Vital Contacts for LHA Landlords

by John Paul

9:21 AM, 9th March 2012
About 9 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.

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Comments

Ben Reeve-Lewis

9:59 AM, 15th March 2012
About 9 years ago

Just came across this interesting article on buy to lets being used as residential homes http://www.bbc.co.uk/news/business-17353204

18:47 PM, 15th March 2012
About 9 years ago

I agree with what you say Ben, despite everyone scaremongering; the practical response by the courts and the lenders is if you can make the payments on your mortgage then that is all that is required.
The lenders do not at the death seem to be concerned about from whom the money comes from as long as it comes!
Therefore the lenders don't really want to know if the occupation status of a property has changed, they just want paying, end of.
They are not bothered about breaches of t & c's providing the mortgages are paid.
So avoid being identified as in breach of  lenders' t & c's all you have to do is pay the mortgage!
One worrying thing for people in this situation that I heard about was; if you do not have consent to let then any AST you issue is worthless and therefore if you have to evict you would have to do so under squatting regs as you would not have a valid AST to seek a possession order.
This situation is right up your street Ben, any ideas as to this scenario?

Ben Reeve-Lewis

19:24 PM, 15th March 2012
About 9 years ago

I can say with 100% confidence that this is a myth Paul. Lender contracts have absolutely no bearing on the type of letting that is created by the borrower acting as landlord. It is true that the lender has no contractual relationship with the tenant but if the landlord sets up an AST then an AST is what it is. A person is only a squatter if they enter and occupy property with neither knowledge or permission of the owner.

I recently backed off a lender who was trying to sell a property out from under a borrower by citing case law that obliged the lender to honour the contract created by the borrower

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