07/2012 at 18:57
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madgen says:
19/07/2012 at 19:36
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Johann Davies says:
19/07/2012 at 19:45
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Angels Property Services says:
19/07/2012 at 20:31
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Mark Alexander says:
19/07/2012 at 20:47
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Angels Property Services says:
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Laura Leighfield says:
19/07/2012 at 21:03
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Puzzler says:
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Mark Alexander says:
19/07/2012 at 21:22
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Rosey says:
19/07/2012 at 21:35
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Neil says:
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Mark Trenfield says:
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Mark Trenfield says:
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Mark Trenfield says:
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Mark Trenfield says:
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Mark Trenfield says:
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Mark Alexander says:
19/07/2012 at 22:29
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HMO Landlady says:
19/07/2012 at 22:48
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Gilly says:
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Harry says:
20/07/2012 at 01:49
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Industry Observer says:
20/07/2012 at 09:19
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Samii. says:
20/07/2012 at 09:26
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Mark Trenfield says:
20/07/2012 at 11:14
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bdpage says:
20/07/2012 at 11:45
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@GrumpyLandlord says:
20/07/2012 at 11:49
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Mark Trenfield says:
20/07/2012 at 14:06
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Mark Trenfield says:
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Mark Trenfield says:
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Mark Trenfield says:
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Pete Judd says:
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Paul Barrett says:
20/07/2012 at 16:23
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Paul Barrett says:
20/07/2012 at 16:40
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Puzzler says:
21/07/2012 at 07:10
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Puzzler says:
21/07/2012 at 08:13
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Mark Alexander says:
21/07/2012 at 09:29
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Puzzler says:
23/07/2012 at 09:41
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Pete Judd says:
24/07/2012 at 03:41
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BOB MCCRACKEN says:
29/07/2012 at 11:13
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Paul Barrett says:
29/07/2012 at 17:09
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Sahota says:
06/08/2012 at 20:39
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Sahota says:
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ML says:
21/09/2012 at 21:14
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new to this renting lark says:
09/12/2012 at 15:05
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Paul Barrett says:
09/12/2012 at 17:52
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Mark Alexander says:
10/12/2012 at 09:22
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Paul Barrett says:
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Mark Alexander says:
10/12/2012 at 22:37
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Paul Barrett says:
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Ian Ringrose says:
11/12/2012 at 12:41
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R. Kent says:
29/12/2012 at 21:33
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R. Kent says:
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R. Kent says:
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Paul Barrett says:
30/12/2012 at 04:36
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Mark Alexander says:
30/12/2012 at 11:28
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PeterH says:
31/12/2012 at 12:44
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Tomasz says:
05/01/2013 at 02:16
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Guest says:
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Tomasz says:
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Paul Barrett says:
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sue devlin says:
20/03/2013 at 17:10
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Paul Barrett says:
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sue devlin says:
26/03/2013 at 04:20
Leave a commentI don’t really think LL have a problem with LHA claimants, it is the system by which they receive LHA that causes LL not to want to take LHA claimants on.
And also the useless county court system should they have to be evicted.
I have been victim of the system on several occasions which has resulted in the LHA tenants waqlking away scot free with thousnads of pounds og LHA that should have been paid to me.
Plus all the damages, thefts etc they caused.
To encourage LL to take on LHA claiamnts this is what needs to be done.
1/ Ensure that LHA is always paid to the LL even if it goes via a tenant’s bank account(UC will address this problem if a CU is used when UC is introduced)
2/ Remove the possibility of ‘clawback’ if as result of a tenant not paying LHA and there being 8 weeks of arrears the LL obtains direct payment and then 6 months later the council claim from the LL all the LHA paid due to a false claim by the tenant.
3/ The arrest of any tenant who has caused criminal damage and theft from a rental property and not to treat such criminal offences as civil offences and for deductions to be made for the costs of those damages and thefts to be paid to the LL via deductions from benefit or wages or other resources the tenant has.
4/ The payment of LHA directly to a LL as soon as a tenant has failed to pay the LHA but for the LL to receive all the LHA due even if they have paid it to the tenant already
Then they should recover that LHA from the claimant by deductions from their benefit.
5/ The ability to discuss ANY aspects of the tenant’s domestic circumstnaces without there being a need to obtain permission(I appreciate one could overcome this isuue by having a condition in the AST agreement)
These are all I can think of at the moment.
Of course NONE of the above will ever happen which is why I do NOT take on LHA claimants.
It is the system which conspires against both LL and LHA claimant and not the LHA claimant per se.
We have yet to see how UC will be operated to ascertain whether the system will protect LL from LHA claimants.
In my water I feel the only thing that will change is direct payments to LL will no longer be permitted, though I have heard rumblings that this may still be possible in extenuating curcumstances.
Therefore I will still NOT rent to LHA clamants.
sorry to disagree but all the dss or dwp that I have had have been a total pain used to think like you but no more after none payment and damage give me a working tenant any day. main problem on rent is they are paid the rent then they are spouse to pay you this does not happen then you have to wait for them to default 8weeks before you can ask for direct payment or the route of a section 21 just to get your property back. after talking to a lot of my local landlords there all of the same opinion since they changed the payment method from payment to the landlord to payment to the tenant it has lead to loads of abuse. so if you wont them you can keep them
regards Ian Goode
A really biased report! Most landlords don’t want Housing Benefit because of the benefits system and NOT the tenants themselves! Benefits Agency don’t give a damn when delaying payments to landlords every time there’s a minor change in claimants circumstances. To blame landlords of discrimination is a very narrow and ill informed view.
