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 11 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!

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Rosanne Turvey

12:39 PM, 31st December 2012, About 11 years ago

Hi, just reading through everyones' comments concerning housing benefit and thought I would let you know about my experience. I had a tenant who was with me for five years claiming housing benefit which was at the time paid direct to me. She never ever paid her top up of £25 per month despite numerous gentle reminders. I was not too bothered about not receiving the top up as quite honestly it was cheaper to let this go than to have a void and I was guaranteed the rent as i was being paid direct. Unfortunately my tenant's circumstances changed and her housing benefit was suspended until the local authority had the information they had requested - again I was not too bothered as I knew that when they had the information, I would be paid all monies owed. In the meantime I had cause to give my tenant Notice to Quit. I then realised that my tenant could go into the local authority offices and request that payment be made direct to her and so I telephoned them to point out that I was worried she would do this. I was assured that this would not happen and that any payments owed to me since the housing benefit had been suspended would be sent to me. I sat back and relaxed only to then receive a letter shortly thereafter informing me that they had reinstated the housing benefit and that all payments had been sent to my tenant! I telephoned the offices immediately and was informed that they could not discuss anything with me as my tenant had told them she didn't want them telling me anything and so they would not give me anymore information. After a battle and demanding to speak to someone in higher authority i managed to find out that my tenant had sent a letter from me stating that i was happy for her to have the housing benefit paid to her - a sum well over £2,000! This letter was obviously forged and it appeared that no information about my earlier phone call had been put on the system - a complete mess up by the local authority who then had the cheek to tell me that it wasn't their problem and i had to claim it back from my tenant. Needless to say I fought my case and although it took a few months, I got my money back - again another story why you should not let housing benefit tenants have your property.

Mark Alexander - Founder of Property118

14:50 PM, 31st December 2012, About 11 years ago

Hi Rose

I think that actually you were VERY lucky indeed to get the money back. I heard a very similar story but in that case the money was never recovered. The tenant decided to spend it all on an overseas holiday before the case went to Court. The landlord did manage to get a CCJ against the tenant, which cost another few hundred pounds and a lot of time a grief. However, enforcement of the judgement, which took even more time and was even more stressful and problematic, resulted in the tenant having £8.63 per month deducted from benefits!

To my way of thinking the case should have been treated as fraud. The benefits were paid to pay for accommodation. Instead the funds were misappropriated and squandered on a holiday. The landlords property was repossessed and sold at a loss. The landlord is facing bankruptcy.

If only the landlord had taken a guarantee this may never have happened.

0:13 AM, 1st January 2013, About 11 years ago

I have long conjectured the problem of bankruptcy facing LL who take on LHA tenants without the resources to cover mortgage payments if the tenant refuses to pay LHA and then is evicted.
I didn't appreciate you actually know of this happening.
I think a bit like Mary Latham always says that every tenant is a P45 away from being an LHA tenant; that this situation should concentrate LL minds to take out RGI if at al possible on existing or soon to be tenants of their's.
Every LL with an LHA tenant is at risk of bankruptcy if they don't have resources to cover those mortgage payments.
£99.00 is pretty cheap for the cover you can obtain.
I am a classic example of learning from my mistake and consequently am NOT facing bankruptcy as I have a RGI policy which has paid out £10000 so far on my wrongun tenant.
I thank whoever that I took out the RGI policy otherwise I could be facing the situation of the LL you have mentioned.
Perhaps an article from you concerning all the latest ways a LL may protect themselves from non-rent paying tenants.
There are quite a few products out there and I am sure LL would like to see a critique of all the relevant products to assist them tyo make a possible purchasing decision.
To think that UC will hand vast amounts of money to these LHA tenants just doesn't bear thinking about.
All those formerly direct payment receiving LL of LHA could face the issues of the LL you have mentioned.
Not a pleasant thought!!

19:49 PM, 1st February 2013, About 11 years ago

Sounds like a nasty, vindictive, greedy and lazy attack on individuals. Criminalising is unlikely to be a deterrent, to non-payment and will just result in more people with criminal records. And huge public expense on handling these new criminal prosecutions.

I suspect your real motivation is simply to move a business cost (managing non-payment) from yourself to the taxpayer.

If landlords don't want to rent to under 35's on benefits, it is simply because the return does not match the risk. There is a perfectly reasonable and sensible mechanism for addressing this problem, and requires no change in law. Landlords simply need to let the authorities know what premium it would take for them to rent to under 35's on benefits. Job Done.

As a landlord your prying into a tenants business extends only to compliance with contract - and so risk associated with non-compliance.

For pretty obvious reasons housing/renting gets special treatment in law - if you don't like it, invest in something else, and sell your properties for others who can make it work.

john handley

13:36 PM, 3rd October 2013, About 10 years ago

I have got a tennant living in my house he has not payed any rent for 6 mounts and i can not get him out . He has beeten me up and is now on leagel aid and is suing me for harasment i am going bankrupt
we are up in court on 15th of November and i have no one to talk to and am going out of my mind i am 66 years old There should be a law to protect landlords but we are looked on as leaches if and when he leaves he can go and do this to some one elece and get away free There should be a law where he can go to prison for theft the same way as if he robed
any one elece
when we go to court the judge will say [ in the intresst of justist we will have to have a proper court case and that will take another 6 mounts to get a court date ] where is the Justis for me John Handley

Mark Alexander - Founder of Property118

13:41 PM, 3rd October 2013, About 10 years ago

Reply to the comment left by "john handley" at "03/10/2013 - 13:36":

Hi John

You really need to talk to Landlord Action - see >>>

11:38 AM, 4th October 2013, About 10 years ago

Oh heavens John, I hope you sort this out! Did you speak to Landlord Action?

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