Stung by the £500pw Benefit Cap, no rent being paid – Help!

Hello Mark,

All very sensible stuff.

There is a lot to be said for concentrating on what you are good at - if it pays.

Jim Slater's book 'the zulu principle' is an interesting read on the subject (if you haven't read it already).

Personally I prefer to diversify. Although I accept I will never be as successful in each individual market as you in the posh market or Mick in the HB market.

But you probably suffered more in 2008 with capital depreciation and Mick seems in a more precarious position than me now with the benefits chaos.

Horses for courses I suppose.

I've also got properties dotted all over the country rather than just in one area, which is against conventional wisdom but it works for me.

Mick says all his are 5 minutes drive away, some of mine are 10 hours away (you've probably worked that out from my IP address!). If he wants to acheive his dream of Spanish beaches and foreign holidays he might need to work a bit on that one. Recent improvements in modern communications have been marvelous for me.

Reply to the comment left by "HB Welcome" at "10/08/2013 - 15:52":

My family portfolio begun in Norwich, however, over the years we diversified and now the furthest North is in Whitley Bay and the furthest south is in Portsmouth. We also have properties in the North West, Yorkshire and the Midlands.

Capital values are only of interest if there is a need to sell or refinance, we don't, therefore we will make no capital gains and or losses during our lives as the plan is never to sell.

We also have rental property overseas, here are some pictures of my personal favourite >>> http://www.trulia.com/rental/3034515958-664-Hart-Lake-Dr-Winter-Haven-FL-33884#photo-1 My tenants have been in this property for 4 years. I have no idea why my agent keeps it listed, perhaps they use it for lead generation purposes. Obviously their systems are charged differently to Rightmove!

Good management is the key to success, whether it is self managed, outsourced in part (as in my case) or in full. Having family dotted all around the country, all of which have property management and construction industry skills helps too 😉
.

That is a lovely house Mark. Including a grand piano brings a whole new meaning to the term "fully furnished", I need to up my game!

I was wondering how you carried out your personal vetting if your properties are spread about. Presumably when you said "I" with regarding checking, you meant "we" as in you use trusted local family/friends.

I had a similar dilema last week, trying to vet an applicant from Canada. I could have let it to a local prospective but I like a challenge. After a lengthy process, I'm confident they will make excellent tenants.

I was going to ask you that very question about CGT but didn't want to go off topic. I have come to the same conclusion as you, although I'm keeping an open mind about moving abroad to somewhere tax friendly.

I had it all planned out until the last government scrapped taper relief.

Which brings us neatly back on topic- You can't rely on governments not to bugger up your best laid plans.

Reply to the comment left by "HB Welcome" at "10/08/2013 - 17:31":

Thank you and I do appreciate your point about thread drift too but it's better than debating who's more left wing than Lenin or more right wing than Ghengis Khan I hope 😉

If I do ever decide to sell some of my properties I might well be living in that house for the tax reasons you have eluded to. Also, that baby grand is far nicer than the piano we have in our home and I love the Wurlitzer in the games room as it's identical to the one featured in the Iron Man movie:)

My tax strategy is outlined here by the way >>> http://www.property118.com/?p=201
.

@ Paul Barrett

You really are a complete berk. I have no more sympathy for scroungers than anyone else and as I read the Mail (occasionally) perhaps that will confirm to you I am not left wing, far from it.

But what I am not is extreme

Reply to the comment left by "Mick Roberts" at "10/08/2013 - 07:38":

