Why Aren’t We More Worried About Withdrawal of Benefits?

by Readers Question

13:31 PM, 11th October 2013
About 5 years ago

Why Aren’t We More Worried About Withdrawal of Benefits?

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Why Aren’t We More Worried About Withdrawal of Benefits?

I am interested that I can’t see any response to, or comment about, George Osborne’s announcement last week to withdraw benefits to claimants – first for 1 month, then for 3 months. Am I the only landlord with social tenants?!

There are serious implications.

Here is an extract of a letter I am sending to Right Hon GO, and to Kris Hopkins, the NLA and any one else who will listen. If you have social tenants I’d urge you to do the same.

As a landlord in the private rented sector I house many tenants who are on benefits.
I know from experience that when a tenant’s benefits are withdrawn, all benefits are withdrawn, including housing benefit/local housing allowance.

In my experience this is always without notice to the landlord. The first that they will know is when the tenant does not pay their rent, or if they are on direct payment, when direct payment does not arrive.

However, I am sure that you will appreciate that in the meantime the mortgage and other bills still have to be paid by the landlord.

My concern is this.

Unless an element of the benefits is ring-fenced to pay the equivalent of housing benefit or local housing allowance, landlords such as myself, who house social tenants on benefits, could see rent payments not being made when benefits are withdrawn.

Under the current legal system there is a defined process by which landlords have to operate in order to gain possession of the property. In practice this can take anywhere months and, in exceptional circumstances, up to a year when a tenant does not comply with court orders and a bailiff needs to be appointed.

It is therefore entirely conceivable that if benefits are withdrawn from a claimant that the landlord will be left with a property with a non-paying tenant.

I would also like to point out that even if an element of the benefit were ring fenced to provide for rent, this would have to be paid directly to the landlord, otherwise I have no doubt that many tenants would use the money in lieu of job seekers allowance or whichever benefit has been withdrawn.

I would therefore urge yourself and Mr Hopkins to consider one or more of the following:

• In the event that benefits are withdrawn, either for one month, three months, or even longer, that an element of that benefit is ring fenced and paid direct to the landlord so that the tenant’s rent is covered.
• That legislation be passed to allow landlords to obtain fast track possession of the property where a tenant is has benefits withdrawn.
• That legislation be passed whereby mortgage lenders be required to waive mortgage payments where a tenant has benefits withdrawn and cannot, or will not, pay their rent.

Again I would urge you to consider these, as sadly, from experience, I know, and I am sure that many other landlords who house social tenants will agree, that the ‘punishment’ for not complying with the terms of claiming benefits will not fall upon the claimant, but will fall upon the landlord.

I would also urge the government, and particularly Mr Hopkins, to decide once and for all how you perceive the private rented sector, specifically in terms of housing social tenants through private landlords.

It seems to me that there is a lack of understanding within government as to the pressures and problems that private landlords face in housing tenants on benefits.

In this age of austerity where few council houses are being built, and the responsibility for housing social tenants’ falls mainly upon private landlords, it would be nice to think that the government support our efforts. Sadly, however, that does not seem to be the case as ideas are put forward, and legislation passed, which does little to help and much to hinder.

If it is still the intention of the government that social tenants are housed primarily by the private rented sector then can I humbly suggest that greater consultation is made with those at the sharp end who house social tenants, and that the ideas and legislation put forward encourage private landlords and not discourage.

Regards

Petergeorge osbourne



Comments

13:44 PM, 11th October 2013
About 5 years ago

I don`t think the authorities have the slightest grasp on the concept you outline, I am behind the benefit cuts in general, it has been needed for some time, but the treatment of landlords by councils and government is appalling, we are seen as the rogues, always they side with tenant against us.

Gary Nock

13:54 PM, 11th October 2013
About 5 years ago

Hi Peter. I only dabbled in benefits tenants once. And that was when I gained one by default when she lost her job. When she got another one she "forgot" to tell the benefits office. The local authority then claimed £1200 back from me as I was "supposed to know" she had got anither job. So I have been very reluctant to take benefits tenants in my own properties. However I also work with other landlords who do in y lettings business. What I have learned very quickly is that benefuts tenants have to provide two month rent up front as a deposit and provide a guarantor acceptable to my rent insurance provider.

Sharon Betton

13:56 PM, 11th October 2013
About 5 years ago

I agree completely with Peter - they have no concept of the lives some tenants in the private sector lead. Alan says he is in agreement with the benefit restrictions, I think most of us are, in ;the ethos, but they are being imposed fast and without flexibility; it will take years for tenants to fully grasp what it is about.
I worry for landlords, where benefits are suspended, but I also have to say I worry for the tenants too - how are they going to live, with no benefits for a month? It is not civilised to cut off all means of support. If I had a son on benefits and they were stopped, he could come to me and I would assist - having given him the length of my tongue! But many do not have that support network in place; if you are a 3rd generation benefit dependent, there is no support available to avoid eviction.
I must also say that the frustration of advising landlords on eviction and having to tell them that despite a 2 week notice period, it will probably still take 3 to 4 months, is immense, because they know that is 3 or 4 months more arrears accrual. We need the legal system tightening up and for once, do it for the landlords and not the tenants, who have many avenues of support.

andrew townshend

14:16 PM, 11th October 2013
About 5 years ago

i now only take h/b tenants who can supply a suitable guarantor, with fewer & fewer l/l taking h/b it will not be long before town halls find themselves with a big big homeless problem ! good luck to them.