How very true. I too have turned my back on LHA tenants.
If I could get landlords to give me their properties and they let me guarantee their rent (albeit below market rents in the area but the landlord won’t have voids!) then I’ll rent them myself to LHA claimants and I’d make a killing in London. Win – win – win I think.
Calling all landlords in Tower Hamlets, London. Let me rent your property from you and I’ll let it to LHA clamaints with no headaches for you.
Interesting, so how would that work then and how can you demonstrate the value of your guarantee? For all landlords reading this know you could just be a chancer who takes the rent when the going is good and disappears when it isn’t. Are you a member of SafeAgent or any of the bodies providing client money protection? Is you “guarantee” insurance backed? What happens if the property gets trashed, i.e. who pays to get it put back in order?
My word is my bond Mark
Nuff said my friend…and that’s better than us landlords get from many agents EVEN WITH all their memberships of ARLA and guarantees and bonds and stuff like that!
I rent a one bedroom house out to a DSS tenant through a letting agency, and I can say that I have had absolutely no problems. At first I was very skeptical when the letting agent suggested a DSS tenant, especially when I found out the the rent is paid to the tenant and it is their responsibility to pay the rent. When the tenant came to view the house, I was at the house to meet her, so that I was comfortable with her renting my house. My tenant pays her rent on time and looks after the house, she has repainted the house and put new flooring in the living room and bathroom. On the flip side, if my tenant has wanted something, I do all that I can to ensure that it is sorted as soon as possible. As long as my tenant continues to pay the rent and look after the house, she can have anything that she wants. In fact, I would seriously consider buying a 2 bed property, to keep her as a tenant, if she wanted a larger property.
I don’t wish to be pedantic but the DSS as so named did exist between 1988 and 2001 (see Wikipedia for verification), I am guessing Mark is a young man but as a business journalist he should check his facts, especially as it is so easy to do.
I would have no problem with letting in this sector except that either or both the property lease or the lender’s Ts & Cs prohibit it. Is there a mechanism for borrowing which would allow it e.g. from local authorities? You would think so, wouldn’t you, given the housing shortage? I have been unable to find it, but if anyone knows please advise.
mmmm! I see, best you get back to your office now then, there may be a long queue forming and you wouldn’t want to have a crush when you open the doors in the morning to sign up all the landlords wanting to take up this incredible offer would you?
Bravo Mark! I have recently let my property to a young lady who was staying in b&b with just 3 weeks before delivering her baby. She had been turned down by countless landlords because she was on benefits, and was desperate. I agree that we all share the responsibility to care for those who have been down on their luck and found themselves homeless. Her partner has now joined her and they are a delightful little family! OK, sometimes one may have problems with Housing Benefit claimants, but, on the other hand employed people can so easily find themselves without a job these days, then Landlords do not get paid their rent. So, not good to generalise. Give people a chance!
Easily the most condascening article I’ve seen on this otherwise very good website. Do you think we’re stupid? Shame on you Mark Alexander for publishing this patronising rubbish.
Hi Puzzler, Point taken (re: DSS existing between 1988 – 2001) …… I stand corrected!
I’m still puzzled though – like yourself – why landlords are still using NO DSS some 11 years after it was abolished.
Regarding lenders and renting to DWP tenants – many lenders will allow you to do this as long as the tenancy agreement is created between landlord and tenant (rather than landlord and local Council).
Regarding leaseholds – some leases allow it … others don’t ….. not a problem, of course, if you buy freehold properties!
Thanks for your comments …
Mark
Hi Rosey,
Thanks for sharing your experience with us all. Your story underlines the point that not ALL benefit claiming tenants are bad.
Mark
Hi Laura,
Thanks for the post (and the personal TWEET earlier). I agree that taking a benefit claiming tenant can be a brave thing to do – and is often against perceived wisdom.
However – the most successful (and riches) property investors that I have ever met are ALL focused on providing housing to benefit claiming tenants.
I think that speaks volumes ….. by turning away the DSS tenants … landlords are turning away PROFIT.
Mark
Hi Magden,
I know the HB system is unpopular and I know this upsets many landlords.
However – landlords soon get used to the HB system and as long as you get your rent money in the end … and you enjoy virtually zero void periods as well … I don’t see the problem with the odd payment being _delayed_.
HB assessors need to ensure that benefit claimant are entitled to their benefit – which is why delays can be introduced from time to time .
It seems to me that you need to take a look at your cash flow within your BTL business if a delay in a benefit payment can cause you so many problems.
The blog is certainly not biased or ill informed … it is based on 10 years experience of renting over 200 properties to benefit claiming tenants …..
Mark
Hi Ian,
Sorry to hear about your bad experiences. As I said – not all DSS tenants are good!
Having a good relationship with your local Council is important. Many Councils will now pay the LHA money directly to the landlord (which is what should have always happened) and many Councils – including my local Council in Swindon – will suspend the HB claim as soon as the claimant is 4 weeks in arrears.
