Should she stay or go?

by Readers Question

9:58 AM, 9th August 2019
About 7 months ago

Should she stay or go?

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Should she stay or go?

My tenant has been in touch to advise that her partner has moved out and that she can still afford the rent if she makes a part-payment when she receives her wages and another mid-month when she receives Universal Credit.

She was late with rent twice recently but always made a part-payment on time then paid the remainder when she promised to a couple of weeks later, so I suspect he left a while ago and she’s been struggling with the adjustment in household income and wants to propose and formalise what she thinks she can manage. She isn’t asking to reduce the rent, just to pay it differently, across two payments a month instead of one.

On the one hand I can see as a now single parent she could be a great long-term tenant and that it could be to both of our benefits if I agree. On the other hand, alarm bells are ringing.

I haven’t let to benefits claimants before as I always let to Professionals who must pass a reference check which includes affordability (although she is working) and letting to claimants has never been part of my business model. I realise however that UC can be claimed for several things and as already said, she is still working.

Pros: potentially good long-term tenant (apart from the previously mentioned two blips which she made good promptly), saves evicting someone who has previously been a good tenant.

Cons: if she’s struggling, might she default anyway, if I stall impact re. changes to Section 21 to consider etc. if she then defaults, potential for income fluctuation/instability esp. Brexit uncertainty looming re. jobs (but that’s true of any tenant right now).

Anyone help me see the wood from the trees? I don’t want to kick someone when they’re down, especially when seem to be trying hard to see a way through, but equally I’m cautious/cynical!

LCH



Comments

LCH

19:14 PM, 9th August 2019
About 7 months ago

Reply to the comment left by Jack Craven at 09/08/2019 - 16:31
Absolutely.

CARIDON LANDLORD SOLUTIONS

22:11 PM, 9th August 2019
About 7 months ago

Reply to the comment left by LCH at 09/08/2019 - 19:13
No worries.
If you email me directly I can send you some more information and links to webinars just so that you can get a grasp of the new system.

Have a nice weekend

Bernadette Hughes

0:11 AM, 10th August 2019
About 7 months ago

Reply to the comment left by CARIDON LANDLORD SOLUTIONS at 09/08/2019 - 16:19
If the rent is paid direct to landlord and the tenant is later found to be claiming universal credit fraudulently my understanding is that the dwp can reclaim it from the landlord?

Mark Trenfield

8:36 AM, 10th August 2019
About 6 months ago

Hi LCH,
Lots of good advice already. A few things I would definitely do:-

1) Reduce the rent a little - for the next few months - to help her out. (Good tenants are hard to find and being a kind hearted landlord will stand you in good stead for the long term with her).

2) Why not let her pay all the rent in arrears rather than in two separate payments. Only one transaction to deal with and easier to keep track on what you are receiving.

3) MOST IMPORTANTLY - change the name on the tenancy agreement to SOLELY hers otherwise you (and your tenant) are going to have problems with the Council and Benefits Office moving forward.

When a Housing Benefit / UC claim is assessed the Council look at the tenancy agreement to assess the income of EVERYONE who is defined as living at the property.

If her husband is listed then he will be assessed as part of this process. This will affect her UC benefit claim and will also affect the monies you ultimately get via UC.

Issue a new tenancy agreement NOW and then get her to submit this as a "change of circumstances" at the local Council ASAP. They will then re-assess her claim based on the actual circumstances (ie: Single mother with children).

It's possible - with the husband removed - that she is entitled to even more benefit so this could help you both.

Hope this helps ....

Mark

LCH

8:56 AM, 10th August 2019
About 6 months ago

Reply to the comment left by Mark Trenfield at 10/08/2019 - 08:36
Thanks, plenty to think about there.

LCH

9:18 AM, 10th August 2019
About 6 months ago

Reply to the comment left by Bernadette Hughes at 10/08/2019 - 00:11
Thanks for the note of caution. From what you're saying, in essence, a LL becomes liable for a tenants potential fraud, despite having no knowledge or input into what or how they claim. That is most definitely not my 'thing'. Sounds like a compelling reason not to bother (and she's not in arrears). As per my original post, I ordinarily let to Professionals who must pass affordability checks, I'm flexing terms for an existing tenant.
I really do appreciate everyone's advice on here, even though I may not act on all of it. I certainly feel much better informed than this time yesterday.

Jo Westlake

9:31 AM, 10th August 2019
About 6 months ago

My experience is the opposite of most of Mark Trenfield's suggestions.

1. Leave the rent at it's current level if around LHA limit. If it's a bit above LHA just mentally forget about increasing it any time soon. The tenant seems happy with the current figure. The full amount of rent is usually covered by Benefits for the first 13 weeks of a claim for tenants already in a home they could previously afford. Reducing it at this point with the idea of increasing it any time soon could cause more problems.
If the rent is significantly above LHA your tenant is going to struggle.

2. Accept the payment in as many installments as tenant needs to make, especially if it is all technically in advance. She is having to make a massive adjustment to her budgeting and it will be psychology important for her to be paying rent in advance. The feeling of debt is horribly depressing.

3. Leave the tenancy agreement as it is at least until the situation completely clarifies.
In my experience the Benefits Agencies don't expect a brand new tenancy agreement to be churned out every time a couple have an argument.
You currently have a deposit. If you refund it you are unlikely to get the full amount back again from that tenant. The Local Authority in this area of the country will provide a deposit for a new home but won't provide one to retain an existing home in the event of relationship breakdown. That question would be worth a quick phone call to your local housing team.
You probably don't know if the deposit was originally his, hers or theirs. Until they have negotiated a financial settlement as part of their divorce you don't actually know which one to return what to.

Good luck. I've stuck with tenants in similar circumstances and it's all worked out fine.

Clint

9:44 AM, 10th August 2019
About 6 months ago

Reply to the comment left by LCH at 10/08/2019 - 09:18
It is incorrect that if the landlord has no knowledge of the fraud that it has to be paid back where Housing Benefit is/was paid by the council. I have had many of such occasions in the past and have won by appealing against the decision to recover monies from me.

In my green days of taking on benefit clients I paid back the money, until I found out that you did not have to if you had no knowledge of the fraud or overpayment as it was called.

UC is a different cattle of fish. They are a law unto themselves and as far as I am concerned, fraudulent themselves but we live and learn.

Clint

9:48 AM, 10th August 2019
About 6 months ago

Reply to the comment left by Jo Westlake at 10/08/2019 - 09:31
I fully agree with you Joe Westlake on this and unfortunately disagree with Mark Tanfield.

Mike T

12:08 PM, 10th August 2019
About 6 months ago

Reply to the comment left by Claudio Valentini at 09/08/2019 - 11:08
Hi, Not sure about creating a new tenancy in her sole name. It could be the couple may even reconcile sometime in the future. In the meantime if she should default on the rent you may still have two avenues to seeking payments. as the partner is still on the tenancy.

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