Why landlords won’t take LHA tenants – this brave tenant has gone public.

Hi Mark,

I hope your vision is right on tenants purchasing such policies, it puts responsibility onto these such tenants, this is something that everybody wants.
Regards Harry 

Hi Paul,

This system would work better if this were incorporated within the Shorthold Tenancy conditions. The courts, local authority, agents, and landlords would save all this time and effort to chase these outstanding monies.
The insurance companies will have the tenants on file, therefore if they move to another insurance company their details will be available for the new company, just like your car insurance if you change your company,
they will know your details also.
All these insurance houses already have this software set up, they just have to change the product, its that simple.
The hardest thing would be to get policy makers to put this in place to make this compulsory 

Regards Harry

If it hadn't have been for the PPI (Personal Protection Insurance) mis-selling scandals, I suspect mortgage lenders would have jumped on that bandwagen soon after the credit crunch. Sadly, financial services legislation and ambulance chasing lawyers have a bigger say than common sense these days.

extremely funny - sadly extremely true!!

Harry I agree that rent arrears are the biggest problem most landlords face and I agree that this is something that was rare when you and I began in the business but in my opinion rent arrears are part of a bigger problem that of anti social behaviour generally. It was not until quite recently that I had my first tenants who attracted the attention of both the police and the local authority because they had serious drinking problems and when they drank they faught and terrified some of the elderly neighbours.  Many landlords talk to me about tenants who drink too much or just behave really badly some landlords are afraid of their tenants.  A landlord told me recently that a tenant had told him  not to keep asking him for the rent because he was getting on his nerves and  "back off because I know where you live"  The landlord has reported this to the police for the second time to get it on the record but he knows that, if this man wanted to cause a problem at the landlords home, he would ask friends to do it for him.

Am I imagining this or are these problems that we did not have to deal with as landlords 20 years ago?

Surely the response to a tenant not willing to pay rent is to evict them; job done
Then you don't have to keep asking them for it!
If a tenant said to me I know where you live, my retort would be and I know where you live mate so I suggest you vacate my property immediately or I will commence possession proceedings.
There is no way I would tolerate a tenant behaving in a non-tenant like manner.
Never be afraid of a tenant; just be afraid of what they might do to your bank balance and act accordingly!
Always make sure you have a Section 21 ready to go; make sure you only have them on a SPT after the initial 6 months
Ideally have RGI and pray that they act up so that you just contact the RGI company and they do all the work whilst paying you the monthly rent from the insurance.
Make sure they appreciate you are in charge, not them and that your Dad is bigger than their dad in the form of bailiffs.
That should shut them up.
If they are really thick then you will have to ensure they know that negative entries will be placed on tenantid and LRS and a CCJ on the Registry Trust and a warrant of execution against them and a order for questioning and a AOE order.
This will make it nigh on impossible to source a nice LL for a future tenancy!

Paul You make eviction sound so easy and quick but the fact is that it usually takes several months from service to Bailiff and during that time most tenants do not pay their rent. This landlord is using Section21 and the tenant is sitting tight knowing that when the Bailiff comes the local authority will re-house them.  The person who is threatening the landlord is a boyfriend and if this landlord is afraid of him he will have good reason.  Remember that tenants are protected by law from landlords making threats but landlords are not protected by law until there have been "serious" threats that can proven.  I always tell landlords to serve the notice and stay away.

Many landlords are telling me that while this is funny it is also true.  In the West Midlands we have begun to deal with the issue of generation after generation "aspiring" the living on benefits. This is what we are doing http://www.property118.com/index.php/maslows-theory-applied-to-landlords-and-tenants/18124/

Well no what I would do is if a LHA claimant did not pass rent onto me I would apply for  direct payment; but commence possession proceedings.
Yes this might take months to evict.
But would I be bothered?
No I wouldn't as I would be receiving direct LHA payments whilst the eviction process proceeds.
So when they are evicted I would use the deposit to pay one of the missed rent payments; hopefully there would be no damage or theft at the property;  some hope!?
This would leave 1 rent payment owing.
I would do a MCOL against the tenant for the rent not paid.
So the tenant would end up evicted and with a CCJ against them.
I would also obtain a warrant of execution whilst the eviction process is proceeding incase the tenant has goods to pay the rent owed that bailiffs would remove.
Hopefully this will leave the tenant in a position not to be housed by the council as they would be deemed to making themselves homeless by refusing to pass the the LHA onto me, they will have a CCJ which means it most unlikely they will be able to source another tenancy.
If I thought it worth it I would go for an order for questioning and a AOE.
They would also end up with a negative entry on LRS and tenantid.
If more LL carried out this process then the expletive, expletive  LHA tenants! will get the message that they should pass the LHA they receive to their LL or face the consequences.
Personally I would not take on a LHA claimant if they or their possible guarantor cannot pass  RGI check.
I accept therefore that I won't be taking on many LHA claimants.

What you have not mentioned Paul is that if one of your working tenants became an LHA claimant and failed to pay rent you would still have the benefit of your RGI policy. On that basis the insurance company would do everything for you which you have listed and would continue to pay you the rent until such time as the tenant is evicted.

I have a similar policy of not accepting tenants without a homeowner guarantor, the only difference is that I use economies of scale to self insure as opposed to purchasing RGI.

Either way it's an extremely robust strategy, especially combined with the additional due diligence I do prior to handing over the keys to my valuable asetts.