Am I getting the most rent out of Housing Benefit?

Reply to the comment left by "Puzzler " at "07/11/2015 - 09:29":

There is no issue of fraud in Jonathan's strategy, in the examples given, the maximum LHA entitlement would be based on the household size, so this would be the same whether the family live in a house that is of the size they are entitled to, or whether they CHOOSE to live in a smaller house. It is their choice.
But, what it does do, is it gives them the opportunity to get a smaller house that has a higher market rent (perhaps a nicer location, or better condition, or different type (e.g. a bungalow)), providing the property is within the LHA rate they are entitled to. Tenants who use such a strategy when house hunting will find a wider range of properties available to them, and this could be vital to their needs.
An example may be:
a family entitled to the 3 bed rate of LHA may need to move closer to an elderly relative to provide care and support, but there are no 3 bed houses available in that area that are affordable (or available to LHA tenants), but there is Jonathan's 2 bed house available at the market rent in that area, and the 2 bed market rent of that property is the same as the 3 bed LHA rate, then the family could CHOOSE to move to Jonathan's lovely 2 bed house in the ideal location, and at a rent that is within their 3 bed rate LHA entitlement.

In such a scenario there is no fraud, and absolutely no detriment to the Housing Benefit coffers (the family would still only get the amount of LHA they were lawfully entitled to), but the tenant family would have a wider freedom of choice, and the landlord would be able to let his property at the market rent to a family on benefits (who would otherwise be excluded from that area due to higher property values). In the example I have given, it would also save the taxpayers (via the Council) lots of money in care fees for the elderly relative who could now be supported by family members living nearby. Tenants win; landlord wins; elderly relative wins; council wins; taxpayers win. What better result could there be for everyone?

Why would creating a win/win/win/win/win situation give landlords a bad name?

hi, the family configuration is for a 4 bed rate, 6 kids and mum and dad working part time

Reply to the comment left by "Peter Johnson" at "07/11/2015 - 15:29":

Then the maximum LHA for them as one household of 2 adults and 6 children would be the 4 bedroom rate of LHA applicable to the area in which the house is located. The LHA rate can be checked on LHA Direct website, or probably also on your local council's website. However, do bear in mind that the income of the household will be taken into account when the Council work out the actual level of HB they will pay, so it is unlikely that you will get the full LHA rate as payments to you, so the tenant may need to "top up" the rent from their earnings.

For such a large family, they will also probably be subject to the maximum benefit criteria (within Universal Credit), which would drastically reduce the amount of Housing Benefit (maybe to £nil), unless they are working sufficient hours so as to be excluded from the maximum benefit restrictions. (This is driving out many large families, especially in London and other expensive locations).

Reply to the comment left by "Robert Mellors" at "07/11/2015 - 16:07":

Let me run an example by you please -

Family of 6 kids, husband and wife, wife stay at home mother, 250 per week child tax credit, 50 per week child benefit, husband works 35 hours and gets paid 13K. This family qualify for £1650 of the maximum £1684 of LHA 4 bed rate for my area so the fact that my house is a 3 bed can I still get HB to pay me the £1650 of their maximum entitlement of HB even though the 'market rent' for a 3 bed in my area is £1500?

Thanks

Reply to the comment left by "Peter Johnson" at "07/11/2015 - 16:40":

The Housing Benefit is based on the LHA rate entitlement for that household, less whatever deductions due to income or previous overpayments (HB clawback), so presumably you have already determined the deductions as you say they would be entitled to £1650 of the maximum £1684 pcm. The market rent for 3 bed properties in your area does not come into the HB calculation in this case as the family are entitled to the 4 bedroom rate of LHA. So yes, I believe you would receive £1650 pcm Housing Benefit if that is the rent you charge them.

Housing Benefit tenants do usually come with higher risks, so if you do go down that route then may I suggest that you look at using the additional income to pay for rent guarantee and malicious damage insurance, and anything left over put back into the property maintenance so as to make it a place that the tenants will respect and look after and never want to leave. That will be good for your tenants, good for your property, and good for your business (less voids, damage, re-letting fees, etc), and of course still be of no detriment to the Council or taxpayers (as the family would be entitled to this amount of HB anyway).

Reply to the comment left by "Robert Mellors" at "07/11/2015 - 17:08":

I really appreciate your first class advice, thanks you!
Do you find as I have discovered that the HB departments have a reluctance to pay the 4 bed rate once you tell them that your property is a 3 bed sized property? I am having this problem, last week I had numerous problems with a person in HB that kept saying to me that the market rent is not 1684 for a 3 bed property in my area and is more near 1500 so why am I charging 1684 as the 4 bed rate? I gave them the reason why and they claimed they had never herd of anything like this and that I should charge the 3 bed LHA rate as the property is 3 bed. I realise that they are wrong but is there something I could quote them in the HB regulations that would make them accept what I am saying and convince them?

Just so others members dont think I am just simply abusing the system, the 3 bed I offer is simply immaculate with nothing lacking, completely refurbed but for that I search out a 4 bed LHA family

Reply to the comment left by "Harry Chunk" at "07/11/2015 - 08:45":

I have some excellent tenants who were previously in hostels or DV refuges, or have previously been dependent on alcohol, so although such tenants could potentially be more problematic or higher risk, some turn out to be great tenants. I try not to stereotype if possible, and I like to give people a chance to prove themselves as good tenants. I myself have been homeless, and although I was not in a homeless hostel, I could very easily have ended up in one, but being in a bad situation does not make me a bad person (or potential tenant).

Reply to the comment left by "Peter Johnson" at "07/11/2015 - 18:52":

Hi Peter

You don't need to set your rent at the "market rent". You are entitled to set your rent at whatever rate you choose. If you want to charge £50,000 pcm for your house you can do so, you may get no tenants, but you are perfectly entitled to charge what you want. Regardless of what rent you set, the tenants will still only receive the amount of Housing Benefit that they are entitled to, no more, no less, so what your contractual rent is makes no difference to the Housing Benefit they receive (unless your rent is lower than their maximum entitlement). You do not need to justify your rent level to anyone, just charge it and let the HB office work out the tenant's HB entitlement based on it.

"When the donkeys call you a fool, it is a very rare compliment." - Don't try to justify your business decisions to donkeys, they are not capable of understanding.

Reply to the comment left by "Robert Mellors" at "07/11/2015 - 23:00":

Hi Robert,

But is there something I could quote them in the HB regulations that would make them accept what I am saying and convince them that I can charge whatever rent I like and that the amount of rent is set by the family entitlement/make up as opposed to the actual number of bedrooms in the property and market rent? How can I put them straight without causing them to get their backs up?

Many thanks

If you charge more than market rent because you can milk the HB, I refer you to my earlier comment and dispute Robert's comment that it is not in detriment to the HB coffers. It isn't a win/win/win/win situation as the taxpayer loses.