Buying property with DSS tenant – steps to safeguard myself?

Buying property with DSS tenant – steps to safeguard myself?

8:51 AM, 15th July 2015, About 7 years ago 5

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I am in the process of buying a 3 bed house where the tenant has been in 4.5 years and wants to stay. She is 37, 2 children (one boy one girl in local primary school), one dog, divorced, from the area and wanting to stay near family, and until recently has worked in a low skill job part time. safe

Now on ESA, plus assorted other benefits, and likely to be off work a while with bad back she says. She currently contributes £50/mth on top of 485 housing benefit at present.

However market rent is much higher than she is currently paying – she may get some extra HB towards that. Even giving a lowish rent for a reliable long term tenant her rent would have to go up another 65-70 quid to be worth my while. She knows this and says that she’d pay, as if not she will have to pay the same or more elsewhere AND have hassle of moving from her home. Excellent refs from vendor who would prefer her to stay, and it is evident from the house that it is well looked after if a bit tired.

Although logic says that given current political and benefits situation and her changed circumstances, this is a big risk, gut feeling is that it will be ok because she will make it ok. The prospect of a long term stable tenant appeals – many years ago I had fully referenced, working, nightmare tenants! Her ex-husband was guarantor to date which she told me about when we met, but today I learned she is approaching her parents instead. Her contract runs till October, but she and vendor are agreeing some compensation between them to terminate earlier. The agent who originally set tenancy up say switching tenancy and deposit should be no problem.

Questions now are what do I need to do to protect myself just in case? Browsing this excellent forum tells me:
– make sure guarantor is home owner and preferably working (I suspect parents may be retired)
– make sure guarantor can pass RGI screening, and is responsible for whole rent not just top up
-get her to agree I can speak w HB office
Anything else I need to add to my checklist?
Can someone explain exactly what I need to have in place re the tenancy end/restart? Also anything specific I should put in new agreement to cover myself?
I won’t have a mortgage so no lenders to consider – just my and my father’s savings and sanity!

Many thanks for advice



Neil Patterson View Profile

8:58 AM, 15th July 2015, About 7 years ago

Hi Nicky,

Do you know why the existing Landlord is selling as that can tell a story too.

If you click on our Lettings tab at the top of the page we also have for your reference a Property Letting & Management Check List. 🙂

Nicki H

9:29 AM, 15th July 2015, About 7 years ago

Reply to the comment left by "Neil Patterson" at "15/07/2015 - 08:58":

Thanks. The owner moved away for work and has now got a long term job contract down south so won't be moving home. His mother (who I've been dealing with) has been managing the property. I get the impression it's time to let go for him now price has risen to what he bought for.

Sharon Betton

10:49 AM, 15th July 2015, About 7 years ago

I think you need to be very clear about how much housing benefit she is entitled to, particularly if you are raising the rent. Depending on the ages of the children, she may only be entitled to entitled to the 2-bed rate - one of the children must reach the age of 10 for the entitlement to the 3-bed rate comes into force.
Try and interview the parents, who will be standing guarantor; make sure they know exactly what would be expected of them, should she fall into arrears. Saying she will pay is one thing - but if she is on benefits, that will get harder as heating bills rise due to cold and then the expenses associated wth Christmas.

Ross McColl

11:05 AM, 15th July 2015, About 7 years ago

Make sure you get the housing benefit paid directly to you from the start.

Sharon Betton

11:52 AM, 15th July 2015, About 7 years ago

Ross is correct, direct payment of the part that will be paid by housing benefit will assist with at least a part payment; however, the rent is supposed to go to the tenant unless there are arrears. Question her closely - does she have any other debts? If so, you can make a case for direct payments.
If you put the rent up and there is a bigger shortfall, suggest she apply for a Discretionary Housing Payment; it will only be for a short period, if she gets one, but it is better than nothing and may assist her until she gets a job.

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