Mick I am gobsmacked that the council only realised the impact of the OBC 2 weeks ago!!
What chance do claimants and LL have if even the agencies delivering benefits haven't a clue what it all means.
Talk about leaving things to the last minute.
Surely training of this situation should have occurred months ago.
After all it wasn't as though the OBC was a State secret!!?
With my cynical hat on; I think govt didn't wish to push this knowledge issue as it does make very good political PR...................................................you know large families being booted out and put in TA; overcrowding etc.
I just cannot see how the OBC can be coped with except if mass movement of claimants affected by it occurs.
This effectively means mass movement from the cities to cheaper areas way up North
Of course the other alternative is for LL to substantially reduce rents to make it affordable for these tenants.
I don't believe it is necessary to do so as most of these LL will be able to source tenants for those properties at market rates.
Quite frankly though and this can NEVER be a political point.
If you choose NOT to afford what you previously could but now can't because of reduced income then an economic choice has to be made.
Yes it will be tough having to move to new places; but NO person has the right to remain where they have been, no matter HOW long that has been, if economics force them to move.
Just because your income is supplied by the govt which has now reduced it; does NOT give you the right to remain where you have been, even if that may have been for decades.
It is about time that those on benefit realised they will be subject to making economic choices like the rest of the working population has to do
So I am curious what will a LL do if he has a tenant who was used to receiving £900 pw in total benefits has a LL who insists on the rent remaining the same irrespective of the large reduction in total benefit the tenant used to receive.
If I was the LL I would insist on the full rent being paid and if they didn't wish to as it seems many are; then I would S21 them with the effect of probably having to evict.
this because if a tenant vacates as per the S21 they have made themselves intentionally homeless.
i wonder how the HO teams would categorise a tenant who passed on the HB element of UC which was insufficient to pay the full rent; would the council advise that by NOT paying the full rent then the tenant has made themselves intentionally homeless and therefore disqualified for council housing.
This sort of query is right up B Irvine's street!!
Lots of tenants and LL will wish to know as the system is now changing.
Essentially will the council categorise a tenant who pays the full HB received to the LL; but not what the AST rent is as intentionally homeless!!??
This situation has many ramifications.
I foresee many large families being evicted and refusing to move to affordable accommodation because they don't wish to leave the area they have been for decades; failing to understand that is what 'normal' people have to do!!
The neo-liberal media will jump on these cases as what a cruel govt is doing.
Well obviously that is NOT the case.
Govt will pay for them; just it will do it in a cheaper area.
NOTHING political in that!!!
But PRS LL are a practical bunch and they will decide what works best for them.
It would be just interesting to see what their thoughts are as to the viability of certain tenant types and size of tenant families etc.
PRS LL will effectively make the running; in that their decisions will affect the endeavours of councils to place certain tenant types with such PRS LL.
Very few PRS LL will take on tenants who will NOT be able to fulfill their AST contractual obligations
As has been alluded to perhaps LL will try and source pairs of houses as it will facilitate such large families; who notionally may live as 2 separate families but who seemingly spend a lot of time in each others houses!!
Whether the council will; have these type of families under surveillance to ensure they only stay with each other no more than 3 days a week heaven knows!!?
That could be a big risk to a LL who receives LHA direct
Just imagine the 'clawback' that could occur!!!??

Councils will I believe find themselves with a tenant who by not paying the full AST rent and therefore being evicted will be deemed to have made themselves intentionally homeless.
Councils won't house them except for putting them in TA which will cost far more!!!
Except if they discharge their responsibility by sourcing PRS accommodation anywhere which a tenant is obligated to take otherwise the council can wash their hands of them!!

@Paul Barrett

Taken from the council guide;

The Secretary of State considers that where a
person applies for accommodation or assistance in obtaining accommodation,
and:
(a) the person is an assured shorthold tenant who has received proper notice in
accordance with s.21 of the Housing Act 1988;
(b) the housing authority is satisfied that the landlord intends to seek possession;
and
(c) there would be no defence to an application for a possession order;
then it is unlikely to be reasonable for the applicant to continue to occupy the
accommodation beyond the date given in the s.21 notice, unless the housing
authority is taking steps to persuade the landlord to withdraw the notice or allow
the tenant to continue to occupy the accommodation for a reasonable period to
provide an opportunity for alternative accommodation to be found.

Reply to the comment left by "HB Welcome" at "11/08/2013 - 15:10":

Yes but it doesn't say they have to be accommodated in a particular place
It can therefore be anywhere!!
So the reason councils allow non rent paying tenants to remain in a property is to give them time to source alternative accommodation!!
So the LL has to suffer continuing loss of rent whilst the council uses the time before eviction to source alternative accommodation.
Is it any wonder why LL detest councils and their stupid housing departments.
Perhaps such council behaviour is the reason why LL are declining HB tenants leaving councils with bigger housing costs for TA etc.
The guide states that it would not be reasonable for a tenant to occupy a property beyond the S21 expiry date.
Yet if a tenant complies with the S21 the council deems them as making themselves intentionally homeless and therefore disqualified for council housing assistance.
Councils actively advise tenants to remain in a property until evicted and then the council will assist in housing!!
I'm afraid the guide you mention are just so many mealy mouthed words and does not prevent my absolute disgust with council housing depts.
Councils make things up as they go along and ignore their own guides!

A bit cheeky this-but there's a little trick i did with a bad tenant who had arrears, didn't respect the property who otherwise would have been a difficult eviction etc and it worked for me-may work for you to in this situation..
..Here goes, the tenant needs to be on board but advise your local authority that you are selling the property, and give the usual section 21 etc, the local authority is then duty bound to rehouse your tenant and will NOT advise tenant to stay until the bailiff eviction... Tenant will be put into temporary accommodation first, maybe a B&B initially but ultimately she/tenant will jump to the top of the local authority housing list and will be re-housed by the council (ie council property affordable rents etc) asap..It certainly worked for me in this situation and as i said had a positive outcome for a problem tenant that otherwise would have required all the usual sec 21 enforcement, to-ing and fro-ing eviction bailiffs etc etc....Something to consider anyway,,,,

@Paul Barrett

"Yet if a tenant complies with the S21 the council deems them as making themselves intentionally homeless and therefore disqualified for council housing assistance."

It depends on the individual council depending on their circumstances at that time.
If you had said some councils do this, then I would agree.
You didn't, therefore what you have said is wrong.