DSS Tenants – another issue

I have to agree with HMO landlady in her earlier post. The problem does seem to be often that once the tenants have had a bad week and used their LHA to pay for something else they realise they can get away with it and the arrears start mounting up. Even if they intend to pay they can't because they have no spare to pay. I have found the benefit people completely unhelpful when I have tried to report bad paying tenants. They take the attitude that having paid what a claimant is due to it is none of their business whether the money gets passed on or not. I seem to be a sucker for a sob story because I keep saying no more LHA tenants and then someone comes along who seems a deserving case but they always let me down. I did a quick calculation the other day and the average LHA tenant has cost me £1300 in lost rent plus often solicitors/court fees to evict them. Trouble is once the arears start to mount up they know they have no deposit to start elsewhere and they just hang on to the last moment because they have nothing to lose. Of all the LHA tenants only one has ever kept up the payments and he often comes up £20 short but then makes it up over the next couple of payments. All of these have been perfectly nice reasonable people in all respects except their ability to handle money. I often feel like I am running a charity not a business. What I lose with arrears and legal costs is the equivalent of 6 months rent and this is much more than I would have lost with a void which would have been 2 months max!

I can understand why as the law stands at his moment that the system is as it is.
for these reasons lots of LL won't take on LHA tenants at the outset.
Having said all that I am now looking at a LHA claimant from the outset from whom I will NOT accept direct payment.
I wiil have a £2000 deposit and I will have RGI on her or her guarantor.
I will require 1 months rent in advance aswell.
This means effectively I will have a credit of £1000 per month as the council pay in arrears, until the tenant terminates the tenancy or I do.
At the end of the tenancy I would refund the advance rent and deposit if everything was OK.
Her guarantor who will be stumping up the cash is happy with this arrangement.
Lots of, indeed most LHA claimants are not in this position to commence their tenency.
Which is why they find great difficulty in finding a LL to take them on.
I know councils can provide a bonde but that is held by them and I wouldn't trust the council to relaease the monies in the event a claim is required on the deposit.
The only LL who can really afford to take on the risk of LHA tenants are those with large cash reserves for when nit all goes wrong.
Accepted that this would not happen all the time.
And clearly LL who carry out full DD on these claimants generally have good experiences.
Well that is fine for them, the little LL who mostly does NOT have such reserves CANNOT afford to take the risk.
As has been mentioned LL haven't really got anything against LHA claimants per se, it is the system which so conspires against LL and which on a regular basis leaves them in severe financial detriment.
The law, system has to be changed to advantage LL who may well then consider taking on LHA claimants.
This hasa political effect aswell.
Mr Wales of Newham council stasted there wer no affordable properties in Newham for LHA claimants. caused bu govt cuts to LHA.
This was proven to be rubbish.
There were plenty of properties available within the LHA limits; it was just the LL did not want to rent to LHA claimants.
Had that been highlighted then all that silly politiking would have been exposed for what it was, basically being economical with the truth.
Had this been brought to attention in the press then perhaps a conversation about how things could be changed to encourage LL to take on LHA claimants, then fine; but that never happened, I wonder why!!?

I think it is absolutely commendable that certain LL are prepared to take the risk of a LHA claimant.
This is all very well if you have the resources to cover eviction etc which coud mount to £8-9oo plus damages and theft.
Such decisions can thought generally only be made by those LL who are let us say more endowed than little LL.
The ability to cover massive losses without a property being repossessed is really the clincher decision.
I know I have had 2 properties repossed caused by wrongun LHA claimants, with the effects still occurring to me such that I might be homeless myself.
Can you see now why most LL without resources just won't take the risk.
It just isn't worth it.
The system is wrong pure and simple and until it changes in favour of the LL there will be a continuing decline in LL offering properties to LHA claimants.
That is just the waqy it is.
O)nly govt can change the system and they don't seem too inclined to do so.
so it is tough on LHA clamants, but that's the way it is; sorry benefit claimants!!

Thanks Mark, regarding lenders then, can you point to any? My problem is I have too many properties for most of the players (HSBC, Platform etc.). TMW, Woolwich, Paragon have high minimum property values (£50K or 75K) or sq. metrage. I am too small for commercial lending (HSBC >£1m) so am stuck it seems.

And all of those lenders say "no benefit claimants".

Hi Puzzler

Have you tried the High Street clearing banks?

I'm not talking about the girls on the counters, what you need is a hungry Business Development Manager with targets to meet. They all still have a few, the trouble is, most of them are over target for new lending and their new targets are to increase margin and cross sales.

I used to be in the business of find out who the BDM's were that were below target. I retired from that business though in 2009. Nevertheless there are plenty of people in the Commercial Finance Broking industry for whom that remains a profession. My business partner (Neil Patterson) has good relationships with a few NACFB members (National Association of Commercial Finance Brokers). You can reach Neil by emailing npatterson@property118.com

These High Street lenders will consider a variety of low value and more unusual transaction but note that they are likely to be looking at repayment mortgages and 60% to 70% LTV maximum. Low value properties tend to produce better yields though so if you have decent deposits or additional assets you can pledge the deals can still stack up on cashflow.

I hope that's useful.

All the best

Mark Alexander

My last two posts have appeared in reverse order for some reason... yes I am approaching such people. HSBC have a big gap between 5 properties and >£1m. RBS, Clydesdale have said yes but stopped taking my calls. Finally some hope with Lloyds but yet to see if anything actually materialises..

They can't debit your bank account but if you have more than one LHA payment being paid to you they can deduct it from the total amount being paid in a lump sum.

In Scotland the law is definately an ass it took me 13 months to evict a tenant who owed me £9,000. He was not DHSS ,and my DHSS tenants are great, I just picked them carefully and listened to their story. I get paid directly from the local authority. Landlords who have bad experiences mostly have very little contact with tenants and usually rely on an agent (may as well give the money to a stockbroker)
Interesting discussion tho, seems to rely on whether your a capitalist or a humanist, me I like helping people.

Interesting re whether a LL is a capitalist or a humanist.
surely this depends on whether you can allow a tenant not to pay rent.
It would seem if you expect to receive rent and evict if you don't you are a capitalist.
If you are not that fussed about receiving rent as you can afford not to be paid then you are a humanist!!!
Trounble is most housing charities expect LL to be humanists and suffer detriment themselves.
I say tenants dream on.
Pay your rent or get out
so I guess I must be a capitalist!!