If my tenants fall into arrears then I give them chance to adhere to a repayment plan. If they repay back what they ow – they stay – if they don’t – we evict.
Mark
Hi Neil, thank you (I think). Mark Trenfield is a landlord and has a strategy to share. Controversial as it might be, as we can see from the comments, there are variety of opinions on this strategy and on that basis it makes for a good discussion in my opinion.
Following a prompt from Mark on Twitter as I was reading through the comments (I was, for once, one step ahead!) the problem is generalisation. We can’t say that ALL LHA claimants are difficult in the same way that ALL people are not the same. The point that needs to be made clear to the powers-that-be is that the housing payment system ISN’T WORKING! Yes, some tenants pass their LHA on promptly and, yes, I find that they are in the property for the long term. However, if they are depressed or teetering on the edge of whatever, it only takes one cock up with the payment routine and the increasing rent arrears causes them to throw caution to the wind and stuff up their tenancy and get into debt.
I have a tenant in prison at the moment. Despite only renting a room he’s already £1000 in arrears. He’s out next Friday, I’ve written to Housing Benefit (who haven’t bothered to reply) and they, in turn have written to him giving him 28 days to respond to the allegation of being 8 weeks in arrears (which he was before he went in).
Now, as I take him for a walk in the car park, how do you think the conversation will go? “Here’s my plan to pay off the arrears and I’ll be straight within 6 months?”. Whilst I’ll give him a chance to come up with a payment plan, with the best will in the world, he’s not going to cover the arrears and stay on top of his rent unless a huge dose of good fortune comes his way.
I like the longetivity of LHA claimants but simply can’t afford to take risks any more.
May I say that getting the rent paid direct to the landlord is not necessarily such a good thing. I would not want it ever again, because in the past I had a tenant who claimed benefits and I had the rent paid to me. It then turned out it was a fraudulent claim as he was working all along and the Council simply demanded the money back from me and I was supposed to chase him for this money . By this time, he had done a runner and was claiming from another address – but the Council couldn’t tell me where he was because of data protection. After a huge battle, they kindly wrote off my debt, although they initially just began to deduct it directly from my Bank account. Nightmare times (as normal when dealing with the Council imho..)
Hi Gilly,
If the LA did not have your authorization to debit your bank account, they would then find themsleves in really serious trouble, not sure how they could do this without your consent ?
Paul
Every single one of your suggestions is impossible legally. I’ll explain if you like but it will be a very long post!!!
To all of you. Decide whether you want direct payment – in which case live with clawback
Or payment to tenant in which case at least clawback is not an issue.
Best tenant I ever saw was a single mother HB tenant who moved into a completely refurbished one bed unfurnished flat and I swear left it in better condition when having had another chilsd she moved along the corridor to a 2 bed in a state and left it like a palace.
Those who say it is the system are 100% correct.
Mark your suggestion on cash flow is admirable, and being patient for payment. That assumes two things though. One is that the payment will eventually actually be made. The other is that the Landlord can afford it.
Angels Property Services – Guaranteed Rent Schemes GRS) very specialised, very complex, only for the big boys do not go there. I used to run one for a very big building society and have recently written a paper on it for a very large national letting agent who may well not proceed with their original intention to introduce one.
Trust me – it is not as simple as it seems!!
Nice blog on the importance of not judging a book by its cover and that everyone deserves to be given a chance, whether they are working tenants or LHA tenants.
Our latest story from one of our community also highlights this;
Working tenants accrue £40,000+ in default & damages…
Neil,
What is more stupid – having an empty property that is generating you no rental income – or having a good DSS tenant (single mother etc) paying rent that stays with you for years and years and years?
Regarding the Armed Forces – it’s OK for us to send them to Afghanistan then … but when they leave the forces (and have to claim DSS benefits) – it’s not OK for a landlord to offer them a home?
There is nothing patronising about the article I wrote.
It is simply encouraging landlords to “think outside the box” to maximize their investment income rather than following the herd mentality of “No DSS”.
Renting to the DSS might not fit your business strategy – but there are an awful lot of landlords who are making a lot of money from this segment of the market and I, personally, get a pleasure from helping people to find a home.
Mark
Re the above and subseqent comments, I have had both good and bad, working tenants such as a prison officer, and a nurse were probably my worst tennants, currently I have a nightmare LHA claimant, who is driving myself and the council mad. As soon as she leaves we will all sleep better at night. Only conclusion is to ensure that the payments are paid direct to the tenant and that they are responsible for paying the landlord. As soon as the tenant is a week in arrears (private or otherwise) the landlord would start appropriate action. Sounds tough, but if you explain to them that this will happen automatically, otherwise they may take you for a ride. Note, obviously once they have a good track record, then make the judgment as appropriate.
Interesting article and valid viewpoints, even if not every one’s cup of tea. I have been taking benefit claimants for several years, and have about 35% of my current crop of tenants claiming benefits. I have had good ones and bad ones. I can say that one of my best tenants ever was a benefit claimant, single mum with two kids, no hassle, paid on time every time, no shenanigans, no “working the system”. Yet again, my worst tenants have been benefit claimants. So, I have seen the two extremes and probably everything in between.
