Newbie renting to Universal Credit claimants?

by Readers Question

8:21 AM, 5th February 2020
About 8 months ago

Newbie renting to Universal Credit claimants?

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Newbie renting to Universal Credit claimants?

I have been browsing this site and found it to be very useful with lots of handy information and a great bunch of valued members – so I decided to join as well! I am having a few issues (with the agent & tenant) and I would like to seek some opinions on the issues.

I have a property (3 bedroom Terrace) which is rented out via an letting agent. Totally new to this buy-to-let thing and I am still learning so please bear with me.

Purchased the property in April 2019. In May 2019 the letting agent lined up a tenant, they asked me to carry out minor repairs and a deep clean to the value of 700 pounds to bring the property up to the standard they required it to be in time for the tenant to move in (single lady). This was all completed as per their requirements. I paid the money into their account and they got in their contractors and carried out all the work.

First Issue
The tenant turned out be a Universal Credit Claimant, so I assumed, being an agent they knew what they were doing and the kind of tenants to look for via their checks, so I agreed to them letting out to this tenant.

Obviously the tenant had to put in a claim for universal credit so this caused a 2-month delay in rental income, I didn’t get my first rent till end September 2019. To date the tenant is still 2 months in arrears. I have asked the agent again and again to chase up the arrears and they keep coming back to me saying they have emailed UC and still no payment of arrears! However to date, the rent is on time (paid by UC to the agent, agent then take deductions (management fee & tax etc) and deposits the remaining funds into my account).
My first question is what can the agent do to recover the arrears from UC? So far nothing is being done and what should I do to push them to chase up the arrears? Can I evict the tenant based on the arrears?

Second Issue
Two days before Christmas letting agent called me saying the boiler at the property had broken down and it needed a new part, with Christmas coming up, no one wants to spend Christmas with no heating and hot water, so I sourced the part and the supplier (200 pounds include VAT) and passed the details to the agent who then called a plumber and had the part fitted for 103 pounds. Agent emailed me saying that I needed to pay 303 pounds into their account so that they could pay the plumber- this was done immediately, and I did state that no reductions to be taken from rent as I wanted to pay separately.

Last week I received my rent statement and they had deducted 57 pounds for the boiler repair? I asked that this was for since I have already paid them 303 as requested and they said since they are VAT registered they have to charge me VAT?
My second question is that since I already paid the agent 300 pounds for the parts (inc VAT) and labour can they charge me VAT again? Despite asking for the receipt they have still not sent me anything till date.

Third Issue
3 days ago I received an email from the agent saying that they received a call from a the local council officer who is supporting the tenant and the local council officer wants to arrange a meeting with the agent to discuss repairs within the property they think are necessary to forward to me.
My third question is what has the council got to do with this, my understanding was that it was the agent who would ensure the property is in a rentable state (which is what I paid 700 pounds for in May 2019) and If tenant complains we would take corrective action. There has been no complaint from Tenant. So why suddenly a local council officer who “supports” the tenant wants to discuss repairs, shouldn’t she be focusing on paying off the arrears?

Sorry for the long question, but I am new to all this so need a lot of educating.

Simon



Comments

Robert Mellors

9:55 AM, 5th February 2020
About 8 months ago

Welcome to the realities of being a landlord, and the (sometimes) nightmare of letting to benefit tenants!

UC will not pay you the missing 2 months rent, it is the tenant's responsibility to pay this (also see the recent article by Mick Roberts about why you probably won't receive the last month's rent either). UC is always paid "in arrears", whereas rent is usually due "in advance" so that means that any benefit tenant is always going to have rent arrears unless they pay over and above what they get from UC.

Your letting agent should have obtained the first month's rent in advance, (did they do this?), but this is all down to what you agreed with them, they are your agent.

It would have been advisable to also get a "rent guarantor", did your letting agent do this? (or even suggest this?).

YOU, are responsible for the property, NOT the agent. If the letting agent is failing to do their job or keep you informed then unfortunately it is still you as the landlord that (in most instances) has to suffer the consequences, possibly including the legal consequences (fines, civil penalties, and even imprisonment in extreme cases).

Issue 1. In addition to the rent element of UC, the agent can also apply for Third Party Deductions for the rent arrears. This should be set up and paid to you in cases where the rent arrears are over 8 weeks, and continue to be paid to you until the rent arrears have been cleared. The amount that can be deducted from the person's UC (personal income) could be up to 20%, but the DWP (UC Team) will decide the amount taking into consideration any other deductions the tenant may have. If the letting agent is not familiar with letting to benefit tenants, then they may not be aware of how to do this, and from your comments about them emailing UC to ask for the first two month's rent, it does sound like the agent is not at all familiar with the issues around benefit tenants.

