Tenants wanting to claim benefits

darkfibre

Hi there,

My tenants are looking into claiming benefits. If they do, will it affect me in any way? What do I need to be aware of? I see a lot of adverts stating "No DSS", etc...is there a reason for this?

clutton_2

local authorities now pay Local Housing Allowance for the unemployed/long term sick etc. this benefit replaced housing benefit and is paid directly to tenants two weekly in arrears. it may take the council 2-3 months to get payments sorted out.

moodydonkey

Hi there, i'm no expert but I do claim housing benefit. When I set this up it took nearly two months to sort which my LL was fine about and it was back paid and goes directly to her. I've found that a lot of peole don't like DSS because of the waiting, are your tennants going to pay the rent while benfeit is being sorted for example?
I think now the system has changed and the benefit goes to the tennant but I believe you can arrange for it to be paid direct to you. Also it juggles the figures about a bit cos your tennant presumably pays every calendar month but the council will pay every 4 weeks and normally in arrears. Probably stuff you already knew but i try lol

stressedofdevon

I worked in benefits for many years and my understanding is that the levels of rent that the local authority allow and pay to the landlord for those claiming benefits are invariably well below what would be a normal commercial rent. Therefore, the tenant who is on a limited income would have to find a way to cover the shortfall. The concern for myself as a small landlord is whether and even how they would do that.

I have also been approached by prospective tenants on benefit and certainly in this part of Devon there is a scheme where the council guarantee their deposit, so you don't actually get it in your hand. For me, I just felt that I would sooner deal with the TDS if a problem came up which required withholding of the deposit, rather than my local council who in my experience are not too great. I just wasn't comfortable with the plan and there were loads of other people interested in better positions. I know some may jump in and criticise me, but I let it to a stockbroker rather than the person on benefit. That's just the way it is when there is competition for a property. It is my biggest asset and I choose who I think will best look after it.

This is just my opinion and understanding of the matter and I am sure there are others with more knowledge who may tell you better.

tbs624

It depends on whether your tenants will be eligible for LHA (Local Housing Allowance) as part of their claim. The rules on what was Housing Benefit have changed and, except in specific circumstances, the LHA is paid direct to the tenant, rather than to the LL. The amount payable under the LHA may be less than the rent you have set for your property, in which case you will need to know that your tenant is able to cover the shortfall.

If your rent is equal to, or less than, the LHA & your tenants have reliably paid rent on time there may be no problem but there are often delays in sorting these claims out. (If the rent is less than the LHA then the Tenant may keep up to £15 of the difference.)

See here for more info: http://www.direct.gov.uk/en/MoneyTaxAndBenefits/BenefitsTaxCreditsAndOtherSupport/On_a_low_income/DG_10018928

and maybe consider joining one of the local/national LL Associations for advice & support. Good local Assctns have specific talks for their Members on these issues.

darkfibre

moodydonkey wrote: »

...are your tennants going to pay the rent while benfeit is being sorted for example?

Yeah they are good tennants, they pay the rent on time. Whether they need it or not is their business I guess, but there shouldn't be a problem with paying the rent whilst the benefit is sorted.



I'm not sure whether they are eligible for LHA. This is something they are looking to find out. I asked them to try and explain it all to me also when they do :P

I guess they would be just paying their normal rent money to me. The benefit scenario would be between themselves and the council. I don't think I really have to be involved with the council if it is paid directly to them? Would there have to be a declaration or something to sign?

kavanaghdavid

The problem with the new LHA system is that the Council takes so long to process the claim that the tenant eventually receives a rather large payout (typically £600) and his first thought is not 'Oh, good, now I can pay the landlord').

An extreme example occurred to me recently: one of my tenants got 6 weeks of LHA but ibstead of paying me, he faked a break-in into his room (having previously texted that the rent was safely in his room) resulting in the disappearance of his rent. This would not have been so bad except that to give credibility, he also broke into the other 2 rooms stealing among other things, a laptop.

This all stems from a Govt initiative to make tenants more financially responsible (easy when someone else is picking up the bill). The law of unintended consequences applies with a vengeance. Many, if not most, LHA recipients just cannot cope with the new system - they often do not even have a bank account, leading to further problems. Previously, the only stability in their lives was a safe, warm comfortable room, crucially with no variable bills to pay. I have never known anyone on Housing Benefit who fell behind on rent and subsequently got up to date.

My understanding is that if a tenant falls behind by more than 8 weeks, the Council will consider (but is not obliged) to pay the landlord direct. Assuming that the tenant will not make up the arrears, this is still a cheap option. The one thing LHA tenants are good at is knowing their legal rights - I have 3 times had to pay people in arrears to leave.

The new rules have brought me to the brink of disaster - another unintended consequence, is that I no longer accept such people. I speak to a lot of people on the other side of the fence who tell me that the number of landlords accepting the old HB was small to miniscule - my guess would be that it has disappeared, though I would be extremely interested to hear from landlords with a happier experience.

poppysarah

kavanaghdavid wrote: »

The problem with the new LHA system is that the Council takes so long to process the claim that the tenant eventually receives a rather large payout (typically £600) and his first thought is not 'Oh, good, now I can pay the landlord').

This all stems from a Govt initiative to make tenants more financially responsible (easy when someone else is picking up the bill). The law of unintended consequences applies with a vengeance. Many, if not most, LHA recipients just cannot cope with the new system - they often do not even have a bank account, leading to further problems. Previously, the only stability in their lives was a safe, warm comfortable room, crucially with no variable bills to pay. I have never known anyone on Housing Benefit who fell behind on rent and subsequently got up to date.

My understanding is that if a tenant falls behind by more than 8 weeks, the Council will consider (but is not obliged) to pay the landlord direct. Assuming that the tenant will not make up the arrears, this is still a cheap option. The one thing LHA tenants are good at is knowing their legal rights - I have 3 times had to pay people in arrears to leave.
.

I think it says as much about you as a landlord as anything else.

Housing benefit has always had delays.

sooz

Check the small print of your mortgage (if you have one) & your landlords' insurance.

Many BTL mortgage companies won't allow you to let to LHA tenants & some insurance may have similar clauses. Similarly, if you have a rent protection policy, this may have a clause about LHA.

Quite what you are supposed to do about it if you let to non-LHA tenants & like yours, they subsequently have to apply for LHA, I don't know

Otherwise, just prepare to wait for you money. The council wheels turn very very slowly

bucephalis

Suggest you check what happens in the event of overpayments.

If you (the landlord) are paid directly the council might chase you for recovery, not the tenants. If that is the case then best to leave the arrangement between the tenants and the council. At least you will know that any money you do receive won't be clawed back.

See the answer to Q33 in :

http://www.dwp.gov.uk/housingbenefit/lha/LHA-national-landlord-QA.pdf

sooz

bucephalis wrote: »

Suggest you check what happens in the event of overpayments.

If you (the landlord) are paid directly the council might chase you for recovery, not the tenants. If that is the case then best to leave the arrangement between the tenants and the council. At least you will know that any money you do receive won't be clawed back.

See the answer to Q33 in :

http://www.dwp.gov.uk/housingbenefit/lha/LHA-national-landlord-QA.pdf

LHA is now only paid to tenants, unless there are special circumstances