Like the author, I give people a chance, and have had some throw it right back in my face! Bottom line is to try and consider each applicant on their own merits. Benefit claimants come in all shapes and sizes and characters just as the working tenants who can just as easily be bad tenants.
The benefits system is what is flawed, and does not encourage the average landlord to want to take on claimants. The direct payment decision was a bad decision which has caused no end of grief to landlords, and to the council officers that have to implement it too, particularly when things go wrong. When the new universal credit comes in, its likely to be “murder on the dance floor” to use the famous song title.
Yes, DSS did exist. The writer is puzzled as to why DSS/DHSS is still used so long after it was abolished? It is because the term itself is still widely used by the claimants themselves and is what is understood. Besides DSS rolls of the tongue better than DWP. Even LHA is not used or understood, whereas housing benefit is. Some also still say giro for cheque. So landlords use the terms that their market understands.
Hi GrumpyLandlord (or can I just call you Grumpy)?,
Thanks for your comments and I think everyone on here agrees that the benefit system is flawed but it is heartening to hear that other landlords, like yourself, are prepared to give some DSS tenants a chance.
Personally, by helping some DSS families – I have not only housed them (when others wouldn’t) but some of these people have gone on to gain full time employment or hve even started there own businesses thereby not needing to claim benefits anymore.
By housing these families we have enabled these people to turn their lives around.
So – I am not advocating that we help the all the long term unemployed who are too lazy to get a job ….
I am suggesting though that we try and help some people who are “down on their luck” and who could do with a break from a kind landlord.
Hi Grumpy,
Thanks for your comments.
I think most people agree that the benefit system is broken but there is little that any of can do to fix this and I am pleased that you are also helping DSS tenants on a case by case basis.
I was never advocating that we, necessarily, help the long term unemployed who can’t be bothered to go out and work. I was merely suggesting that, sometimes, people need to be given a break in life and – as landlords – we have the power to help (if we want to).
Some of my DSS tenants have gone on to full-time employment and even set up their own businesses once they been housed thereby meaning that they no longer needed to claim benefits at all.
In other words – being accepted by a caring landlord meant that they started to turn their life around.
Hi bdpage,
Yes – I totally agree and thanks for your feedback. Tough love is a good strategy (and I will write more about this in a subsequent blog).
Hi Samii,
Thanks for your feedback and support.
I do hope the working tenant that accrued £40,000 in default and damage wasn’t renting from Neil …. after his less than complimentary remarks on my blog!
Mark
I have to agree with HMO landlady in her earlier post. The problem does seem to be often that once the tenants have had a bad week and used their LHA to pay for something else they realise they can get away with it and the arrears start mounting up. Even if they intend to pay they can’t because they have no spare to pay. I have found the benefit people completely unhelpful when I have tried to report bad paying tenants. They take the attitude that having paid what a claimant is due to it is none of their business whether the money gets passed on or not. I seem to be a sucker for a sob story because I keep saying no more LHA tenants and then someone comes along who seems a deserving case but they always let me down. I did a quick calculation the other day and the average LHA tenant has cost me £1300 in lost rent plus often solicitors/court fees to evict them. Trouble is once the arears start to mount up they know they have no deposit to start elsewhere and they just hang on to the last moment because they have nothing to lose. Of all the LHA tenants only one has ever kept up the payments and he often comes up £20 short but then makes it up over the next couple of payments. All of these have been perfectly nice reasonable people in all respects except their ability to handle money. I often feel like I am running a charity not a business. What I lose with arrears and legal costs is the equivalent of 6 months rent and this is much more than I would have lost with a void which would have been 2 months max!
I can understand why as the law stands at his moment that the system is as it is.
for these reasons lots of LL won’t take on LHA tenants at the outset.
Having said all that I am now looking at a LHA claimant from the outset from whom I will NOT accept direct payment.
I wiil have a £2000 deposit and I will have RGI on her or her guarantor.
I will require 1 months rent in advance aswell.
This means effectively I will have a credit of £1000 per month as the council pay in arrears, until the tenant terminates the tenancy or I do.
At the end of the tenancy I would refund the advance rent and deposit if everything was OK.
Her guarantor who will be stumping up the cash is happy with this arrangement.
Lots of, indeed most LHA claimants are not in this position to commence their tenency.
Which is why they find great difficulty in finding a LL to take them on.
I know councils can provide a bonde but that is held by them and I wouldn’t trust the council to relaease the monies in the event a claim is required on the deposit.
The only LL who can really afford to take on the risk of LHA tenants are those with large cash reserves for when nit all goes wrong.
Accepted that this would not happen all the time.
And clearly LL who carry out full DD on these claimants generally have good experiences.
Well that is fine for them, the little LL who mostly does NOT have such reserves CANNOT afford to take the risk.
As has been mentioned LL haven’t really got anything against LHA claimants per se, it is the system which so conspires against LL and which on a regular basis leaves them in severe financial detriment.
The law, system has to be changed to advantage LL who may well then consider taking on LHA claimants.
This hasa political effect aswell.
Mr Wales of Newham council stasted there wer no affordable properties in Newham for LHA claimants. caused bu govt cuts to LHA.