If letting to benefit tenants, then I would suggest using the services of an agent that specialises in UC tenants, e.g. Caridon (see their posts about UC on this P118 forum).

Issue 2. Sounds like the agent is adding extra charges to the costs, so insist on getting the receipts from the actual contractors. Also check your letting agency contract to see what admin charges you have agreed to. But in relation to VAT, yes, the agent can and will add VAT to any of their charges, and that includes any work they arrange for you.

Issue 3. Council can and will inspect the property for any repair issues if they have been asked to do so by the tenant or by anyone acting on behalf of the tenant, e.g. a support worker. The Council will inspect the property against the Housing Health and Safety Rating System (HHSRS) to identify any hazards and risks, and will then give you a list of repairs or improvements required, and a (short) timescale in which to get the work done. If everything is put right, then they most likely will decide not to prosecute you, BUT (if you get a nasty Housing Officer who has it in for private landlords) then even if you do put everything right, they could still decide to prosecute you on the basis that "as at the date of the original inspection there was an offence, and therefore they have the right to prosecute".

Check all your paperwork is in order (gas certs, electrical certs, PAT testing certs, EPC, deposit paperwork, right to rent check, etc), and don't rely on the agent's word, ensure you have copies of it all.
Also get copies of the inventory and schedule of condition that should have been done at the start of the tenancy, and copies of the letting agent's periodic inspections (most agents do these every 6 months, unless you've requested them to be done more frequently).
Also check your letting agency agreement, as you don't seem very sure what you have agreed to.
Ensure you are ICO registered and have all your GDPR policies and procedures in place.
Ensure you are registered with HMRC and have declared everything you should have declared.

Good luck with sorting all of this.

Rob Crawford

9:58 AM, 5th February 2020
About 8 months ago

It's for all these reasons I and many more don't let to UC tenants! As you are a "newbie" I fully sympathise with you! There are some UC members (not many) who should be able to help you with your questions.

Simon

12:36 PM, 6th February 2020
About 8 months ago

Thank you for your feedback and advise I really appreciate it. Since the tenant is already in the property I have to deal with it and I really dont want to fall in this mess again especially as I am a first time investor.

Called up the agent yesterday and they advised that the tenancy had expired two weeks ago and it is now a rolling tenancy. I guess a section 21 notice would be in my favour now if the tenant is causing me a headache by involving a council social worker at the time the tenancy has expired.. the agent had advised that it's not the tenant who is raising repair issues the tenant has not complained at all. It's the social worker.

I will go through all the checks described above and make sure all documents are in place.

Thanks again what a great bunch of professionals on this forum.

Simon

4:18 AM, 8th February 2020
About 8 months ago

Dear forum members.

Just wanted to update you on my situation, things kinda got from bad to worst!

Before the UC tenant moved in (July 2019) I had spent a considerable sum of money restoring the house to its former glory to the standard managing agent wanted it to be in.
They even sent me pictures of the house restored to its former glory!

Yesterday i get a sudden email from the agent that the tenant and her council support worker wanted a meeting with the managing agent regarding some repair works. The agent has passed me the repair works seems to be a lot of damage to kitchen floor, thermostat, electric switches, window handles broken off which is going to cost a considerable amount to fix . However my question is that since 7 months ago the house was in a good state of repair before the tenant moved in, this damage is surely all caused by the tenant yet the tenant never reported any of this and hides behind her council support worker to report this damages.

I have pictures from 6 months ago taken by the agent to prove that the property was in a excellent state. Am I obliged to repair damages caused by tenant? Currently the tenancy expired 2 weeks ago and it is a rolling tenancy now. The tenant is also 2 months rent in arrears.

What are my rights? Will I prosecute if I dont repair the damage?

Regards
Simon

Robert Mellors

22:22 PM, 9th February 2020
About 8 months ago

Reply to the comment left by Simon at 08/02/2020 - 04:18
Hi Simon

Your letting agent should be able to advise you on all of this. If the agent is no good then check your contract for how to get rid of them. Learn your responsibilities under HHSRS. I presume this is a self-contained property, not a HMO? If the house was in good condition when you let it, but tenant is damaging it, then you need to issue notices to evict the tenant without delay (it will still take you many months, a court hearing, and loads of expense). Contact someone like Paul Shamplina of Landlord Action to get help with this. The longer you leave this tenant there, the more damage will be done and the more it will cost you.

In the meantime, yes, you do need to carry out the repairs which you are liable for, and this MAY include some of the repairs needed due to tenant damage (see your AST, the HHSRS, and s11 Landlord and Tenant Act) - GET PROFESSIONAL ADVICE.


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