Equality laws could affect “no benefit tenants” policies

Reply to the comment left by Monty Bodkin at 27/02/2018 - 10:42
I don't run a charity. I chose to balance rent received with other values. I have a substantial portfolio in North London and over the past 10 years + have gone from 100% privately rented to 99.9% LHA tenants so have experienced both spectrums.

Maybe the issue (purely speculation!) is down to the quality of accommodation being offered, ability to carry out repairs quickly and efficiently and other property management issues that is the cause of the problem for some landlords, not the tenant or their circumstances or where the rent is paid from !!

Reply to the comment left by Prakash Tanna at 27/02/2018 - 10:10
Have you borrowed to grow your business? If you have and you have a large portfolio you are likely to be screwed with s24 if you don't change your model.

Reply to the comment left by Dr Rosalind Beck at 27/02/2018 - 11:08
My gearing is 35%. Yes s24 has an impact on me but its marginal. I did considered (forced by tax changes - s24 & loss of 10% W&TA) changing my model but my local council agreed to work with me to keep my LHA tenants in return for CASH incentives which more than covers the additional tax bill ! Thats cheaper for them than having to put them into TA.

I also setup a Ltd. Property Management company which charges a fee and is taxable at reduced Corporation tax rates.

For me, the LHA model works well, is relatively hassle free and never caused any harm while still generating a very comfortable income.

In conclusion, you just have to adapt and find a work around ... while moving forward with ever evolving changes in regulations, etc.

Reply to the comment left by Prakash Tanna at 27/02/2018 - 11:25
Wow! I think if all councils were even a fraction as obliging as yours Prakash there would be a huge increase in the numbers of landlords prepared to accept LHA tenants. We do accept LHA tenants, but only with a guarantor. The experiences I’ve had with our council are beyond horrible. No one likes to be spoken to like something you’ve stepped in, which is how I’ve been spoken to every time I’ve had occasion to phone the Housing Benefits department. That’s why I mentioned in my earlier comment that it’s about time councils started treating private landlords as stakeholders in the housing sector and working with us to keep LHA tenants in their homes by ensuring their rent is paid. It’s MUCH cheaper for councils to have tenants housed by private landlords than in B&Bs or even in council houses. We are providing housing and we deserve to be paid, but the councils and the media make out that’s just greed. You are VERY lucky, your council seem to be one of the enlightened few who actually appreciate the role we play in keeping their costs down. It’s my dearest wish for that attitude to spread to all councils.

Reply to the comment left by Prakash Tanna at 27/02/2018 - 11:25
Hi Prakash

I commend you for finding a workable and cost effective solution to your personal s24 problem.

The management company model is one of the strategies I recommend personal where it is appropriate. A word of caution, just in case you haven't already considered it, is that unless you are extremely careful and the management company only charges a comparable market rate you can very easily fall foul of the "Transfer of Income Streams" tax avoidance legislation in schedule 25 of the Finance Act 2009 - see http://www.legislation.gov.uk/ukpga/2009/10/schedule/25

Reply to the comment left by Prakash Tanna at 27/02/2018 - 11:25
Sorry, two more questions please?

Which North London Council do you deal with please and can you give me the name of a helpful contact there?

I agree there are limitations set by both lenders & insurance companies, that's a given!
IF you want that All are treated equal, when they are clearly NOT equal, then affordability is a real issue. The other real issue is High Risk tenants, without a choice of reducing your risk!
If they want these tenants catered for, then the benefit agency should become the guarantor for the landlord.
I had a benefits tenant once, I felt sorry for her, as I remember my mum with 2 small kids, I felt she needed a break.
BIG Mistake!! Cost me almost £8,000 with property damage, unpaid rent, legal costs etc...never again, too High a Risk for such a small reward! Council housing is the answer for such tenants!

Reply to the comment left by Prakash Tanna at 27/02/2018 - 07:38
Nothing to do with the £8,000 it cost me with lost rent, damaged property, legal fees Prakash then?
Maybe you could have popped in to clean up all the dog pooh as well maybe?

When I rent my property out directly, I refused HB tenants, because I don't understand the application process.

A prospective tenant told, that I had to sign an AST contract. She would then take it to the Council, who then would process the application. I had no way of knowing if this tenant is entitled to benefits or not.

For a landlord dealing direct with a tenant, it is a lot easier with payslips and bank statements to prove in come.

Reply to the comment left by Mark Alexander at 27/02/2018 - 13:09
Hi Mark. Thank you for your comments. I have seized the opportunity to setup a bone fide Property Management company to manage property for myself and other reputable Landlords whereby I am charged the going rate of commission. It's a separate entity and does not fall foul of the GAAR rules.

I deal with Barnet Council. They have a specialist team/department called let2Barnet (http://www.let2barnet.co.uk/) which helps match suitable LHA clients with private landlords. The whole team is very helpful and my main contact there is Bhavesh Patel on Tel: ‭020 8359 2186‬ or email: bhavesh.patel@barnethomes.org

Hope you find them as useful and friendly as I have.