This was proven to be rubbish.
There were plenty of properties available within the LHA limits; it was just the LL did not want to rent to LHA claimants.
Had that been highlighted then all that silly politiking would have been exposed for what it was, basically being economical with the truth.
Had this been brought to attention in the press then perhaps a conversation about how things could be changed to encourage LL to take on LHA claimants, then fine; but that never happened, I wonder why!!?
I think it is absolutely commendable that certain LL are prepared to take the risk of a LHA claimant.
This is all very well if you have the resources to cover eviction etc which coud mount to £8-9oo plus damages and theft.
Such decisions can thought generally only be made by those LL who are let us say more endowed than little LL.
The ability to cover massive losses without a property being repossessed is really the clincher decision.
I know I have had 2 properties repossed caused by wrongun LHA claimants, with the effects still occurring to me such that I might be homeless myself.
Can you see now why most LL without resources just won’t take the risk.
It just isn’t worth it.
The system is wrong pure and simple and until it changes in favour of the LL there will be a continuing decline in LL offering properties to LHA claimants.
That is just the waqy it is.
O)nly govt can change the system and they don’t seem too inclined to do so.
so it is tough on LHA clamants, but that’s the way it is; sorry benefit claimants!!
Thanks Mark, regarding lenders then, can you point to any? My problem is I have too many properties for most of the players (HSBC, Platform etc.). TMW, Woolwich, Paragon have high minimum property values (£50K or 75K) or sq. metrage. I am too small for commercial lending (HSBC >£1m) so am stuck it seems.
And all of those lenders say “no benefit claimants”.
Hi Puzzler
Have you tried the High Street clearing banks?
I’m not talking about the girls on the counters, what you need is a hungry Business Development Manager with targets to meet. They all still have a few, the trouble is, most of them are over target for new lending and their new targets are to increase margin and cross sales.
I used to be in the business of find out who the BDM’s were that were below target. I retired from that business though in 2009. Nevertheless there are plenty of people in the Commercial Finance Broking industry for whom that remains a profession. My business partner (Neil Patterson) has good relationships with a few NACFB members (National Association of Commercial Finance Brokers). You can reach Neil by emailing npatterson@property118.com
These High Street lenders will consider a variety of low value and more unusual transaction but note that they are likely to be looking at repayment mortgages and 60% to 70% LTV maximum. Low value properties tend to produce better yields though so if you have decent deposits or additional assets you can pledge the deals can still stack up on cashflow.
I hope that’s useful.
All the best
Mark Alexander
My last two posts have appeared in reverse order for some reason… yes I am approaching such people. HSBC have a big gap between 5 properties and >£1m. RBS, Clydesdale have said yes but stopped taking my calls. Finally some hope with Lloyds but yet to see if anything actually materialises..
They can’t debit your bank account but if you have more than one LHA payment being paid to you they can deduct it from the total amount being paid in a lump sum.
In Scotland the law is definately an ass it took me 13 months to evict a tenant who owed me £9,000. He was not DHSS ,and my DHSS tenants are great, I just picked them carefully and listened to their story. I get paid directly from the local authority. Landlords who have bad experiences mostly have very little contact with tenants and usually rely on an agent (may as well give the money to a stockbroker)
Interesting discussion tho, seems to rely on whether your a capitalist or a humanist, me I like helping people.
Interesting re whether a LL is a capitalist or a humanist.
surely this depends on whether you can allow a tenant not to pay rent.
It would seem if you expect to receive rent and evict if you don’t you are a capitalist.
If you are not that fussed about receiving rent as you can afford not to be paid then you are a humanist!!!
Trounble is most housing charities expect LL to be humanists and suffer detriment themselves.
I say tenants dream on.
Pay your rent or get out
so I guess I must be a capitalist!!
I think it’s important to treat everyone as an indervidual. I often recommend “DSS” tenants to a landlord, however I always ensure they have a garentour in place (prefrably a home owner, in full time employment, earning at least the minimum salary threshold) and ensure thy sign a deed of guarantee
Why not go down the guarantor route???
A landlord cannot be a humanist without being a capitalist first, unless they are a dilettante before both and can afford to lose the lot.
wonder if anyone can help me i have 6 property’s 4 are rented out to dwp tenants my dilemma is this do i declare to insurance company and mortgage company that they are tenanted to dwp if I don’t declare i wont be insured. and if i do declare and mortgage company asks to see policy will i have to pay back the mortgage as there is a clause in the mortgage that you cant rent to dss.what if i had tenants who where working and then lost there jobs do you have to give them notice can some one advice me please.
Ever heard of sleeping dogs lying!?………..leave them!
Do NOT under ANY circumstances make ANY information known to your lenders about DSS tenants if there is a clause in your lending agreement restricting certain tenant types.
Building insurance doesn’t take ANY notice of the tenant type, contents insurance etc DOES.
No lender has EVER asked to have sight of a buildings policy or for that matter a contents policy, which would be taken out by the tenants anyway.
Yes you could have your own LL insurance; first I would just get hypothetical quotes for different tenant types.
Providing you make the mortgage payments the lender will be none the wiser.
Technically if a tenant was in receipt of £1.00 of HB that makes them a DSS tenant.