Jonathan Clarke

14:29 PM, 11th October 2013
About 5 years ago

Governments follow a pattern.
They deliberately go in very hard and upset the apple cart.
They then wait until the affected parties kick up and get their objections together
They then sit and pretend to negotiate
This results in minor concessions being given which they have already factored in
They can then say they are listening to the people
They then make believe that they are the good guys and we are the bad guys because they make out we were resistant to change and reform.
Having worked in the public sector for 30 years
I`ve seen this game played out time and time again.
Its a political game played with people. It can devastate lives
Their aim is to get elected again
That overrides any common sense
Many politicians suffer from personality disorders.
They are ill
They know exactly what they are doing
BUT at the same time ....
Forgive them for they know not what they do..........

http://www.jstor.org/discover/10.2307/3791395?uid=3738032&uid=2&uid=4&sid=21102735854031
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Mike

14:46 PM, 11th October 2013
About 5 years ago

Quite right, we need to think twice before letting in benefit tenants, I have had two tenancies where a single parent (usually a young woman) bring up one or two young children, eventually they start a new relationship and when the Council finds out they not only stop her benefit but may also claw back some of the benefit whilst she had let her fellow in for months before it comes to a landlord's attention.

Even if we did find out, we have no right to meddle in someone's personal life, and so how are we suppose to find out for a start, as a landlord we have to give our tenants plenty of notice (usually written) that we will be coming around for an inspection, and then does the council expects us to go through the tenants personal items to determine if someone else has also moved in, do we go there with our forensic kit? so it is a complete nonsense, I would simply not take any benefit tenants in future.

Both of my social tenants have been nothing but trouble, falling behind on rent and I have lost far too much money through them, so in the long term it is better to wait
for proper working tenants, rather than put whoever comes first.

Social tenants are also very hard to get rid of, if a social tenant loses their benefit, they won't respond to a section 21, they wait until a court order or a hearing comes, and then they play emotions with the Judges to allow them extra time as they have little ones, so the court gives extra time, and finally they still won't leave until the bailiffs are sent in, usually on the last day.

Council's Homeless section will not help any social tenants until they have been served with a court order to leave, so in all this becomes a very lengthy procedure and one can lose lots of months of rent.

andrew townshend

14:46 PM, 11th October 2013
About 5 years ago

Reply to the comment left by "Jonathan Clarke" at "11/10/2013 - 14:29":

spot on Jonathan, pleased your comments came from someone with 30 yrs in public sector .

Gary Nock

15:02 PM, 11th October 2013
About 5 years ago

And briefly then the answer to any prospective tenant who is on benefits is............. No Thanks.......

Sarah Pajger

15:19 PM, 11th October 2013
About 5 years ago

Reply to the comment left by "Mike " at "11/10/2013 - 14:46":

Totally agree with you. I had a woman move in with 2 young children. The council were paying me directly, so I was liable. After a few weeks her boyfriend moved in unofficially. I had 2 choices...keep quiet or grass her up. By grassing her up the council would have stopped all rental payments to me and I would have been left with months of arrears where she would have been advised to sit tight tiill I evict her. I couldn't afford to grass her up so I reluctantly turned a blind eye to her boyfriend living there whilst in full employment and her claiming full housing benefit. When are we going to be supported in the PRS??? Especially as there are no council houses!!

Jonathan Clarke

16:00 PM, 11th October 2013
About 5 years ago

Reply to the comment left by "Gary Nock" at "11/10/2013 - 15:02":

70% of my portfolio is rented to LHA tenants. It is more labour intensive yes but the commercial benefits are many fold. Legislation as it is changes throughout the years has to be worked with or worked around.

But when I was buying investment property I could get 650pcm LHA on a 75K property in a local authority estates whereas a property on a neighbouring posh estate attracting a working tenant may cost me twice as much at 150K. The rent would be roughly the same. Two for the price of one as I saw it.

I could never fathom why some of my peers invested 75K extra of their hard earned money for the same return simply because they didn`t want to get in with the mix. Often it was simply fear.

If you cycle everywhere in town for 10 years rather than take the taxi and then the money you save you invest wisely it will enable you with the passive income you receive to afford to take the taxi for the next 50 years. Delay gratification and work hard when you can and you will reap the benefits later down the line .

The LHA model in many areas ( but by no means all) with its high yields and high cash flows make working with the eccentricities of government ministers and their crazy gang of MP`s a true love / hate relationship .

Focus on the numbers though and work around the irritations because with the superior extra cash flow you receive you can in time employ someone if needs be to deal with the sometimes challenging needs of your benefit customers .

There will still be ample left over in your piggy bank to enjoy treats . Manage them yourself and you will need to buy in some more piggy banks as one wont be enough. 🙂
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