Forms and procedures for LHA Landlords

Forms and procedures for LHA Landlords

15:43 PM, 16th March 2012, About 10 years ago 49

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LHA Top Tips for landlords. Article 4 in a series of 8
The most important things are that you need everything in writing; you need to keep it clear and simple for the tenant and you must understand timings.

  1. Before you offer any tenant your property let them know that you would like to use a tenant referencing agency to do a basic background search. A number of free services exist and you can find some of these tenant referencing services in the Property Services Directory at Property118.com.
  2. Not all tenants will be familiar with the claims procedure and complex forms or long interviews will put off many tenants. Simplify any forms you have, both in layout and wording, be prepared to explain when paperwork must be completed to secure the tenancy and offer to help with completing the forms.
  3. Produce a standard list for the tenant of the information you will need them to provide to complete their application. Proofs of identity, NI number, banking details etc.. to enable you to reduce delays in submitting their application. The council will advise what they are likely to require.
  4. Ensure that the tenant understands their obligations with regard to giving notice on their current home and if appropriate obtain a Housing Benefit overlap form from your local council. This can be paid for up to a maximum of four weeks where an overlap is unavoidable.
  5. It is always preferable to have rent paid direct to you rather than via the tenant. Explain to the tenant that you will seek direct payments so any information they can offer to help with this would be appreciated; for example evidence of a medical condition or debts.
  6. Once you have decided which prospective tenant you want you will need to contact the council and give them the composition of the family, ages and their income details to get confirmation of what LHA rate they qualify for. Don’t forget you will already have an idea as to what rate the tenant qualifies for, but this will confirm it. Always ask for the confirmation to be emailed so you have a copy in case of any problems. If the tenant only qualifies for the single bedroom rate but it is a two bedroom property, try applying for a Discretionary Housing Payment, which is a fund that allows the council to top up any Housing Benefit. It cannot be used to pay off arrears. For the council to allow this the tenant must be vulnerable and at risk of not getting the property, also the rent cannot be higher than the LHA rate for that property.
  7. You can submit a claim for Housing Benefit up to 13 weeks prior to a tenancy start date. The sooner this process is started the more margin you have for unexpected delays. It is worth stating on the paperwork that it is an “Advanced Claim”.
  8. Always ask your prospective tenant to sign a declaration that states you can contact the council about your tenants’ circumstances that relate to the property. The council may otherwise refuse to speak directly with you due to the Data Protection Act.
  9. If there is likely to be a rent top up required from the tenant make sure they understand how much, when it will need to be paid and that you will require this to be done via a standing order. This will hopefully prevent any problems at a later date. If you are intending to use a letting agent they can ensure that payments are set up as a direct debit.
  10. Contact the council to ensure that there are no overpayment claims pending for your tenant which may affect ongoing payments or affect the tenants ability to afford top-up rent where due. When dealing with some councils this is not an option as the length of time it takes to get an answer could be weeks, by which time you could have lost the tenant. Always try though.


Comments

by Mary Latham

19:16 PM, 19th March 2012, About 10 years ago

I have put a new thread in the system Ben lets not detract from Johns important information.  I am running a seminar all day tomorrow so I will leave you to hold the fort and join in in the evening.