Do you then evict them because they are now DSS tenants which is in breach of the mortgage lenders conditions……………………………….NO.
You ignore these stupid conditions,
If everybody abided by mortgage conditions there would be mass tenant homelessness, mass LL bankruptcies, mass write downs of loans and banks going belly up again and running to the taxpayer for another bailout.
Don’t concern yourself
White lies can be very useful in business; I suggest you use them or better still say NOTHING, you won’t be asked anything if you keep paying the mortgage.
Paul
I have mortgages with Platform and West Bromwich Building Society, both of these lenders ask for copies of the insurance every year.
Also, it does make a difference to building insurance premiums if a tenant is claiming LHA.
I agree that if your tenant goes on to benefits you wouldn’t necessarily give them notice. What you should consider though is asking for a guarantor at that point. If they can’t provide one then a commercial decision needs to be made.
This is a VERY interesting question that’s been raised though. Clearly if a landlord lets to LHA tenants from outset he could be in breach of his mortgage conditions and does need to declare the basis of letting to his insurance company, otherwise his insurance would be void too.
I suppose there are SOME lenders that have these strictures.
I have NEVER been asked for such information.
So if it exists then LL are restricted to the lender they can use as every LL could have a tenant a P45 away from becoming a LHA tenant.
What happens then!?
EVEN £1.00 of benefit makes someone a LHA tenant.
What is a LL supposed to do; evict the tenant.
No it is one of those stupid conditions and if I had a Platform mortgage I would tell them to get stuffed.
My insurance is my business and so is who I have as tenant.
I think the issue is a DSS tenant at the outset of the mortgage; which is fair enough; but NOT thereafter,
Such a condition might only last a few months before a tenant is evicted under Section 8 or under S21 after 6 months.
Therefore it is a ridiculous and pointless condition.
Perhaps lenders might like to source non-LHA tenants for LL who would pass a RGI check; I’d be up for that!!
Hi Paul
These lenders simply charge the insurance to the landlords account if it is not provided. If a tenant claims benefits after all referencing has been done and passed the landlord may well be none the wiser. If the tenant advises the landlord that they are now claiming benefits it is in the landlords interests to advise the insurers and the lender. I have never been in this position so I am unable to say what would happen. If they insisted on me serving notice though, that’s what I would reluctantly do as I’m not about to redeem my lifetime tracker rate with Platform which costs 0.68% over bank base rate.
Is it any wonder why LL don’t advise lenders if they do rent to DSS tenants!
If you took into account all those LL who are in breach of their mortgage conditions by letting to them there would be mass homelessness!
I’ve heard all the stupid threats that lenders come out with; it is no wonder LL don’t tell them anything or rather just tell them what they want to hear.
Providing the mortgage gets paid the lender doesn’t really want to know!
I have NEVER had any insurer for buildings insurance ask the status of the tenant occupants and I have had quite a few claims!!!
I think in these cases economy with the truth is called for.
Lenders aren’t stupid, they know exactly what is going on and therefore only eventually need too or have to know when the mortgage payments get into difficulty.
That is actually the reality of the situation, but nobody wishes to mention it; it is however one of the great unstated truths that everyone in the industry knows about..
Aren’t there in fact about 3 1/2 million LHA tenants in the PRS; with them mostly in mortgaged properties which specify NO DSS!!!
But I agree that if a lender insisted on removal of the DSS tenant or lose an attractive rate then ta, ta tenant.
I have NO loyalty myself to any type of tenant and certainly like you wouldn’t allow a tenant to compromise my efficacious financial products I may have in force.
The building insurance I have seen with malicious damage by tenants cover does seem to cost more if it covers LHA tenants or students. I have heard of a case when the insurance company did not pay out on a rebuild after a fire, due to the tenant being on LHA and questions over how the fire started.
Not having the correct insurance is a risk I would not take, however I don’t think a lender would spot if you brought insurance that included LHA. If the lender questioned it, you could just say that you are not in control of what a tenant did once they moved in, so wished to be covered if they claimed LHA.
Can you find insurance that covers you for LHA without it being listed on the front page of the policy as a “add on” you have brought.
I love this Paul Barrett. Spot on!!!
However, a guarantor is only as good as your ability to pursue them legally. Sounds good but in practice it can be difficult.
Wise man!! “I won’t let to housing benefit claimants”
We could sell this guys audacity by the jar load!!!
When you want to let a property everyone is your friend as follows….
1. The letting agent loves you
2. The local Council loves you
3. The family of the tenant loves you
When you have to evict a tenant everyone says it not their problem! In fact you are considered unreasonable if you are evicting a tenant event if the tenant decides not to pay their rent.
Good advice – Always tell them that they brought it upon themselves by not paying rent!
Always try to S21 your tenant if they mess you around.
My second to best advice is…………
Ensure you are covered by Landlords Insurance with legal cover protection and malicious damage by tenants. (some have a £2500 excess for malicious damage so please check the small print)
Also try Letsure for rent loss cover.
My best advice is…………..
Do what I did and sell your BTL properties and live a more stress free life!!
