Checks needed for DSS / LHA tenant?

Are they more hassle for any reason other than the one you put forward?

By the process of elimination, I've evicted the bad ones and now only have lower hassle good ones left.

My eviction rate has been around double for DSS tenants over the years. Evictions have not been a frequent occurrence but sufficient enough to increase the hassle factor.

It may just be 'perceived' hassle, but I think I have more repairs on my DSS properties. It would seem logical as they are using the property twice as much (working tenants are out working). Thinking back to the last few repairs, most were from my DSS tenants. Hardly a scientific survey! Maybe just coincidence.

And I have one persistent late payer. They always catch up, it is not a large amount but it is annoying and extra hassle.

I could apply for direct payment but that wouldn't cover the top-up. I also wouldn't want the extra hassle of clawback. I appreciate your points about it and I've also read Bill Irvine's excellent posts on the subject. But it is still extra potential hassle, a working tenant's employer never rings up asking for the rent back!

Incidentally, can your method for immediate direct payment only be used if the rent is set below or at the LHA rate? (I might be getting that mixed up.)

Then there is the extra hassle of dealing with the council. Yours might be an exception, but most councils aren't very landlord friendly IME.

And with a couple of tenants, rent is paid in arrears, not in advance. If they ever move on, I'm not confident of receiving the last rent payment hassle free.

Your property sourcing example is more down to your personal skill. I'm sure you could find far better than the 150K house if you applied yourself to finding a profitable working let.

"LHA rent is set every year in alignment to the BRMA rate so its based on market rents in the area. So the pace is kept up with the market around. "

That is not quite correct. It is the lower of CPI or BRMA. And it was frozen in 2012. So what started out as rents being set at the lowest 30th percentile are now at perhaps the lowest 27th or 28th percentile. That gradual downward creep is set to continue.

Nominally they are increasing but in real terms they are decreasing. I'm seeing 5% rent increases in some micro areas, LHA rates just aren't keeping pace.

I agree Government will have to step in eventually but in the meantime it will cut into profits.

I'm not bailing out of DSS, as you say, there are many upsides, but I'm not replacing any movers unless/until it becomes more profitable.

Hi,
responding to Jonathon's twin scenario.
for me the extra hassle is this:
1. Unemployed twin I will automatically need to get a guarantor for and check them out etc. Employed twin may not be necessary.
2. Rent insurance, for unemployed twin may not be able to get at all, and if i can get it, it will be very expensive. For employed twin should not be a problem.
3. Household insurance. Once I declare tenant unemployed on receipt of benefits, cost goes through the roof. Employed tenant cost standard.
that is before they move in.

Okay either one moves in, either one can live there nicely and not cause any problem.

I then decide that I want to get my property back for whatever reason.
1. Twin in receipt of benefit is automatically told by the local authority that he should stay there until bailiffs move him on, otherwise he not eligible for alternative housing. In my area that realistically will add another 5 - 8 months to the process (that after the 2 months s21 notice). That is just the overloaded court system. that more hassle delay and cost for me. cost may or may not recover from guarantor.

Twin that working far more chance that once he gets the s21 notice he will just move on.
so I think Jonathon it appears that your strategy is to get benefit tenants and let them stay there very long term. so for you a family a good option as they are likely to always be in receipt of benefit, and hence rent for you, and you may not want your property back for say 10 years. But for me the above examples together with the baby sitting that the tenant provided by the council needed was just too much hassle,

Reply to the comment left by "soca joseph" at "03/02/2015 - 13:31":

Hi

I take a slightly different view

1) The government is my guarantor. A working person is only 24hrs away from a P45 or an employer going bust.

2) Again the government is my guarantor. Some of my tenants have been with me 10 years.

3) Some companies it is yes. I get mine at around £1 - £1.25 per £1000 rebuild costs. The extra costs is minimal and not a deal breaker.

As for sec 21`s with LHA. Each council varies. Some act on a sec 21 expiry date and will put them up in a B&B or rehouse, some require additional evidence of intention to evict, others encourage them yes to stay put. All this could happen with a working tenant as well . Its the tenants attitude to life and access to family networks which often decides the outcome. Their source of income is relatively immaterial I have found.

One could argue working tenants often will know the system better and employ lawyers to advise them. Some of my LHA if push comes to shove will just accept they have to go. I help them pack, buy them a macdonalds and a packet of fags and drop them off back round their mums or at the bus station.