by

19:57 PM, 19th March 2012, About 10 years ago

OK LHA is the most fantastic investment you can ever make!
Every prospective LL should consider that LHA is far and away on average the best way of investing in the rental sector.
Anyone who chooses not to consider LHA needs thare head examining.
You should not  concern yourself with the additional issues with LHA.
Just pay a percentage of your rental income to a LA to manage properties that are far away from you.
You will make far more income doing this than buying nearer where you live; if you did you will also have all the hassle of managing things yourself and you won't have so much LA fee to offset against your tax bill, think of the LA, he has to make a living somehow.
Any small prospective LL that chooses to invest in the PRS rentiing out to private tenants is doing the wrong thing.
If you find that private rents pay more than LHA where you live, LHA is far and away still the better option.
LHA claimants are wonderful people, far better than PRS tenants.
Helping LHA tenants through their difficulties will cause you much work but oh, so rewarding when you manage to set up a single mother with 3 kids in your nice 2 bed flat, paying less than the market rent.
LHA claimants are considerably less trouble than the PRS tenant.
This as they tend to stay for longer and the LHA rate stays the same for longer.
Also having LHA means you will be able to employ more builders and decorators when you have to repair and refurbish your property when the LHA claimants eventually leave.
All those walls that will have been coloured in by her children.
Don't concern yourself with obtaining RGI on your LHA claimant or a possible guarantor; it is highly unlikely they will qualify.
Don't worry if they don't pay the rent to you; all you have to do is do loads of admin work to get the LHA paid to you directly.
It normally takes 2 months of non-payment before you may claim for LHA to be paid directly., this all takes about another month during which time you will have to find some money from somewhere to pay the poor LHA claimant's rent.
Obviously her drink and drugs and lifestyle is far more important to you than her paying you the rent owed.
Of course you know the poor thing is not going pay you the 2 months rent she owes you.
She has a lifestyle to maintain you know!
Why should she pay to a greedy LL who is making profit, hopefully! out of her unforunate domestic circumstances.
You won't mind if the council claims back al;l the rent they paid directly if it turns out she has been living with a secret boyfriend you didn't know about and as a consequence the council will be clawing back from you the overpaid amounts for her actual domestic situation.
LHA claimants are the most wonderful people you could ever hope to meet; don't be judgemental if their domestic circumstances impact on your bottom line.
Under no circumstances should you cast envious eyes at the differential that the PRS is achieving in market rents.
You know LHA is a far better proposition!
So I say LHA for ever.
Almost to the extent I am going to kick out my PRS tenants at £1000 pcm and rent out to those wonderful human beings called LHA claimants.
I will receive about £676 per flat.
I have nice plain walls for lots of drawing on when I take on the inevitable single mother and 2 screaming kids; but hey I can always just slap a bit of magnolia on it when they go!
I say never listen to a LL who says he finds the PRS pays more than LHA, he is clearly talking BS and doesn't know what he is doing.
Don't take any notice of any LL who has had bad experiences with LHA claimants and consequently does not ever wish to take them on.
He is clearly misguided.
So I say to all LL get rid of your PRS tenant sand take on those wonderful LHA claimants.
Don't concern yourself if your lender states you are not allowed to take on housing benefit claimants.
Don't tell them; how are they going to find out?
Even better sign up for a PSL which means you could any sort of council tenant in your property and pay a fixed rent, that will be less than the PRS.
But is will leave you with a nice warm feweling all over with the help you are providing to the council to assist those poor unfortunate claimants.
Don't concern yourself if your lender forecloses on you if they find out the council has a 5 year lease on your property.
You won't mind being bankrupted will you, think of all those poor unfortunates you will have helped.
You have performed a public service, you should be knighted!
Let's hope there is a LL who will be prepared to house you as you will be a LHA claimant.
So lets hear here it for all those LHA claimants they are wonderful people and deserve good quality accommodation at a substantial discount to the local prevailing market rents
Support your local housing department, they need your quality properties for their claimants; DO YOUR PUBLIC DUTY!.

by Mary Latham

20:15 PM, 19th March 2012, About 10 years ago

Paul This thread was addressed to those landlords who do take LHA tenants and who want to learn from a very knowledgable man

I know that you are not interested in this client group and I cannot understand why you feel that its appropriate to hijack this thread. Dont landlords have enough enemies without turning on each other?

by Mark Alexander

20:17 PM, 19th March 2012, About 10 years ago

by Ben Reeve-Lewis

20:19 PM, 19th March 2012, About 10 years ago

Yeah come on Paul. I like exchanging ideas with you and count you as decent landlord/fella. Nobody is syaing you have to go LHA. JP is just pointing out the financial advantages of  doing it in certain areas. It aint a moral thing, and I wouldnt expect that of any landlord. Its business pure and simple and if JP can make extra by renting to LHA tenants, surely that is a relevant business model?

by

20:27 PM, 19th March 2012, About 10 years ago

Indeed I wholeheartedly agree that where appropriate LL make an appropriate investment decision.
That is all I ever did..
In my case LHA was not appropriate because I deliberately chose not to cater to that market as presently the market rent pays more than LHA.
So as you suggest I have made the pragmatic decision of renting out to only PRS tenants.
It seems that possibly I don't know what I'm doing; mind you maths was never my strongest subject at school!?

by Mark Alexander

20:35 PM, 19th March 2012, About 10 years ago

Here, here Ben and Mary.