As it appears that we LL all have a major concern about the way the county court system works in relation to rent arrears and necessarily prevents some LL from choosing to take on certain tenant types because of the difficulty in evicting; would there not be a possibility of attempting a change in the eviction law to ensure that once 2 months of rent arrears have occurred the tenant may be removed forcibly by police if that is what the LL wishes.
This would require a petition of 100000 LL signatures and possibly even some good tenants would sign aswell which should not be too difficult to achieve bearing in mind there are 1 1/2 million LL who must all at one time or another suffered the iniquity of the useless county court eviction process.
At least if such a petition is raised it will highlight the issue of LL not wishing to let to HB tenants due to the eviction process.
There are of course many other very good reasons why a LL would wish timely removal of a tenant..
I think; however it is one step at a time, sweet Jesus.
The major issue affecting ALL LL is rent arrears.
We have ineffective means presently at our disposal within the law; which as so organised is unlikely to change anytime soon.
Perhaps to have the matter debated in Parliament is as much as we can hope for.
It might bring change, it might not!
Nothing ventured, nothing gained however!
As for the form of words for such a petition proposal and to initiate the petition formally I would leave in the capable hands of a certain Mr.Mark Alexander; who has waxed lyrical and reflected in cogent terms the concerns of LL in regards to this timely eviction issue where rent arrears are concerned.
We are the only service I believe who are required by law to continue to provide that service when the defendant does not pay anymore for the service.
The fact that they happen to reside in the service that LL provide is irrelevant as far as I am concerned.
No other business; as that is what the PRS is would countenance such a business model.
Can you imagine for say 9 months no none paying for their goods at the the local supermarket!!???
Well effectively that is what can and frequently does happen to LL on a regular and increasing basis.
It might be a completely unrealistic thing to consider we can attempt to have changed; but surely we as LL; providers of an important societal service cannot be allowed to continue to be effectively abused by the users of the service they provide.
Thought I’d just throw the idea in the pot to see what other LL etc have to cay about the idea
I have searched the e-petitions website for petitions mentioning landlords and have found this one. Please help me to spread the words and get more landlords to sign it. There are already nearly 3,000 signatures >>> http://epetitions.direct.gov.uk/petitions/35479
Unfortunally you have to experience the problems of taking on a DHSS tenant to understand the serious problems the tenant and the systems through up..
CAB and the DHSS office telling the tenant to stay in the property even though a working tenant has to leave after the two months notice till DHSS tenant has at a court order then they have to go plus now they have a court order against them.. it cant help them..
The lists do really go on and it has now become a major problem for tenants who have to receive benefits as once they spend the rent it doesn’t take a Einstein to understand that they cant make up the money and it just spirals downwards etc
So good luck to people who help the DHSS
I am a tenant and I want to share my story. I claim Housing Benefit. And this is only because of ridiculousness of this system. I own my LTD company so I decide of my salary. If I increase my salary by 100 pounds and I take into the account the drop of tax credit, the drop of housing benefit, the increase of housing benefit because of drop of tax credit, the tax that I need to pay, the NI that I need to pay, the NI that my company (so thats me again) has to pay I will pay in taxes and in lost benefits exactly 102.55 pounds. That makes me MINUS 2.55; therefore the most logical option is to keep salary as minimal as possible and reinvest the money in the company so it grows faster and brings more income and in years to come I wont need benefits any more. However this stage when my rent is 1300 (I live in London) which is far more than minimum age the most logic move is to use Housing Benefit. When I worked as a full time hotel manager and I had salary of over 30k and my wife went on maternity I obviously qualified for Housing Benefit. I think that what landlords usually tend to forget is that you can be professional, have a great job, great salary and still easily qualify for Housing Benefit (due to very high rents). I have never failed with any rent payment on time since I started renting 10 years ago, I have never failed with any single credit card or loan payment. Yet I know people who worked in professional jobs, were made redundant and got into massive debts towards the landlords and those were not recoverable as they had no jobs. So this is life and there is always risk. The fact that I claim (out of reasonable economical decision as I could increase my salary to 2500 net per month easily but whats the point if this would cost me more and I will be worse off) doesnt make me risky tenant. In current economic situation I would be more concerned about people who might easily loose their jobs tomorrow.
I meant minimum “wage” not age, sorry
Oh and by the way. The tenant does not need to tell landlord he wishes and will be claiming after moving in
some of your posts address problems of notifying mortgage company and insurance company, but how would you know that your tenant made a claim after he moved in if he would never tell you. I personally know people who work increased hours or two jobs for three months before renting new place and as soon as they move in the decrease hours or go for part time jobs and then claim as it makes no economical sense to employee to work additional hours under current system. For an employee ere is 90.55% withdrawal rate, which means for every 100 extra gross pay 90.55 will be taken away in lost benefits and taxes. No wonder so many people claim. And due to high rents many full time employees must claim to be able to pay their rents. If you (landlords) want to keep your rents at over 1000 a month you must allow people on Housing Benefit or demand for houses will drop significantly and majority will stay empty until rents fall down. And if you think that your tenants do not claim as they are working you might be very wrong. 9 out of 10 Housing Benefit claimants (In my work I deal with people on Housing Benefit very often, so I know hundreds of claimants) do claim at the no-DSS properties and of course they do not authorise Councils to contact their landlords, so landlords have no clue (or pretend they dont know as they dont really want to know) that their tenants make claims. I think that it is time to distinguish between out of work claimants and in work claimants as those who do work claim because of low salaries, number of children (my friend has three kids, he has great job, huge salary, but it makes no sense to pay for childcare for 3 children which would be more than wifes salary and no help from government, so wife stays at home and they claim massive payouts in Housing Benefit) or other circumstances and those who work and claim usually have a very strong ethic and want to pay on time. This is because if they dont they credit scoring will be affected and they will struggle to rent another property in future and thus affecting their own families. For me my rent is top priority as I prefer to live in a nice area, close to my children schools, away from council housing and troublesome areas, so I need good references and great credit score; therefore it is so important to never fall back with rent. So does the fact that I, the same as thousands of working families, make us worse tenants? I dont think so. i believe that it is wrong to treat working claimants in a same way as unemployed claimants. Good credit score, history, references, work references, that should matter.
