Introducing The LHA Expert for Landlords – @TheLHAexpert

Introducing The LHA Expert for Landlords – @TheLHAexpert

10:00 AM, 6th March 2012, About 10 years ago 44

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-By Guest Columnist John Paul- Part 1 of an 8 part series


Welcome to the first in a series of eight articles giving you top tips for renting your property to tenants in receipt of Local Housing Allowance (LHA).

I have personally built a successful portfolio by letting to LHA Tenants and the profits and cash flow exceed those I could have achieved with working tenants. In some areas rents are as much as 30% higher than market rents in the private rented sector. I think you’ll agree that’s a premium that makes some additional administration worth the effort.

I am also Managing Director of Castledene Property Management and we specialise in managing properties with LHA Tenants and believe that, with the right information, the opportunity is there for shrewd investors to increase their rental yields often in areas where property is cheaper to purchase.

There are over 4.89 million people receiving housing benefit in the UK, with 2.57 million people unemployed. With many more people in jobs which are under threat, the chances are that even a working tenant might need to claim Local Housing Allowance at some point. These tips will help you understand the system and be prepared so that you are ready even if you become an LHA Landlord by accident.

As a reader of Property News you may already be experienced in managing all types of tenants in which case please share your knowledge in the comments which is a great way to add to the value of these articles for all readers. If you are new to property investment or have never considered LHA tenants then I hope this brief guide will give you food for thought.

Buying a property and then renting it for a profit is a simple concept. What can make things complicated is the relationship between landlord and tenant. Many landlords avoid tenants in receipt of Housing Benefits, also referred to as LHA Tenants, because they perceive that such tenants represent a greater workload and greater risks to property condition and rent arrears.

My aim in this set of articles is to give you guidance on how to get the best out of the investment opportunities offered by LHA Tenants. How to maximise rewards and reduce the risks.

Wishing you every success.



Comments

by John Paul

16:53 PM, 8th March 2012, About 10 years ago

Mr Beige, Im just stating facts. in my and certain other investment areas LHA is considerably higher than PRS, simple as that. Are you saying that because im providing higher quality home than the council i cant ask for the "going" rate of LHA. im not exploiting the system, im simply asking for what the rate is, im providing a much needed service in my area. whats wrong with that

by John Paul

16:58 PM, 8th March 2012, About 10 years ago

Hi Joshriza, i think i might have seen where you have misunderstood how i got started. I was a high ranked cage fighter but never fought in UFC. i never made enough money from it (although irrelavant) i remortgaged my own property 7 years ago and built up a portfolio of property. i then started a Letting agency and NOT an estate agency, so ive never bought property ahead of anyone else or anything which you may suggest. i went to an estate agent put an offer in and bought a house, simple really. Moving on, i started Castledene with £500 e 1/2 years ago and we manage in excess of 1500. i have 8 agencies all bought with the cash flow the business produce. its sort of taking the gloss off the article really but i hop this has answered any doubts as the the morality of how i built my business

by John Paul

17:06 PM, 8th March 2012, About 10 years ago

30% higher return because that is what teh going rate is for properties in certain areas. like it or not thats the way the rates are set. it was even higher before the cuts last April. I and many other LHA landlords are not exploining the system, we are playing by their rules. Are you saying i should say "thanks Mr Council but the £100 per week you want to pay me thats far too much, just pay me £80 instead" come on get real. No one in their right mind would do that. if your frustrated at the way the system works dont blame the LL or Letting agents.

by

18:32 PM, 8th March 2012, About 10 years ago

I think people have missed the complete point of the article. Im not taking advantadge of the system, im playing by the rules presented to me by the government and the DWP. Like it or not we are a caring nation and we will always look after those less fortunate i.e. LHA. As too how profitable that will be in the future i cant say, but what i can say is that its very profitable now. Know one knows what round the corner, but with the amount of LL housing LHA tenants its big business and i intend to make the most of the situation. I call it business acumen not exploitation, which i find a ridiculous statement made by people not educated in LHA and the system. If people saw the type of people we help and the advantage we give them rather than dealing with the council and waiting for coucnil stock for up to 5 years, we wouldnt be having this debate. If people have a problem with the system thats fine, just dont blame some one who is playing by the rules and being successful at it just becasue YOU dont understand it