Never been to court in my life. Persuasion works for me. The thought of waiting 8 mths is just not conceivable in my book. With your worse case scenario 750 x 8 = £6240 in lost rent plus court costs!! . If they are digging their heels then a £100 cash pay out in compensation in their hand often helps focus their mind. Its much cheaper and works

I accept that its not for all and that`s fine but dont forget these twins are from the same mother. They are in essence the same person with same values except one difference. One has just lost their job and one hasn`t. They were either nice and nice before or nasty and nasty. I dont believe overnight they become nice and nasty

I have just had a worker tenant leave one of my flats who was paying £525 pcm but her job hours were changed and they mucked up her wages and moved her office to the other side of town. Now its a trk to get there . She left and went back to her mum. The tenant signed up to replace is LHA and will get £105 more on LHA. The pay comes direct to me. They have given me 2 months up front as security . The property is rented as seen. They will put their own mark on it and make it their home. Their family live nearby so no chance of relocating which some do when they have a job.. I dont like changeovers.

But I agree its horses for courses

Reply to the comment left by "Jonathan Clarke" at "03/02/2015 - 19:11":

Hi Johnathan

I agree with much of what you have said in your various posts on this thread, but to say that the government/local authority is your guarantor is not true:
1. if the tenant smashes up the house the government will not pay for the repairs,
2. if the tenant fails to claim HB and thus gets no HB, the government will not pay it to you,
3..if the tenant claims HB but decides to spend it on alcohol/holiday/new TV/ anything else, the government will not pay it again so that you receive it
4. if tenant gets 10 dogs in the house and then abandons it leaving it full of dog shit, the government is not going to pay for the cleaning,
5. if tenant turns it into a cannabis farm the government is not going to compensate you for the damage, or lost rent while you get the house cleared and made safe and re-lettable.
Thus, the government definitely is NOT any sort of guarantor!!!

Reply to the comment left by "Robert Mellors" at "03/02/2015 - 21:49":

Hi Robert

I was talking about the rent being guaranteed as opposed to protection against damage as in your points 1,4 and 5. That would be covered by appropriate deposit plus normal contents and buildings insurance just the same as with a working tenant.

With regard to point 3 I get all mine paid direct so its not an issue but i agree if the tenant gets paid you have to either take the potential hit if they default or insure against it. As for point 2 yes I guess so but Ive yet to have a tenant who fails to attend the offices to claim as it just isnt in their interest to not do so.

I was attempting to make the point ( perhaps badly) that the money pot the government has far exceeds employers. The government is a very good payer its systems are poor perhaps but they do pay. Therefore the income to our LHA businesses is fairly secure.

The vulnerability with workers is two fold. The employer may not pay the worker as their business may be running into trouble and even if they do pay the worker ,the worker tenant may not pay me. I cut out both vulnerabilities of a working tenant and their employer by getting the government to pay me the LHA direct.

Reply to the comment left by "Jonathan Clarke" at "04/02/2015 - 00:19":

Jonathan, you state that you receive all your rent direct from the council, are you aware that even if that was stated in an agreement between you and your tenant ,if the tenant DECIDES that they want the rent paid DIRECT TO THEM there is nothing you can do about it, and it will be changed to their wishes

Reply to the comment left by "graham durkin" at "04/02/2015 - 12:54":

Yes I am aware but there are numerous safeguards in place to prevent this ever happening.. The LHA is yes I agree essentially a relationship between the council and the tenant. I am seen ( wrongly in my view) as an imposter. The safeguards in place to prevent that ever happening. ( with my council anyway ) are

1) The tenant signs the HB form to say they want to pay it to me.
2) The AST states the tenancy is invalid if not paid direct
3) A support letter sometimes to that effect. I cite the relevant regulations

All parties therefore recognise that the tenancy is invalid if I dont get paid direct. The tenants actively want payment to me anyway . If they were to have a change of heart for some reason the council suspend the rent and give me 2 weeks to appeal and put forward my reasons as to why the tenant should not be paid.

Because the AST and the signed supporting letter covers it as well as the landlord payable direct application form there isnt a problem. I could always use the vulnerability criteria as a bolt on additional reason.

If the council ignore the T&C`s of their own policy and government regulations and are instrumental in permitting a breech of my tenancy T&C`s then they can be held liable.

