Checks needed for DSS / LHA tenant?

Reply to the comment left by "Jonathan Clarke" at "31/01/2015 - 08:01":

Using your analogy;

"Ask me to drive to Lands End today and pay me £1000 I`m your man."

Ask me to drive to the end of the M5 and pay me £500, I'm your man.

The twisty bit from there to Lands End you can keep.

I get to have a late start driving a straight road and to knock off early whereas you are putting in 12 hour shifts on dodgy roads. If you are doing that 365 days a year as per landlording, then there is a fair chance the average landlord would be burnt out long before reaching early retirement.

Twice the income, twice the hassle.

Reply to the comment left by "Monty Bodkin" at "31/01/2015 - 10:13":

Ah that`s where we differ I guess
I see it more like this

Twice the income
But not twice the hassle.
Yes I agree extra hassle while you learn.
Maybe an extra 30%.
Then maybe 15% extra hassle after a bit of practice and experience
Then 0% extra hassle when you fully know your stuff.
A tenant is a tenant to me whether working or LHA
Their hassle factor is constant and interchangeable
They are just people who need managing
Selection process is key to reducing hassle
Its the business model that excites me.
Tenants are really just an occupational hazard

Knowledge is power
Power then reduces hassle and delivers extra income
.

Hi Jonathan

I let to LHA tenants, both in self-contained properties and in HMOs, and I think your hassle factor percentages are somewhat optimistic, and from my experience I would perhaps add 20% to the % figures you've used, but it does vary widely from one tenant to another. However, you say that the selection process is the key, so I wondered if you could share some tips about selecting DSS/LHA tenants, to see if there's anything that you do in the selection process that I am failing to do?

Reply to the comment left by "Jonathan Clarke" at "31/01/2015 - 10:39":

It is not twice the income, generally speaking.
Unless you are cherry picking good case LHA against bad case non LHA.
The risk is commensurate with the reward.

"Yes I agree extra hassle while you learn.
Maybe an extra 30%.
Then maybe 15% extra hassle after a bit of practice and experience
Then 0% extra hassle when you fully know your stuff."

I think it is a lot more than 30% extra hassle but using your figures;

The 30% extra hassle stays constant.
A bit of practice and experience in non LHA and the hassle margin goes down by an equal amount.
Same reduction for both even when you fully know your stuff (if that is possible, I'm still learning).

When I naively started letting to tenants on benefits 15 years ago, the hassle factor was ,getting towards, twice as much.
15 years down the line, I've learnt a lot but the hassle factor is still, getting towards, twice the amount of non LHA.

The overall hassle factor has reduced massively but the difference remains the same.

The selection and interview process is more or less the same. The paperwork is different.. The interview process is not essentially different because they are DSS or working. I look at the individual. What is their attitude, their personality, their approach towards renting a property off me not where the source of the rent is coming from.

I want basically 3 things from them.

1) Sort the rent out .
2) Keep the place reasonable
3) Dont upset the neighbours

If someone can give me a a specific difference between DSS and working people which separates the two types then please tell me. There isnt though. I accept some peoples have a pre conceived perception towards them and some people have had a bad experience with them so that yes that may disproportionally colour their judgement. If that happens on a regular basis then you have to look at your selection and interviewing skills as to where you are going wrong.

Many agents use a tick box 3 rd party reference system via e mail . Its crazy to rely on that . You need to spend time at least an hour interviewing your prospective tenant getting inside their heads as to what they are like. If you havent got the skills then find someone who does have the skill.

As I have said before their personality doesnt change if they lose their job or they get a job. They are the same people before and after. I have several who are part DSS and part working. They are not somehow Jekyll and Hyde characters.

So when you interview someone, interview them on the same basis as you would interview any prospective tenant. One has rent coming from the government one has rent coming from an employer. The actual source of the rent is not an issue. Its the person the person the person. If they have been brought up to pay their bills on time to keep their place clean and to be considerate to others they will behave like that throughout their lives job or no job.

As for the hassle factor . The knowledge is the hassle initially . But then when that is learned ( to a satisfactory level) then it is no hassle. I could start a job at tescos tomorrow shelf stacking . Its hassle I dont know the people I dont know where the staff room is or where the marmite should be stacked or what discount signs go where etc etc Its hassle . You go through a small pain barrier of learning But once I know where the marmite is stacked I have the knowledge so I`m ok.

