No job + no guarantor = No Home and Crisis wonder why?

No job + no guarantor = No Home and Crisis wonder why?

11:25 AM, 25th December 2012, About 9 years ago 27

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Crisis LogoAccording to the housing Charity “Crisis” only 1.5% of private landlords across the UK are willing to rent to benefit claimants aged under 35.

Changes in benefit rules have meant that single people under the age of 35 can now only claim benefits which are sufficient to rent a room in a shared house. With increased demand though, Private Landlords are in a much better position to “cherry pick” their tenants in order to minimise risks and maximise returns.

The risks of renting to benefits tenants are three-fold and are set to increase:-

1) Housing benefits are paid directly to tenants, not private landlords. If a tenant chooses to misappropriate those benefit funds and spend the benefits on something other than the rent, that’s not a crime. Many landlords argue this should be treated as fraud but the authorities do not see it this way and believe that the recovery of unpaid rent should be dealt with via the courts. However, it stands to reason that if a person is claiming benefits they do not have the ability to pay even if a private landlord wins a case in court. The costs of pursuing rent are prohibitive and the minimal chances of recovery make the use of the legal system to recover debts futile.

2) If housing benefits are misappropriated and a tenant falls into arrears a private landlord currently has to wait at least two months before applying to have housing benefits paid directly to him. No such rules apply to Registered social Landlords at the moment, however, they too are going to become caught with a similar and much larger problem later this year called “Universal Credit”. When this kicks, the plan is to pay no benefits to landlords, whether they are private landlords, councils, housing association or charities.

3) No landlord can apply for possession until a tenant is two months in arrears. Technically a landlord can then serve a section 8 notice requesting a tenant to move out. However, once the two weeks is up, if the tenant does not move out no crime is considered to have been committed. The landlord then needs to apply to Court and that’s when the delay tactics and false defences begin to occur. Most private landlords have completely lost faith in this system based on experiences of the processes taking six month or more to recover possession. Therefore, they have been serving section 21 notices to gain possession which technically can not be challenged as the law allows the landlord to request possession of his property on this basis without having to prove a reason. The tenant is still not compelled to leave though and by the time this notice has expired could now be four months in arrears. To add insult to injury, the tenant is still not compelled to leave the property and continues to break no laws whatsoever if he chooses to stay there, even if he’s still not paying rent! Try getting away with that in a guest house or hotel. The only way a landlord can gain possession is to get a Court order and instruct bailiffs. This can very easily take another few months, sometimes longer.

Can you see now why private landlords don’t want to take the risk of letting to tenants claiming benefits unless those tenants have a financially sound guarantor who is worth litigating against if things do go wrong? I haven’t even touched upon anti social behaviour of tenants or damage to property. You’d be forgiven for believing that the Police would take more of an interest in those two things wouldn’t you? Think again!

The long and short of the matter is that there is a massive under supply of property. Private landlords are business people and like all business people they simply want to minimise their risks. Therefore, it stands to reason that they will let their properties to the lowest risk tenants they can find and for as much as they can charge. That’s business!

No shopkeeper is going to leave his door unlocked at night so that hungry people can take food. No bank is going to leave it branches open with no security and the safe wide open so that poor people can help themselves to money. Why, therefore, should private landlords to be expected to have a social conscience  and allow people to live in their properties without paying for them.

Oh, by the way, the Registered Social Landlords and Councils are also turning their backs of housing benefits claimants too. There is a growing trend for these organisations to provide properties only to working families too. They are not really known for building shared accommodation. These organisation are often Charities, if any group should have a social conscience, should it not be them?

Is all of this right and will things change?

Written on Christmas morning whilst my family are getting ready to go to visit friends.

Bah Humbug!



Comments

by

8:44 AM, 30th December 2012, About 9 years ago

hi Paul, the problem we have is ' public perception'.
i'm convinced the powers that be are well aware of both - what to do and how to do.
but have an innate fear of the publics perception of LLs.
this should be our target. the only way to change this is by letting it be known that the cost of bad tenants and bad legislation leads to higher rents which pays for their mistakes, the damages, loss of rents, the licenses, the inspection, etc. etc.

how else do we pay for these costs ???

50% of the country pays rent. let them be informed of what truly goes on - on their behalf.

education is a dangerous this - but to whom ? that's up to the educator and what is being taught.

by terry sullivan

9:22 AM, 30th December 2012, About 9 years ago

never give more than 6 months tenancy!

by

18:06 PM, 30th December 2012, About 9 years ago

I know that a number of my colleagues have started issuing Section 21 notices (with a date at the end of the initial term) as part of the check in process. They get these signed by the tenant to confirm receipt and then feel they have this greater "insurance" should they need to evict the tenant at any point.
Whilst this could be seen as underhand, the people I speak to feel that it is the only way of swinging the current legislation back in their favour, especially as they would only intend to enforce should the tenants force a reason for doing so.

by

18:31 PM, 30th December 2012, About 9 years ago

The rent should be payed directly to the landlord. In Ireland there are tenants who use rent allowance as pocket money and change appartment every 3 months. When the supply and demand changes here in a few years time no landlord will accept council tenants due to the abuse currently taking place.

