Other Landlords experiences of successfully getting Rent arrears from evicted HB tenants

by Readers Question

10:47 AM, 12th August 2014
About 4 years ago

Other Landlords experiences of successfully getting Rent arrears from evicted HB tenants

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Other Landlords experiences of successfully getting Rent arrears from evicted HB tenants

Hi fellow members, Other Landlords experiences of successfully getting Rent arrears from evicted HB tenants

Love to hear your thoughts/experiences:

I’m going through the eviction process on two properties which are let to tenants claiming Housing Benefits. They have a combined arrears of over £6,000!

Is it worth the emotional stress (as well as time and costs) to go on a not so fruitful expedition of getting these arrears back after they have been evicted?

Yours  – a very frustrated landlord!

Sanjay



Comments

Jill Lucas

14:13 PM, 12th August 2014
About 4 years ago

It is almost impossible to get rent arrears from people on housing benefits - quite simply they tend not to have any money! To get to a combined total of £6000 of rent arrears - if the rental was say £500 pcm this has been going on for a while. Perhaps there are deposits you can claim back. I believe you can claim the legal costs for a section 21 against tax. Ideally you need to meet up with the tenants and have a face to face discussion about their proposals to pay these arrears - sounds like they are spending their benefits on other things! and you may have to consider writing this off

I don't have anyone on benefits because of nightmares in the past - although I have one exception a tenant claiming disability and housing benefit and the only way I would accept the tenancy was for the money to be paid direct into my account.

Monty Bodkin

14:38 PM, 12th August 2014
About 4 years ago

Yes, I think you should.

£25 for a MCOL for the first £300 of the arrears. (£15 if you are a higher rate tax paying landlord)

Another £100 for the remainder, as circumstances dictate.

Plus any enforcement.

All reclaimable if successful.

Keep a track of them on line periodically, and locally for the next 6 years +.

Helps stop them doing it to another landlord, it's good odds for a chance of payment and helps you deal with the emotional stress just for the time it took to post this question.

Robert Mellors

20:03 PM, 12th August 2014
About 4 years ago

Unless they have assets worth seizing (car maybe?), or are working, or have a rent guarantor that you can sue, then it would be extremely difficult to recover money from them and taking court action is likely to cost you more than what you eventually recover.

Consider what you may realistically recover, and whether it is worth the hassle and cost of pursuing it.

1:48 AM, 13th August 2014
About 4 years ago

Monty and some of Robert's posts are "on the money" ( pun intended ) for me.
PLUS, don't think All HB tenants are the same, i.e have little of value to re-posses.
You can even get a good deal of success by using Civil enforcement companies, who are a whole lot better than the bailiffs ( which isn't hard, is it )

Monty Bodkin

12:34 PM, 13th August 2014
About 4 years ago

Reply to the comment left by "Robert Mellors" at "12/08/2014 - 20:03":

Hello Rob,

I'm very glad you've replied as I think our areas might overlap
-ever had any tenants connected to Manton ?

Do you think your laissez faire approach might be working against you in the long run?

You are sending a clear message that paying rent to Robert Mellors is optional as it isn't worth the hassle and cost for him to pursue it.

I make it very clear to my tenants that paying the rent is their number 1 financial priority and I will definitely go through the hassle and cost to pursue them if they don't pay.

What you've said is that they are never* going to have any assets, never going to work and never even going to find a partner that does. Are all your tenants really like that? (I've read your previous posts of the sector you work in and find it admirable)

Also as I said earlier, it is an odds thing. Even if most of your tenants are like that, it only takes recovery of 1 out of 10 tenants that owe you a grand for you to break even.

I do know where you are coming from though, as for years I had exactly the same attitude and I've writ off thousands. Surprisingly, since adopting a zero tolerance to it, my arrears level is now nearly non existent.

And to be blunt, if our areas do overlap, you have inadvertently been sponging off the work I've been putting in to make it clear that paying rent is not optional.

Not meant to be abusive or over critical, just hoping you might re-think it a bit.

*not quite never but for at least 6 years+

Robert Mellors

13:16 PM, 13th August 2014
About 4 years ago

Reply to the comment left by "Monty Bodkin" at "13/08/2014 - 12:34":

Hi Monty

Yes, I do have a few tenants in Manton.

Most of my tenants are on Housing Benefit, though not all of them. In these circumstances I usually get the HB paid direct to me, and if there is a service charge I get this deducted from their JSA/ESA at source (i.e. the DWP deduct it from their benefits and pay it to me), so these actions help to ensure that the rent (and service charge) is paid, and is thus not "optional" as you put it. I also get the DWP to deduct from their benefits for any rent arrears, and although this is only at the set rate of £3.65 pw, it does mean that the arrears start coming down instead of going up. Such action to prevent arrears occurring in the first place is not exactly a laissez faire approach, a lot of work goes into it.

