No housing benefit but what if they need it during tenancy?

by Readers Question

9:22 AM, 10th March 2020
About 7 months ago

No housing benefit but what if they need it during tenancy?

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No housing benefit but what if they need it during tenancy?

We do not accept housing benefit and always make sure that tenants are working. We also put on our lease that Housing benefit is not accepted and that if the tenant needs to claim it, we will have to give them 2 months notice.

Is this OK, as the tenant is fully aware at the outset that we do not accept housing benefit and they have signed the lease, fully aware of this condition.

Thanks for your advice.

PS We do not mention housing benefit on our advertisement, in case that is now seen as discriminatory.

Highland Lass


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Comments

Neil Patterson

9:28 AM, 10th March 2020
About 7 months ago

Shelter are encouraging tenants to take landlords and estate agents to court for discrimination who advertise no DSS based on the majority of claimants being female or single mothers.

Adding this to your AST may still cause a claim at a later point.

I am assuming you mean give two months noticed after the fixed term period?

The Forever Tenant

10:12 AM, 10th March 2020
About 7 months ago

I think this is one of those times that you need to consider the optics and the tenant themselves.

Have they been a good tenant up until now, have they been with you for a decent period of time and always paid on time? Are they now claiming housing benefit because they recently got made redundant? Are they looking for more work?

To have someone say to you "Sorry you lost your job, by the way now you are losing the roof over your head" is the kind of story that the media would love to use to show how bad landlords are.

To simply say "you are on benefits, now get out" is not a blanket statement that you should be considering in my view.

LordOf TheManor

11:13 AM, 10th March 2020
About 7 months ago

Why not purchase Rent Guarantee Insurance? That should contain the situation you fear - provided you have fulfilled all the insurance requirements before any new tenancy begins. It's not a huge undertaking at all!

Robert Mellors

11:32 AM, 10th March 2020
About 7 months ago

New claimants are extremely unlikely to get Housing Benefit, instead they will have to claim Universal Credit, and the "housing element" of UC will be paid direct to the tenant. (There are a few exceptions, but these are not likely to apply to most tenants of private landlords).

Rather than a "no Housing Benefit" clause, why not take out Rent Guarantee Insurance, and also have an affordability clause, which then enables people in receipt of benefits to prove to you that the rent is still affordable to them based on their individual circumstances. It would also be advisable to get a Rent Guarantor for any new tenant, so that if the worst comes to the worst, you can ask the Rent Guarantor to pay the rent (or any debt).

Julie Ford

12:36 PM, 10th March 2020
About 7 months ago

As the other replies have said, there is more to this situation than just a blanket ban on those in receipt of benefits.
If you have had your tenant for 5yrs, they keep the property in good nick, they don’t bother you with petty maintenance issues, have paid the rent and are friendly with the neighbours.
Why would you serve notice if their source of income changes?
Also with UC, how would you know the tenant now gets benefits?
I’m struggling to see the logic in the original post.
What if said tenant is on UC but between jobs and by the time the S21 expires they have a job again
Personally as a tenant I would not want to continue with a landlord like that and would be looking to move ASAP.
Remember that being a landlord is a business and tenants are your customers. Businesses work with their customers not against them

Highland Lass McG

13:11 PM, 10th March 2020
About 7 months ago

Reply to the comment left by Robert Mellors at 10/03/2020 - 11:32
Hi Robert.
We have accepted housing benefit at the outset in the past and also during a tenancy, where a good tenant was between jobs. The reason behind the idea is to make potential tenants aware that we do not generally accept housing benefit. We know all the difficulties that can occur with accepting benefits.
I haven't heard of an 'affordability clause' in the lease. Is this where, if a tenants circunmstances change they have to inform you and then prove they can continue to pay the rent? Would this be a statement in the lease? Thanks

Robert Mellors

13:22 PM, 10th March 2020
About 7 months ago

Reply to the comment left by Highland Lass McG at 10/03/2020 - 13:11
When a letting agent advertises a property they will generally have some sort of criteria that specifies that the prospective tenant has to establish that they can afford to pay the rent. This is also a criteria for some Rent Guarantee Insurance policies. It is basically just doing the tenant referencing that you would generally do, and satisfying yourself that the tenant can afford the rent being charged. By calling it an "affordability criteria", you are not excluding anyone and instead are making it clear that you will consider applications on their own merit, and by doing this you avoid any accusation of "discrimination". Of course, most people on benefits will not meet the affordability criteria, (but there may be exceptions), so then it comes down to what Rent Guarantors they can provide (and whether they meet the affordability criteria). All of this should be put in place at/before the start of the tenancy, but I see no reason why it could not be a criteria specified for a tenancy renewal.

Gunga Din

14:08 PM, 10th March 2020
About 7 months ago

I absolutely agree with being flexible for a good tenant whose circumstances change, but that change can result in a tenant metamorphosis.

"I’m struggling to see the logic in the original post."

I'm not. I empathise with the OP's caution. Yes the tenant may be conscientious, prioritise rent over other discretionary spending, but I'm sure I've read a stat recently saying 60% of tenants starting UC in an area over the last so many months have gone into arrears. I would hate to tar everyone with the same brush but an element of risk suddenly arises which wasn't there at the tenancy start.

"Personally as a tenant I would not want to continue with a landlord like that and would be looking to move ASAP."

I would expect the tenants to dig their heels in and do everything they could to avoid moving. In many areas, voluntarily leaving a tenancy puts one right at the bottom of the LA's priority list, and the tenant faces a limited choice of properties to move to.

"Remember that being a landlord is a business...."

Exactly. Not a charity. Sound business sense dictates ensuring your incomings cover your costs, lowering risk, and reacting to changes in risk.

"..and tenants are your customers. Businesses work with their customers not against them."

If they're not paying rent they're not really customers. LLs often have mortgages to pay. There is the possibility that even if the tenant gets another job in six months they won't be in a position to pay the missing or reduced six months' rent.

I agree, work with the tenant, explain your angle, be flexible, but it depends on how long term a view you're prepared to take. See whether they keep paying rent then decide how long you're going to pay for a roof over their heads.

John Dace

15:37 PM, 10th March 2020
About 7 months ago

I find this ‘discrimination’ argument by Shelter a bit thin. Has this been determined by court yet? Is like my sign, ‘No tarmac sellers’ being discriminatory against travellers as it just so happens most tarmac sellers are Gypsies. Or ‘No Farting’ being ageist. Its surely irrelevant what group or type claim HB most? After all its nothing to do with sex, age, colour or religion - its about who can afford it.

Paul Shears

18:26 PM, 10th March 2020
About 7 months ago

Reply to the comment left by Julie Ford at 10/03/2020 - 12:36
"by the time the S21 expires they have a job again"
Not a snowball's chance in hell.

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