Other Landlords experiences of successfully getting Rent arrears from evicted HB tenants

Reply to the comment left by "Ray Davison" at "15/10/2014 - 23:46":

Hello Ray,

Is there a difference between a mandate and a standing order ?

Can the tenant cancel the mandate ?

Some Benefit tenants are denied bank accounts due to their financial history, however my bank Lloyds have informed me they will open an account for my tenants so long as they have a typed (not hand written) AST. This also helps lloyds as it reduces the number of cash over the counter payments.

Regards
Arran.

Reply to the comment left by "Ray Davison" at "15/10/2014 - 23:46":

Interesting angle to prevent LHA claw back,
What can prevent the tenant from closing that account, or asking council to change the payment account to theirs after the start of the AST -
we a ll know that clauses in AST seem almost there for some tenants to break - almost like a 'challenge' to them !
And why is there a third party like Tasker involved, - does a third party have tobe involved ?
Chris

Reply to the comment left by "Chris Daniel" at "16/10/2014 - 00:12":

I've had ones where the HB went to the local credit union and then the credit union paid the landlord, but as you say the account is in the tenants name so they have the right to remove the money, close the account, cancel the mandate, ask the council to pay into a different account, etc, so I found this may prevent clawback, but it also can mean the landlord does not get paid and can do nothing about it.

surely with all the grief uncertainty and costs chasing bad debt time and time again if your area lacks a large enough pool of stable employed long-term renters why not lease the property direct to the council or an RSL for 5 years - that way you get paid and have no voids at all and you don't manage the thing either for having exposure to exactly the same group of HB tenants?

Hi Chris

Not all councils (or RSLs) offer this option. Where they do offer it, it is usually on poor terms, e.g. 20 - 30% below market rent. Also, in most instances, they only use it for emergency accommodation for people who "qualify" for assistance under the homelessness legislation, so the turnover of residents is very frequent and the damage/wear and tear is much higher. All that said, leasing is a very viable option for many landlords, particularly those who want to be less involved with managing their properties. Indeed, my company leases properties from other landlords in this way (though usually much closer to market rent rather than 20-30% below market rent, and with "tenant damage" guarantees), and I have no shortage of landlords wanting to offer me their properties.

However, for those landlords who prefer to manage their own properties, then being able to get the full rent in on time is vital to their existence, so any ideas for methods of doing this during the tenancy are very welcome so as to prevent or reduce rent arrears, as are any ideas for recovering former tenant debts from evicted HB tenants.

Robert - thanks for your thoughts not sure where you let/operate but re the higher (or market) rents paid by professional/employed it only takes one of those to muck you about and the @ 25% uplift you took on the rent is swallowed up by court costs not to mention all your time and the like and maybe written off / totally unrecoverable in the end as discussed in previous posts.

Reply to the comment left by "Arran Pritchard" at "16/10/2014 - 00:07":

Hi Aaran,
Mandate was probably a poor phrase. What they do is give written authority to Tasker for the LHA to be paid straight across to me as soon as it is received.

Yes the tenant can cancel the mandate at any time however if they do this then you know immediately that they have intentionally done this so can discuss it with them and/or take immediate steps for possession. However, I have been doing this for around three years now and have found every tenant most willing to have the hassle of rent payments removed from them and none have ever cancelled the arrangement.

Tasker do charge £3 per payment to the Landlord but I see this as a small price to pay for reliability of cashflow.

Reply to the comment left by "Chris Daniel" at "16/10/2014 - 00:12":

Hi Chris,
There is nothing to stop the tenant cancelling the arrangement however my experience is they are all grateful for the rent payments to be done for them and none in three years have ever cancelled. If they did cancel then clearly that would not be 'accidentally ' spending the rent money but a deliberate decision not to pay and in my mind probably the end of the relationship if things could not be quickly resolved.

It needs a third party like Tasker (Who perform exactly the same job as some Credit Unions as alluded to by Robert above) so that you are at arms length and therefore cannot have clawback imposed as the council are not paying the LHA to you but to an account in the Tenants name.

Reply to the comment left by "chris wright" at "16/10/2014 - 10:11":

What 25% uplift are you referring to? What professional tenants? I let to low income households and those in receipt of Housing Benefit, I have no highly paid professional tenants (and I do not deal with the student market at all).

I let family properties at a rent set at or just above the LHA rate for the household or property size, and I have an average of approximately 20 applicants for every family letting.

Some properties I lease at market rent but then convert to HMOs and then rent out as individual rooms, and this give the necessary margin to cover the non-payers/bad tenants etc.

The margins can be slim, which is why it is so important to get the highest rate of rental income in from each letting, as this is what enables me to lease from the owner at a guaranteed rent at a reasonable rate, i.e. better rate than the councils/RSLs offer.

I operate mainly in South Yorkshire and North Nottinghamshire, but have some properties in other areas as well, including the West Midlands and as far south as Oxfordshire. The comments I give probably apply to all areas.

Reply to the comment left by "Ray Davison" at "16/10/2014 - 10:34":

Sounds like its working well which is good to hear - i advise people on risk quite a lot in my business so its always interesting to see just how people reduce exposure and limit damage when they don't have insurance or deep pockets etc. I had a call from a business who got bounced for the first time in 8 years of trading @£900 - i did tell them to write it off but they've spent money n time doing a CCJ and it's off to court, the other side have cited issues in the contract and i can see some issues myself so my advice was take the info to a contract lawer and beef up the agreements why spend it on a CCJ as 1 in 8 years is batting well above industry average so don't take it personally, but they're hell bent on making an example of them - it may pan out in their favour but its a risk and they've still got to get their contracts reviewed....