by Jonathan Clarke

18:43 PM, 8th March 2012, About 10 years ago

I agree of course the council should be providing enough social housing. Yes they out source so to speak the problem to LHA landlords. Its less expense for them though not additional. I pay for the maintenance and all the admin. I think your beef should be aimed at the government policies not at LHA landlords.  I didn`t actually say...... 
`
 Jonathan Clarke admits he can spend less money because LHA tenants are too grateful too kick up a fuss.` 
 That kinda misrepresents me and my intentions I feel. It implies that I don`t look after my properties properly and I quash attempts by them too make their wishes heard because they should just be quiet and be grateful for what they have got.....  It is the opposite. I bend over backwards to assist them. The overheads are less because their expectations are less and i manage it well. The relationship is symbiotic though. We chat it all through. I`m good to them and they are good to me. I am very flexible in how they decorate the properties. Many landlords will not allow what I let them do. I get some wacky designs as a result! I give them  virtual freedom and a free hand and they willingly get  stuck in largely at their own expense to make the house into their home. They in return dont trouble me as much for other stuff that they might have done.  I give them freedom. I already have mine

by Jonathan Clarke

19:01 PM, 8th March 2012, About 10 years ago

The relationship between councils and landlords is unfortunately weak but I can see hopeful signs it is gradually strengthening which can only be good. The council people I have dealt with agree it is just almost as if it is embedded in their culture to be suspicious of landlords and vice versa. Communication and liaison meetings will break that mistrust down. 
. Fortunately the extreme abuses of properties are few and far between but the ones where it has occurred was a great learning curve for me in the early days. I`ve had drugs raids/ fires / petrol bombs the lot so I`m not phased by it.  I adapted and extended my interviewing strategies at the start to learn the lessons from before. I dont have a clear distinction though between LHA and private tenants . I`ve had good and bad in both sectors. Sometimes everything is fine for a couple of years then maybe a nasty boyfriend may appear on the scene and spoil the status quo. Thats life. I just deal with it . Its the game I`m in

by

2:51 AM, 9th March 2012, About 10 years ago

I totally agree with what you do.
You are using the rules as presented to you.
The rules may be perceived as immoral.
So why don't the rules get changed?
I say exploit the system until the rules get changed.
Jealous people tend to moan but not do anything about it cos they don't know how to  or  don't have the resources to exploit the system.
Capitalism is inherently caused by exploitation of other parties.
It may not morally be the best system; but it is the only system that has been proven to work over centuries.
Now I don't mean unbridled capitalism.
Appropriate conntols must be enforced otherwise true human nature will come to the fore and that is not pleasant.
However all power to you in yor manipulation of the system.
I wish I could be you.

by

9:03 AM, 9th March 2012, About 10 years ago

Sorry Mark if I got the wrong end of the stick. I fully understand yields can be much higher in LHA properties for the reasons you have succinctly described. However the article said "rents" were up to 30 % higher. It is that phrase which got me going!

by Mark Alexander

11:23 AM, 9th March 2012, About 10 years ago

Hi Mr Beige

Thanks for that, no apology necessary though, this is a professional  debate, exactly what Property118 was created to facilitate.

I can see the point from both perspectives. For JP, the rents may well be 30% higher than the property could be rented for privately as the private tenants will want a discount if they are to live somewhere less convenient, even if, as in my example, it's the same house just a mile down the road. However, for the Council, the rents are set based on the average for the area, which may well overlap two identical houses a miie apart. An example of that was given by a previous commentor on this thread. LHA rates in Haverhill and Cambridge are the same but the difference in capital value can be enourmous, and so can the rents to private tenants. JP's skills appear to be to capitalise on these anomolies.

So many comments and this is just the introduction!

It's exciting to think how much attention these articles will receive when JP starts to put some meat on the bones. Remember, I've already read them so I know what's coming 😉

by

16:01 PM, 9th March 2012, About 10 years ago

Hi Mark
Thats correct, you cant set LHA rates street by street so they are obviously set by a larger area. In Certain localities you can have large properties that attract higher LHA rents and yet nearby you can have the smaller terraced properties, but are also lumped in with the higher LHA rents. In some areas "rents" are 30% higher, im not going to apologise for it or change facts just because some people got "going" becasue of it.
Can wait to see the reaction we get when they get past the introduction 🙂 


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