So perhaps what we should look at is what people actually think and mean by `hassle` because I can give countless example where DSS tenants cause me far less hassle. What is hassle to you maybe not hassle to me in which case yes we will have to agree to disagree. So what do peeps really mean by DSS being extra hassle?
.

Reply to the comment left by "Jonathan Clarke" at "31/01/2015 - 14:51":

So what do peeps really mean by DSS being extra hassle?

For starters, a landlord is more likely to have to evict a tenants on benefits, there are around twice as many possession claims for those receiving benefits.

There are a number of factors for that and as you say, knowledge and tenant selection can alleviate a lot of it but the end result is the same- extra hassle.

I have had 2 HB tenants.Both very nice properties and both tenants very pleased to live there because they could not afford to live there if not for HB.
First tenant, rent paid direct to me. Nice girl, but takes/took no responsibility for things. so played dumber than she was, called out my rep for all sorts of nonsense. rent got stopped when she went missing. she takes no responsibility for things, and plays the victim either the council or the landlord should/will sort everything out. Council guaranteed her rent, but note that they only guarantee I think it was for the first year, after the agreement goes periodic, guarantee no longer applies. She kept the place ok, but with her it was the hassle.I waiting for an eviction date, for her

2nd Tenant on HB but it paid to her, been there 8 years of so. keeps house very well. no problems until change in HB system a couple of years ago. I think that she decided to rob Peter to pay Paul at that introduction and went into arrears, and our relationship deteriorated.
she on a mission, has refused me access, claimed that I harassed her (all rubbish) gone onto facebook and told all kinds of nonsense, intimating that I tried to break in etc etc. complained to tenant liaison officer, based on her lies, fortunately i got an email train, so that amounted to nothing.
i think people are people, good bad and indifferent in all types.I wont rent to HB again, the main reason is that the standard advice given to HB tenants is not to move until court bailiff moves them out, so have to go through eviction proceedings, cost and hassle, and if any of you know about Bow County Court you know that means months for an so called Accelerated possession. also my properties in London, most HB tenants cant afford london properties, that a fact now. my flat HB rent is about 900, commercial rent is about 1300-1400. other property local housing allowance about 1200, commercial rate about 1600.
so I don't say all HB tenants are terrible, some are nice decent people, but for me the 1. attitude of their problems are of everybody elses making, 2 the advice of the council to stay until bailiff evicts. 3. the less rent HB provides, which will only get worse as welfare system tightens means that I wont rend to HB again.

You advertise your cheap ex local authority high yielding flat
10 LHA prospective tenants apply
You interview well and discover that......

7 out of the 10 are hassle.
3 are fine and good

Simply select your 1 LHA tenant from the pool of 3 good ones.

If you do that each time where is this extra hassle emanating from

I haven't read the whole thread - hopefully will later, as it's an interesting discussion. As I think I might have said, our worst tenants have not been on benefits. Personally I don't touch self-employed unless they've got a full-time working guarantor, so that I can get an attachment of earnings if necessary. That gives me peace of mind and we have implemented this once or twice. Also, it's no good if they don't earn enough as they have to earn a certain amount each month for an attachment to be actioned.
Actually, I don't see why people are so against tenants on benefits if they have a guarantor. The self-employed are a far greater risk as we have had people who have had the money to pay the rent but just chosen not to and/or they could have gone on benefits and get LHA and chose not to - and you can't predict that.
As a side-issue, it makes me think that the regulations should change so that landlords are able to claim LHA for tenants who refuse to do so or are too lazy to get around to it. I don't know how this would work, but it would be logical and just since we're the ones who stand to lose out.
Back to the main point: We have also had people with a good enough income to pay the rent who have also chosen to spend their salary on fags, booze and take-aways. But if they're self-employed it's worse as we then have no way of getting it. With those on benefits the loss would be far less as you can get direct payments pretty quickly (if not from the start like Jonathan manages).

You advertise your average price, average yielding flat.
10 working professional prospective tenants in full time employment apply.
You interview well and discover that......

3 out of the 10 are hassle.
7 are fine and good.

Simply select a working professional tenant from the pool of 7 good ones.

Half the hassle already, even at this stage.