And what about those who work, have decent salaries but send children to childcare and claim help with the childcare (through tax credits and housing benefit) and I talk about families with joint income of over 60,000 per year. YES, providing they use childcare they can still qualify!! Should they be treated in a same way as someone unemployed for the last 10 years just because they also claim some housing benefit? That’s why I think that landlords who understand that there are as many different situations as people can really benefit from having great tenants who are responsible and pay on time even if they claim some housing benefit. Of course you can read about horrible tenants who claimed benefits but you can also read about horrible tenants who never claimed a penny.
Tomaasz you put forward very eloquent rationale as to why LL should consider tenants who may be in receipt of benefit.
However you fail to relise the crux of the matter.
Let’s say you were a millionaire; but for various reasons you receive benefit.
If I had RGI check carried out on you you would probably fail.
How could you possibly guarantee to me that you a milionaire would pay the rent?.
The maximum deposit I could obtain would be 2 months worth of the monthly rent and 1 month’s rent in advance.due to issues with premium tenancies etc
You may have brilliant credit references etc; but if you failed the RGI check I would NOT take you on as a tenant.
You may have a guarantor that passes the RGI check and if so I would take you on.
You see it doesn’t matter how rich you are, you can still stop paying me my rent and there is nothing I could do about it.
I would have to evict you and try and pursue you through the County Court for rental arrears.
With no rent coming from you, who is going to pay my mortgage!?
It can easily take a year to evict a tenant during which time the property will have been repossessed by the lender due to no mortgage payments being made.
So you see LL don’t have anything against benefit claimants it is the eviction process which puts LL off and we cannot obtain RGI on these benefit claimants..
There are; however, some alternative rent insurance products which have recently come to the market and it may well be that such new solutions would be acceptable to LL if as it seems the LL is GUARANTEED to receive rent if the tenant won’t pay.
So don’t blame the LL; he is only reacting in a way to protect his livelihood,; which in my case is not to accept tenants who don’t qualify for RGI!
So you see it does NOT matter how good a tenant is; without RGI in place on the tenant, the LL can still face financial ruin if that great tenant stops paying rent.
With RGI in place it doesn’t matter as the rent will be paid by the RGI company until the tenant vacates or is evicted
What we LL need is the facility to boot out a tenant as SOON as they stop paying rent.
If LL could do this even I would be prepared to take on all sorts of weird tenants; because I would know as soon as they didn’t pay rent I could have them removed from the property by the police.
This situation will NEVER happen; so I am stuck renting to tenants who pass RGI checks.
Believe me I would love to rent to you sound tenants; but no pass RGI check!, No tenancy with me!
i am a housing benefit tenant and have always payed any top up needed but i must admit i prefer to have rent direct to landlord and i always leave the houses i rent in better condition than i found some of them and without bed bugs its the bad tenants and cannabis growers that give gud tenants a bad time and make it harder for us now i have got to go thru it all again because of this stupid bedroom tax i need to raise at least 900 to get anywer
I feel for you as you are clearly a victim of the system.
For a LL to take you on would you sign a tenancy if it stated and was legal that in the event of you not paying rent that after 1 month the LL could have you removed.
Do you think that would be fair or do you think a LL should subsidise your ‘lifestyle’ until you are evicted!!??
This early eviction would ONLY apply in non-rent payment situations.
Could you take on a lodger without any effect on your benefits?
Could you reduce any ‘lifestyle’ elements to enable you to remain.
Could you not source a tenant on spareroom.co.uk without telling anyone.
Who would know!?…………………you would have a regular visitor wouldn’t you!?, They wouldn’t be on the electoral roll or council tax register would they!! !?
Could you NOT get a job!!!??
with regards to Paul Bennets comment below:
(Who would know!?)……I would know
(you would have a regular visitor wouldn’t you!?),
I don’t want to do anything illegal no i don’t want a
stranger in my home nr my young ward
(They wouldn’t be on the electoral roll or council tax register would they!! !? ) I don’t want to do anything that would end up me being
homeless I have a child to think off.
(Could you NOT get a job!!!??)
would you employ someone who after working 3 days needed a week off to get over it i have arthritis from hips down back problems carpal tunnel in both hands , type 2 diabetic asthma depression and a few more to be going on with I may have found someone to help us we go to look at a house on Wednesday fingers x