Come on Paul, there are lots of readers of this thread. Some are like you and choose to do what you do, I'm one of them. That's not to say that I don't admire what others have achieved.

Bear in mind that some people reading these threads will be new to property investment and want to read all angles. You have your point of view and that's fine but you way is not the only way, please respect that.

Your views of LHA claimants are very obviously prejudiced and whether you see that or not other people do.

I've documented my own property investment strategy here very clearly. John Paul is doing the same. I have nothing to prove and neither does he. Some people will follow my strategy and others will follow his.

Some people may want to do what I do, others may want the larger profits and follow John's LHA model, do I care which? Of course not! I share for the sake of sharing.

If somebody is out there with half a million considering property investment does it make any difference to you or me whether they do things our way or another way? No, of course it doesn't!

Many people have made their fortunes in property and choose to share their stories here. We have all done it in different ways. Student lets, holiday lets, LHA, upmarket, mid market it makes no difference. These people are sharing their strategies freely and people will choose which if any of them they want to copy.

Please don't allow your ego to take over. Reading your comments is a bit like watching a person of one religion or political persuasion trying to convert another person to their religion or political persuasion and then attacking them when they share their own beliefs. What's the point? If both people are good people let them be. Others will decide what's right for them too and there is nothing at all wrong with that either is there?

There are plenty examples of fundamentalism in religion and politics, are you aiming to be the first landlord fundamentalist because that's what you are beginning to come across as.

by

20:44 PM, 19th March 2012, About 10 years ago

One presumes Mary that all the previous knowledge built up over the previous years will be of  no use and UC will require a massive steep learning curve!?

by John Paul

20:44 PM, 19th March 2012, About 10 years ago

It's horses for courses Paul. You chose private and I chose LHA as I make more money at it. However if you reread all you comments about LHA you do seem to be very negative about them, unusually so. You have had bad experiences with LHA tenants, I've had bad experiences with landlords but that doesn't mean I don't want to deal with them or even be negative about them. I was always taught if you haven't got anything nice to say don't say anything at all.

Look guys, we will get over UC. We got past the tenants being paid direct, everyone thought that would be the end of the LHA sector and it wasn't, we then managed to get past the LHA reductions last April, and we will get over UC.

We can set up direct debits from our office so as with marts great idea on credit unions, we too will be in control of the tenants benefit and can change the DD to come out when ever we choose, which will be the day the tenant gets paid.

Good thing about the DD is that there are only two reasons for the DD not to go through, either not enough money in or the tenant has cancelled the DD. If the rent is due on the 15th and the tenant doesn't have enough money in, we will get an email the next day, so we can act immediately. The other reason is that the tenant may cancel the DD say on the 7th (week before) we will get an email the next day exhaling the tenant has cancelled the DD so again we can act quickly and effectively. As with all problems we face in business, there is always a solution. There is a great saying by Charles Darwin, "it's not the strongest or most intelligent that survives but the most adaptable to change" how very true!

by Mary Latham

20:56 PM, 19th March 2012, About 10 years ago

Very possibly Paul we still don't know the details.

One thing I will tell you is that I too chose not to target people on LHA but until last year I had 5 tenant who paid me from LHA a couple had lost their jobs, one family breakup, one gambling habit, one health issues.  All these tenants were paying their own rent when I took them.  At this moment I still have two tenants on benefits and they pay their rent in full and on time. 

Paul my thread on Universal Credit is live now and I would be happy to discuss possible issues with you because one day one of your tenants may need to claim it.  We are all one P45  away from a tenant on benefits.


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