Two sharing AST, one working, one on UC?

by Readers Question

15:32 PM, 26th August 2020
About 4 weeks ago

Two sharing AST, one working, one on UC?

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Two sharing AST, one working, one on UC?

I am aware of the potential disadvantages of dealing with tenants on benefits, but wondering how to set the rent on this one. Large flat, advertised at £395 for one person. The previous pair of tenants were paying £475.

The working tenant will pay first months rent and deposit upfront and I realise it’ll probably go to regular rent in arrears at least partially. The chap on UC, due to his age, gets about £380 for 4 weeks and I assume that if the UC office knows he’s sharing, the amount will be less.

Does anyone know what he will get as a sharer? It’s in Hartlepool in case that’s relevant.

He claims direct payments are in place to his current landlord and that he will simply log a new address in his journal and payments will come to me. I’ll believe this when I see it, and since I’m inexperienced in dealing with benefits, can anyone shed light on how the changeover process is likely to pan out?

I’ve had one benefits tenant with direct payments to me, and all went smoothly, but I understand that with all new claims (and an address change counts as such), the default is payments to the tenant.

I don’t know on what grounds his money is paid directly to the Landlord currently.

I’m not out for the whole of his alleged £380 (-ish) payment, nice though that would be, because I’m sure it would be payback time when the UC office discovers he’s sharing. It’s attractive of course to have the payments direct to me if this in fact transpires, but payment to the tenant would put the onus on him to be claiming correctly bearing in mind the shared tenancy.

Alternatively, I can take the view that I might be overpaid initially, and then pay it back when sharing is discovered.

The decision now, and which I’d appreciate input on, is where to set the rent amount for the tenancy agreement.

Many thanks

Doug



Comments

Lindsay Keith

9:29 AM, 27th August 2020
About 3 weeks ago

Just wondering, what are the tenants' skill sets in an area of historic high unemployment levels?

david porter

9:30 AM, 27th August 2020
About 3 weeks ago

We are in Southampton. We have enormous demand for our product. We put properties on the market online overnight and we will have a deposit before midday the next day. They pay the asking rent, We do not take people with impaired credit. U.c. people cannot afford our properties
Many local landlords have bailed out due to adverse tax treatment and other concerns which include rougue electricians and so forth
There is little competition. We do have issues but do not need to endure poor credit histories or UC.
Perhaps you might find it easier if you take a harder line?.

Gunga Din

10:11 AM, 27th August 2020
About 3 weeks ago

LK - the worker is a warehouse shift manager who has survived recent restructuring and is above local average wage so I'm confident about him. He's happy to take "lead tenant" role and prop up his mate. They have been sharers for some time. I and my tenant-finding agent have spoken to both and get a good vibe. Its always a gamble and we've rejected quite a few. There is no end of interest from families on benefits for my flats but of course one needs a month in advance plus deposit etc. etc. so I've kept it vacant since last pair moved out in November.

DP - I'm usually as hardline as you but one has to take a "balanced view". This prospect has mitigating circumstances, as mentioned above.

david porter

15:28 PM, 27th August 2020
About 3 weeks ago

Gunga Din
As my old grandad said,
in business keep it simple
dp

Chris Bradley

16:31 PM, 27th August 2020
About 3 weeks ago

Uc will want to see tenancy agreement. Had a case where they asked me to amend the way names appeared on a tenancy agreement to enable one of the tenants to claim council tax relief. The initial agreement listed one tenant the husband as tenant with wife as other occupant, council wanted them as joint tenants, which was what I'd suggested in first place

Bill irvine

19:29 PM, 27th August 2020
About 3 weeks ago

Reply to the comment left by Chris Bradley at 27/08/2020 - 16:31
Hi Chris

Most landlords creating a new tenancy, involving couples, related JTs etc. will put both or each of their names on the agreement.

However, DWP's insistence on you changing the terms of the AST is simply wrong. It actaully makes no difference, whether one or both names appear. When couples claim, either could be the named tenant, as when they claim UC they both need to make their claim. That's sufficient for the purposes of claiming LHA, UC's Housing Costs and Council Tax reduction.

I've tackled DWP on this issue many times and pointed them to their own guidance, produced more than three years ago, after lengthy exchanges with me and other benefit advocates. One of my members' bulletins explains, in some detail, how unnamed occupiers can assume liability in the absence of the "liable person".

Bill

Bill irvine

19:49 PM, 27th August 2020
About 3 weeks ago

Hi Doug

In answer to your question, as the landlord, you need firstly to determine, the contractual rent for the whole property.

Based on what you've said above, it appears you were previously charging £950 pcm ( 2 @ £475).

DWP would normally assess the "maximum" rent for the UC joint tenant by apportioning it on a 50/50 basis. They would then assess, the UC tenant's LHA rate, based on the shared accommodation rate (SAR) if he's under 35. If he's over 35 or qualifies for the 1 bedroom rate, due to satisfying one of the exceptions, he'll receive the more generous 1 bed rate.

For the hartlepool area the rates are:

CATEGORY 1st April 2020 1st April 2020
SHARED ROOM WEEKLY £65.00 CALENDAR MONTHLY £281.67
ONE ROOM WEEKLY £86.30 CALENDAR MONTHLY £373.97
TWO ROOMS WEEKLY £99.65 CALENDAR MONTHLY £431.82
THREE ROOMS WEEKLY £115.00 CALENDAR MONTHLY £498.33
FOUR ROOMS WEEKLY £155.34 CALENDAR MONTHLY £673.14

Either way, he'll have a significant shortfall to make up. As I'm assuming the AST is based on "joint & several" liability, it makes no difference to you who makes up the difference but DWP is entitled to question the affordabiity of the property to the UC tenant and what you would do if the shortfall is not paid.

I hope this helps your understanding.

Bill

Gunga Din

21:11 PM, 27th August 2020
About 3 weeks ago

Thanks very much Bill that's very useful.

Clearly I was ambiguous earlier - the total rent for the previous couple was £475. We've set it at £480 this time and both tenants will be named on the AST of course.

Bill irvine

7:32 AM, 28th August 2020
About 3 weeks ago

Reply to the comment left by Gunga Din at 27/08/2020 - 21:11
In that case, the UC tenant’s rent will be capped at 50% of the contractual rent I.e. £237.50 NOT the higher LHA amount.

Bill

Gunga Din

21:06 PM, 28th August 2020
About 3 weeks ago

Thanks again for the confirmation. Seems reasonable.


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