I have not said that my DSS tenants will never have assets, or be worth pursuing for the debt owed. What I said (or meant) was that I take a realistic look at what is likely to be recovered, the costs of pursuing it, and whether it then makes financial sense to spend money pursuing it at that time. Of course a person's situation can change, so it may be that a year later the person has money (or assets or employment etc) which will then alter the financial viability of pursuing the debt via court action.

I have taken some DSS tenants to court in the past, got CCJs against them, but then had no effective means of enforcing the CCJ, as I have found that the bailiffs (both county court bailiffs, and high court sheriffs) were ineffective. I have also referred cases to various debt collection companies, but with very limited success. - Indeed, it often seems to me that it is the legal system as a whole that has the laissez faire approach, as they provide no effective means to enable landlords to recover former tenant arrears from DSS tenants (without assets or employment). This is one of the reasons why DSS tenants are often considered to be high risk, and why many landlords will not let properties to them.

In relation to Sanjay's original question as to whether it is worth the hassle and cost to pursue a former DSS tenant debtor, then it depends on the likelihood of recovering anything. The tenant is that case owes a lot of money so this is one factor, but there are lots of factors we do not know, so no definitive answer can be given. My advice to Sanjay is to pursue the debt through court action only if there is a realistic chance of being able to enforce the county court judgment, but this "chance" may change as the debtor's circumstances change over time.

Monty Bodkin

13:31 PM, 13th August 2014
About 4 years ago

Thanks for that Rob, thought there was more to it than it seemed from your earlier post.
Maybe it's actually been me sponging off your work in Manton!

Arran Pritchard

5:02 AM, 2nd October 2014
About 4 years ago

Reply to the comment left by "Robert Mellors" at "13/08/2014 - 13:16":

Hello Mr Mellors

I have a portfolio of 130 rooms in north wales, I house benefit tenants who have accrued significant rental arrears. I have just learnt of the DWP third party deductions for service charges and am currently implementing this.

Do you have the HB paid direct to yourself from the start of each tenancy ?

I am struggling to convince my local authority to do this, currently they will only pay direct to landlord after 8 week rent arrears has accrued.

How have you negotiated this to your satisfaction ( if at all ).

Thank you in advance for any advices / experience.

Regards
Arran Pritchard

Robert Mellors

8:18 AM, 2nd October 2014
About 4 years ago

Reply to the comment left by "Arran Pritchard" at "02/10/2014 - 05:02":

Hi Arran

100% of my HMO residents have their HB paid direct to me, and about 90% of my tenants of self-contained properties.

1. Have a clause in your occupancy agreement which says that if resident will be claiming HB then it is a condition of the granting of the occupancy that HB is paid direct to the landlord.

2. In your housing application form, make sure you ask the questions that indicate in what way a person may be vulnerable, i.e. less able to manage their own finances, e.g. do they have any debts? do they have a history of homelessness? have they ever been evicted for rent arrears? do they have criminal convictions? have they ever had to manage their own tenancy before? do they have mental health problems or learning difficulties? do they have a drink or drug dependency? do they struggle to budget effectively? have they been referred to you by a homelessness charity/organisation? have they spent time in hostels, DV refuge, or drug/alcohol rehab?

3. Using the info obtained in the application form, or speaking to the resident, ensure that you include this information in the HB application form, and also back this up with a letter (or better still, an e-mail) to the HB Dept, requesting HB is paid direct to you due to the reasons stated (include all relevant vulnerabilities, and the condition of occupancy clause).

The HB Dept will not grant payments direct to you across the board as a matter of policy, but they do have to consider each request on it's own merits, so will grant it on a case by case basis, but if you do it right then you can effectively get this in place for every new resident (plus defaulting current residents).

Of course you cannot retrospectively impose the "HB direct occupancy clause", so for existing residents you will have to rely on making a good argument to the HB Dept as to why they should pay you instead of the resident, e.g. 8 weeks arrears.

Arran Pritchard

10:24 AM, 2nd October 2014
About 4 years ago

Thank you Robert,

I will move ahead with this, amend my AST, create a Housing Application form and complete the Housing Benefit forms accordingly, including all with the application claim for Housing Benefit.

I suppose to apply this to existing tenants, I have the existing tenants sign the new AST, complete the Housing Application, then re-submit these to housing benefit.

The third party deductions to cover the service charge, is this paid direct to you from the start ? my local authority will only pay third party deductions to the landlord again after 8 weeks of arrears have passed.

Your self contained rooms, by this I understand you provide a private bathroom, kitchenette or designated cooking area and facilities. By doing this you achieve the one bedroom rate instead of the lesser shared room rate. I understand the one bedroom rate is only available to tenants 35 years old and over.

Regards
Arran.

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