Vital Contacts for LHA Landlords

by John Paul

9:21 AM, 9th March 2012
About 7 years ago

Vital Contacts for LHA Landlords

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Vital Contacts for LHA Landlords

LHA Top Tips for landlords. Article 2 in a series of 8

Inform yourself. If you don’t know all the rules about being a landlord for Local Housing Allowance tenants, at the very least be sure you know where to look when you need information fast.

  1. Well, you’re reading these LHA Top Tips so you’re off to a great start!
  2. The book most councils deal with and which is updated every year around June is ‘The Guide to Housing Benefit and Council Tax Benefit.’ It can be purchased through Amazon.
  3. The most important legislations are the Housing Benefit Regulations 2006 and The Housing Benefit and Council Tax Benefit (Decisions and Appeals) Regulations 2001 and further information can be found at www.legislation.gov.uk
  4. Understand the LHA rates in your area. Visit www.direct.gov.uk and search “LHA rates”. The tools they provide help to determine not only how many bedrooms your tenant is eligible for but also what rates are paid for a specific postcode. LHA rates are reviewed annually and can go up or down. Be aware of these changes as they will affect cash flow.
  5. A great source for updates and changes to benefit structures is www.dwp.gov.uk
  6. Your local authority – know who the contacts are. Some councils will offer information and advice through their websites or Landlord Packs to support PRS landlords letting to LHA tenants. Build a relationship with the people who will be over-seeing the funding for your tenant.
  7. Your mortgage broker or lender. Some lenders will say they do not provide finance for LHA tenanted properties but this is rarely the case.
  8. Your insurers- Taking on LHA tenants will affect your insurance premiums due to the perceived increased risks. You must inform your insurers to ensure that your policies remain valid in the event of a claim.
  9. Letting Agents. If you are using a letting agent, it is important to speak to them about their knowledge and systems. You need to know that the person you are entrusting with probably the most expensive asset you own knows what they are talking about. You must make sure they have sufficient knowledge and experience in dealing with LHA tenants and councils.

    • Ask for references from current landlords and tenants.
    • Ask to see their systems for managing late payments or changes in tenant circumstances.
    • Ask what their systems are for checks on property condition and handling repairs.
  10. You. It would be foolish to pretend that dealing with the issues faced by some LHA tenants is straightforward. Many will be managing difficult family circumstances, financial insecurity, debt and unemployment. You must be patient and a good communicator. Before you begin, decide to what extent you are prepared to offer support and define where your boundaries are and then be prepared to stick to them.


Comments

Ben Reeve-Lewis

11:27 AM, 9th March 2012
About 7 years ago

Good stuff John. Do you see any problems arising from the freezing of LHA rates to an annual level in April?

16:04 PM, 9th March 2012
About 7 years ago

Hi Ben
With what information i have, i dont see much difference. In fact it will be less of an administrative headache for us. Reason being is that at the minute LHA rates change on a monthly basis so the 2 bed room rate will change slightly, depending on what it is we charge different top ups. From that point of view at least we know exactly what a 2 bed rate is or a 3 bed rate so we can inform with concrete fact what the potential top up may be for a tenant.

Mary Latham

16:32 PM, 9th March 2012
About 7 years ago

Since rent increases are now slowing down it will be less of an issue but while they were rising fast many landlord were concerned about LHA falling behind in addition to the cuts that they have swollowed.

In areas where LHA rates give a good return landlords will also not be concerned about increases in their mortgages at the same time as rent reductions/freezes but in the West Midlands many do worry about this

17:07 PM, 9th March 2012
About 7 years ago

The point of the first article is to arm yourself with right contacts that can help. LHA can be seen as daunting, esepecially to the novice landlord, but the people and references mentioned above are a great source of information and can be a huge help. If your new to LHA, you are not on your own, dont panic

Jonathan Clarke

17:39 PM, 9th March 2012
About 7 years ago

Hi John 

Re point 8 on insurers. This i find a headache especially when i have a private rent which goes LHA half way through the term. Its hard to keep tabs on them sometimes. Some like Direct Line allow part LHA part working but not full LHA which is a shame as I find them good value. I use a multitude of insurers and would like to get around to streamlining them all one day  . Any tips you have on who to look at perhaps and  how to ease my burden and ensure I`m covered come what may. 
.
Btw I agree freezing of rates is quite a blessing in some ways as yes it will ease the uncertainity and constant chopping and changing. Sometimes the council  didnt update the website each month  until a week into the month which caused a hassle. I hope they set it at a nice round figure as well rather than the say needlessly complicated  £735.02 pcm we get for instance say on a 3 bed at present  or the £300.17 for the shared room rate!

19:18 PM, 9th March 2012
About 7 years ago

One of your important points re insurance has been reiterated in the Landlord & Buy-to-let Magazine.
Issue 31 ,2012, the most recent one. Page 19
web site is http://www.landlordnet.co.uk
Article is headed 'Landlord insurance loophole warning'.
You might wish to additionally comment as it expands a bit on your point as far as your excelent other points are concerning LHA tenants

Ben Reeve-Lewis

19:33 PM, 9th March 2012
About 7 years ago

I must say I am very heartened to hear all of your responses about LHA freezing. In my world (local authority enforcement) we have seen the freeze as a disaster that would further disincentivise landlords to rent to LHA tenants.

And as PRS rents slow down and social rents rise somehwere in the middle maybe things will let up a bit for benefit tenants. We certainly arent done yet with upheavel in housing. Interesting times.

I am also intrigued by the points about insurance and benefit claimants. Hands up on that for me, I honestly didnt know that. Yet another reason for counicls and PRS landlord to get to know each other better

John Paul

19:39 PM, 9th March 2012
About 7 years ago

Hi Jonathan
All my tenant are LHA so I'm charged the "rate" for LHA tenants. We have had 2 landlords (despite being warned) have claims thrown out due to claiming they had professional tenant for insurance purposes but when the loss adjuster queried this and found out they were in fact LHA tenants the claims were knocked back. One claim was around 4k the other was a whopping 13k ouch. If you have LHA tenants and they change to professional there is no harm in this as you are paying a higher premium for LHA tenants, however it doesn't quite work like that the other way round. For piece of mind I would pay for the LHA rate for insurance (if you don't want to chop and change all the time)

Freezing of rates would allow us to know where we are instead of checking all the time, different top ups for tenants, etc

4:14 AM, 10th March 2012
About 7 years ago

Your strategy of paying for insurance as though you always have a LHA claimant irrespective of whether you have obviously causes a price differential.
Is the differential significant or not really worth being concerned about, on the basis that playing safe as you suggest is maybe the safer option if the expense is minor..

Mark Alexander

7:16 AM, 10th March 2012
About 7 years ago

When I looked into this the rates seemed to be loaded by around 50%.

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