by Mark Alexander

18:55 PM, 30th December 2012, About 9 years ago

Paddy, the chances of changing the systems of Universal Credit are ZERO. However, when Housing Associations and councils are in the same boat as Private Landlords I think we have a far better chance of working with them to criminalise none payment of rent and to improve the time it takes to re-gain possession of properties. In some American states the local Sheriff will arrest tenants for none payment of rent, anti social behaviour or damage to a property and even help tenants to get them out of their properties. Watch a film called "The Pursuit of Happyness" - that's how things should be here in the UK. We need to undo the "Welfare State" we have become.

by Anthony Endsor

20:00 PM, 30th December 2012, About 9 years ago

I've learnt that now Terry. I won't be falling for that again. Still wouldn't solve the problem of getting the tenant out at the end though.

by Anthony Endsor

21:03 PM, 30th December 2012, About 9 years ago

That's correct Mark. No guarantor was appointed. Big mistake. But I think the figure of 98.5% of landlords saying no more dss has just gone up to 98.6%.

by Mark Alexander

22:08 PM, 30th December 2012, About 9 years ago

Interestingly, the more the Charities shout about this problem, the more landlords make the decision to follow the advice and strategies of their peers. Whilst demand is so high for accommodation from hard working people (e.g. Eastern European families migrating to the UK) why would anybody CHOOSE to rent to people who believe the state owes them a living? Landlords are being asked to provide accommodation but do not feel that the law protects them sufficiently. There can only be three outcomes - 1) change the law or 2) deal with mass homelessness and the associated issues such as crime or 3) incentivise the development of more affordable accommodation. I thinkwe will witness all three of these outcomes within the next two years.

by Mary Latham

23:10 PM, 30th December 2012, About 9 years ago

Paddy it will not take " a few years" in less than 2 years these tenants will be homeless because private landlords, local authorities and RSLs will all walk away from them - because none of us can survive without income and if none of us survive there will be NO HOMES FOR ANYONE!!
As as aside I assume that those landlords who are issuing S21 at check in are protecting the deposit and giving the tenants the correct information, with proof that they have done so, before they issue the S21. Also that they have evidence that the AST was signed before the S21 was issued. If they have not done both of these things the S21 is not worth the paper that is it written on.
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by

2:28 AM, 31st December 2012, About 9 years ago

Mark, I think this is not a situation of insufficient accommodation; there is plenty of rental accommodation available.

It is just LL do not wish to take a risk on the riskier tenant type because of the problems of eviction.

It doesn't matter that much if you have a 'normal' tenant on whom you have an RGI policy as that will cover rent and eviction.

But for possible tenants that a LL cannot source RGI for , the LL won't bother taking the person on due to the risks of a tenant without a RGI policy on them.

Clearly the most important law to change is eviction following say 2 months of rent arrears which is 1 month and 1 day if rent paid in advance monthly.

As you advise in certain US states the police initiate such removal action as is necessary.

If we had similar circumstances in the UK there would be a rapid change in LL taking on LHA tenants.

Once the useless county court system as far as rent arrears and eviction are concerned is dispensed with then LL will take on LHA tenants.

The best incentive to motivate a tenant to pay rent and LHA/UC given to the tenant for the purposes of paying the rent; is if you don't pay all up to date rent; then after 2 months rent arrears which will be 1 month and 1 day then you and all your goods and possessions and any family will be thrown out onto the street by the police, if their LL so desires it.

There is not such possibility at the moment, which is why tenants behave with impunity.

They know the system is on their side and that it will take months for a LL to get rid of them.

You would be removed by police from a B & B if you did not pay the charges.

I see no reason that an AST should be any different from a contract to have rooms at a B & B.

Nobody seems to have picked up on the massive loss of tax revenue to the govt caused by tenants not paying rent.
As well as rent losses there are all the other losses that LL presently write off against tax, perfectly legitimately.
I believe a figure of 2.1 billion pounds per year of losses to the PRS have been estimated.
These losses offset against a LL income are a massive tax loss to the UK economy.
Govt has been making much play about the large corporates avoiding tax legitimately, though maybe immorally, but has said NOTHING about the losses it is suffering from wrongun tenants.
LL if they can absorb the losses that occur, but offset such losses against any income from rent.
Govt could if they were so minded to rapidly increase the tax take from LL, would just change the eviction laws.
95% of evictions are for rental arrears.
It could be possibly extrapolated that the govt tax take from LL might go up 95%!, not a small figure!?
Govt is supposed to be on the side of SME businesses as they suggest these are the economic drivers of the economy.
So surely assisting LL to generate income and profit is in the govt's interest
We are SME's, are't we!?
Allowing LL not make losses from rent arrears will allow LL to reinvest and improve property which would uplift standards across the industry.
I just don't understand why more of this knock-on effect on the economy and taxes is not being highlighted by the govt.
Perhaps I am being a bit thick here; or is it because the issues of rent arrears might show up the state of the country for what it actually is.
To have vast swathes of the population unable to service their basic living requirements wouldn't make the govt look too good!
At the moment the issue of rent arrears and subsequent LL losses can be kept quiet as 'only' 1 1/2 million LL in the PRS are affected.
Govt knows that keeping things quiet will not affect their vote; but making it easy for a LL to evict would, especially as I believe currently 2.5 million tenants are in rental arrears.
This why I think we will see NO action by govt to assist the PRS in timely eviction for rental arrears.


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