No they wont do it and they dont want to do it so its pretty much as belt and braces as you can get I believe . It hasnt happened in the last 15 years so its not a realistic worry for me tbh. Has that happened to you then ?

This is why in my view the housing benefit amendments regs which came in force in April 2011 is such a gem. It prevents evictions and makes tenancies invalid if not paid direct. That is in the interests of all concerned. It works well.
.

Reply to the comment left by "Jonathan Clarke" at "04/02/2015 - 14:20":

Hi Johnathan

I have all those "safeguards" in place as well, but I've had two occasions when the tenant/licensee has then gone to the Council and asked to be paid the HB, and the Council started paying them without letting me know. When I did find out I got it changed back again, but nevertheless this can and does happen, and it caused a financial loss.

My occupancy agreements also make it a condition of the granting of the occupancy that HB is paid to the landlord, but as far as I know the tenancy/licence does not become "invalid" if HB is paid to the tenant instead. It would be really useful if that was the case because then I would not have to go to court to evict non-payers (in such circumstances), I could just give them 7 days notice and then change the locks!!!

How does a tenancy become invalid if the Housing Benefit is not paid direct? What form of words do you use for this clause? Surely, the tenant would still have a valid tenancy and thus still have the benefit of the Protection from Eviction Act, i.e. you could not evict them without a court order? If you have a way around the Protection from Eviction Act (even in limited circumstances) please share this,

Reply to the comment left by "Jonathan Clarke" at "04/02/2015 - 14:20":

I hear exactly what your saying 1,,but it doesn,Matter whether its signed to you ,the tenant can change their mind and they will get it at least upto 8 weeks ,then if they don,t pay you ,it can then be re-directed,2, A tenency is geared up for the time period that you have set,it won,t be invalid if they get the rent, 3, The contract is purely between the council and the tenant, The vulnerability criteria is a dangerous place to be if you haven,t go the approval of your tenant.

It hasn,t happened to me yet,but i have been advised there is nothing i can do if they request it.. I have this at present with a tenant ho has not received rent for 9 weeks ,(iI am fuly aware of the situation and happy with it), He is a very responsible person and requested payment to me have just found the council paid him by cheque, for 9 weeks h.b ,then took abouit £140 for h/b that was owed from 4 years ago and will cotinue to take £41 per 28 days until their debt is clear.when i quoted your reguation 2011. they said as the tenant was not vulnerable they paid him.
I complained that his debt doesnt relate to his tenacy or his address with me ,they are adament they have the right to take this money as he owes it to them .what are views on this one. Ican assure you that the tenant will make good to me its just the council riding roughshod over me because they control the money flow.

Hi,
I had HB paid direct to me, but when tenant went missing and benefit was suspended and almost stopped there was nothing I could do except try and frantically find her. That doesn't include the six weeks or so that it took for the claim to be up and running (even though the council gave me the tenant and the agreement was signed at their office)

Also when I informed my insurer that tenants were on HB, one insurer (that I had been with for years) failed to insure at all. Another company and different tenant the insurance went up dramatically, I think it was almost double. also the council provided me with a guarantee under their rent guarantee system, but the small print means that they only guarantee for the initial term of the agreement, so if you sign a 6 month or year contract, any problem after that period you are on your own.

I don't know where you are based but I understand that generally in London (I stand to be corrected) where the housing crisis is so bad, the standard advice LA's give to tenants is not to move until the bailiff. I am experiencing that now with both tenancies (same LA) . And yes Jonathon you are right, a 5-8 month delay after the s21 makes the situation untenable. Hence for me, no more HB tenants.

And Jonathon I agree with you that people are people and the ideal tenant can come to you today and loose his job tomorrow, and yes some professional tenants just know how best to play the system, but my hope is that a working tenant MIGHT be more responsible and be prepared to move on, whereas some HB tenants consider that everyone else has the responsibility for them, and so someone else will have to sort it out, and they will just sit pretty and play the victim, and again blame "the system". Which I am experiencing now, a tenant that been with me for 8+ years I am evicting as she has refused access, and repairs. LA advice is to stay until bailiff, and tenant feels that she is the victim and I am the wicked wicked landlady. the fact that I didn't put the rent up for years, and that even then I kept it at LHA levels for years when I was under no obligation to do so, seem to be of no interest to her. I hope that I don't sound too jaded:-)

PS I think that you might be on very dodgy ground if you consider that the tenancy is invalid if benefit paid direct to tenant and seek to evict without going through the court process.