What to do when taking on a benefits tenant?

What to do when taking on a benefits tenant?

13:36 PM, 8th August 2017, About 4 years ago 15

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Could I ask what other Landlords are doing when taking on benefit tenants.

I usually only take on benefit tenants if they can provide a homeowner guarantor.

I am finding in some areas that some tenants can only provide working guarantors and some on benefits can’t even get a guarantor.

Could I ask what other landlords do if they have properties in areas were there are a lot of housing benefit tenants and what you do if applicants are struggling to get guarantors ?

Many thanks

The Property Man



Comments

by david Brinsden

15:24 PM, 9th August 2017, About 4 years ago

I have 3 tenants on benefits now, having had 5 before. I now only take them on if they are supported by a housing charity

by Robert Mellors

23:54 PM, 9th August 2017, About 4 years ago

Reply to the comment left by Sherrelle Collman at 09/08/2017 - 13:42Hi Sherrelle

If you set the rent at the LHA rate, this is generally well below the market rent, as it is set at the 30th percentile of what the market rents were several years ago, so the LHA rate is probably now at around the 10th percentile of current market rents. While I accept your reasoning about the tenant not paying the top up, if you only ask for the LHA rate then that is definitely all you will get, but if you ask for more, e.g. the true market rent, then you have a chance of receiving more. Individual landlords will know there own costs and what rent they need to get in order to make the renting viable, so if they want to set a below market rent then that is up to them, but I don't think it is good to encourage this as many landlords are going to need a profit in order to set aside some money to pay their extra tax bills next year due to the Section 24 tax regime.

by Dr Rosalind Beck

8:43 AM, 10th August 2017, About 4 years ago

Reply to the comment left by Robert Mellors at 09/08/2017 - 23:54And also rents have to go up because of the PRA stuff coming in or remortgages could be refused on the basis of not enough rental coverage.

by The Property Man

19:43 PM, 12th August 2017, About 4 years ago

Thank you everyone for you comments and advice. It's a tricky one really as some properties are sticking simply due to benefit tenants not being able to provide guarantors at all !! It's like the chap said above he had a house empty for 7 months !! If the rent was £500 pcm then that's a £3500 loss already trying to hold out for a benefit tenant to get a guarantor. I may just have to take the risk an consider getting a larger deposit if possible on some properties but monitor them more closely. I know soon we won't be able to take deposits more than the equivalent to one months rent so that may put a spanner in the works.

by Norfolkngood

23:17 PM, 12th August 2017, About 4 years ago

Hi the property man,
If you don't mind benefit tenants but don't want the hassle of benefit payments, go to your local council and offer your place to them on a lease basis, they are likely to pay you a tad less than you would end up with if you went through an agent, the point is it, whether a tenant pays or not becomes the problem for the council, they are likely to offer you a five year contract and give your property back to you in the same condition.
I offer one of mine a few years ago, they offerred to take it but insisted that the kitchen and bathroom was first renewed. There was nothing wrong with what was there so I didn't take them up, it's the problem with those that work for the council is their heads are up their own back ends.

If you've got a mortgage you should check your contract to see if you can lease it out, if it doesn't say you cant I wouldn't ask, if it say you cant it's for you to decide if you wish to chance it, the penalty if you get found out may be of little consequence.

Better still sell before the crash!

Regards kris


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