Renting flat to housing benefit applicant

accountingbod

Hello everyone

We are renting out our flat and had someone round yesterday to view it. They seemed okay. (Man and his daughter).
He said that he was on top-up housing benefit. He does work but needs a top up to afford the rent.

Does anyone rent to people on housing benefit? What are the things to consider (if any?)

We will be seeking references etc...
We are doing this privately so not through an agent.

This is not a dig at people on housing benefits, this is more about any differences that there may be between those who can afford to pay all of it themselves and those who require state help.

He is after something long-term which would suit us so we potentially would like to have him in providing all his references check out okay..

Many thanks.

BitterAndTwisted

Just because someone is on a modest income and is entitled to a contribution from LHA towards their housing costs does not mean that they have no savings or cannot afford the whole of the rent. You need to ask to see their bank statements for the last three months (at the very least) plus a reference from their previous landlord. Not their current one as they may be glad to see the back of them. You are going to undertake credit-checks as well, aren't you?

accountingbod

Thanks bitter and twisted. He has said that he could afford the rent etc...
Like i said, this i not a slight against people on benefits, i just wanted to know if there are any extra considerations to think of when renting out your flat to someone on housing benefit.
We will be doing credit checks yes.
Bank statement also is a good point.
At the moment, he is living with his godmother and before was living with partner but they have now seperated so no previous landlords to ask but good point to bear in mind in case we choose someone else!

Darlyd

The only pitfall for the time being would be waiting for the council to sort the paper work out, can take a while. But when that is all sorted, it is guaranteed rental income. I think the council pay the tenant and the tenant pays you, BUT you can instruct the council to pay you direct, my SIL LL requested this and it's being done..

accountingbod

Thanks DarylD

That's what he was saying as well. He would pay us from his account once the benefit was in place.
We just want to make sure of all the angles because he seems like a nice enough guy so would like to go ahead with the rental.

jamie11

However he pays the rent is his responsibility, whether LHA or not. But to protect your investment you should be asking for a home owning guarantor. The guarantor should also be credit checked and very careful attention paid to the documents, they must be signed as a deed for it to have any chance at all of standing up in court in case you need to prove anything. Be careful that the guarantor agreement ties up the guarantor for the whole of the tenancy, probably best to get it drafted by an experienced housing law solicitor

If the tenant is making a new application for LHA then tell him you wish to be included as a third party to discuss his claim with the housing department.

Also get a proper deposit and protect it (6 weeks is best) and get the first month rent in advance and specify the rent is always due in advance, this saves time if the tenant does turn out bad. Do not offer a weekly rent or three monthly rent or agree a 28 day period for the rent, they all lead to problems if you need to issue notices.

BitterAndTwisted

NO! The tenant needs to cover the whole of the rent from day one. Do not allow yourself to be underpaid until and unless the tenant is in receipt of the LHA: that's not your problem. Covering the all of the rent is the tenant's responsibility. This sounds like the tenant may have insufficient savings. Presumably they can furnish you with an adequate deposit

Perhaps it might be wise to continue your search for another, more reliable tenant?

accountingbod

Sorry bitter and twisted - May have confused you. I was responding to Daryl's response. The money will come from his account not the from the council.
We will only rent to him if his benefit is all in place when rent payments become due.
He said he can pay up front for first month's rent and a month and half deposit and then monthly moving forwards...

BitterAndTwisted

I appreciate that the rent will be coming direct from the tenant. What I was objecting to was when you said "He would pay us from his account once the benefit was in place" which I took to mean that he wouldn't be able to afford all of the rent until the LHA had been approved and paid to him by the Local Authority. None of that is your problem. LHA is always paid in arrears so the tenant must have sufficient funds in place to pay the rent when it is due i.e. monthly in advance.