How does DSS work for a landlord?

England83

We currently rent out a house privately and also rent somewhere ourselves. Reason being we couldn't sell the house and needed to move to a new town for work etc. have had a tenant in for the past year and they are now moving. Have someone who is very interested in the property but is on DSS. She can pay the bond of 575 upfront but says her housing benefit is paid direct to landlord in 2 week arrears. Now obviously we would prefer first month rent upfront plus bond but as we've not got anyone else interested it looks like this may be our only option. We would have to use the bond as first month rent to pay the mortgage then somehow use the rent when we get it as bond to go in the deposit scheme. Very apprehensive about this but they seem a nice genuine family just don't want tp be without a bond as we had trouble with our last tenant paying bond. Any advice is greatly appreciated.

Caz3121

does your BTL mortgage and insurance allow you to rent to people on benefits - many don't

HappyMJ

England83 wrote: »

We currently rent out a house privately and also rent somewhere ourselves. Reason being we couldn't sell the house and needed to move to a new town for work etc. have had a tenant in for the past year and they are now moving. Have someone who is very interested in the property but is on DSS. She can pay the bond of 575 upfront but says her housing benefit is paid direct to landlord in 2 week arrears. Now obviously we would prefer first month rent upfront plus bond but as we've not got anyone else interested it looks like this may be our only option. We would have to use the bond as first month rent to pay the mortgage then somehow use the rent when we get it as bond to go in the deposit scheme. Very apprehensive about this but they seem a nice genuine family just don't want tp be without a bond as we had trouble with our last tenant paying bond. Any advice is greatly appreciated.

No one is on DSS. DSS does not exist.

You need to know the tenants full income. Wages, salary, working tax credits, child benefits, child tax credits...or anything else.

If the total of that income is sufficient to rent then go ahead and rent to them. If they don't have enough to pay the rent then they will need housing benefit based on LHA rates to pay the rent. It gets rather confusing. The tenant needs to pay the rent in advance and is given the money by the council in arrears. The landlord is rarely paid directly any more....unless the tenant is seriously in arrears and that's not a tenant you want.

You cannot use the deposit to pay the mortgage it must be lodged. You can choose not to take a deposit and ask for the first months rent in advance instead...but that is really not recommended.

You then need to wait until the tenant is 2 months in arrears before you can ask the council to pay you the housing benefit direct. By the time that application goes through your tenant will be 4 months in arrears. As you want to use the deposit to pay the mortgage I really would not recommend this.

You will not be able to get rent insurance to get the rent paid in the event of tenant default as the tenant does not earn enough.

Housing_Benefit_Officer

Local Housing Allowance is paid direct to the tenant.

They only pay the landlord direct if the tenant has a history of rent arrears or mental health or drug or alcohol problems and is considered vulnerable.

Under Universal Credit it will go to the tenant.

Housing Benefit is paid 4 weeks in arrears. Check with your local council.

The tenant can keep their Housing Benefit and the Council will only pay you direct if they fall 8 weeks in arrears.

bebewoo

Don't do it.

Or come back on this board in a couple of months asking how to go about evicting the tenants who seemed so nice at first but now have stopped paying rent.

gayleanne

It does work, but it depends on the tenants entitlement if she is entitled to a 2 bedroom property, and she moves into a 3 bedroom property, then the money she receives in LHA payments may not be enough to cover the full rent.

The money is paid to the tenant, to pay the landlord, but Christmas is approaching, and many tenants, think oh I will pay double next month! which of course means they are in arrears.

It may take weeks or a couple of months before the council awards them LHA, which of course means that you have no rent coming in.

If they can only pay you the bond in advance, and not a months rent as well, I would be making a lot of enquiries about their incomes, before I let to them. I think I would prefer to have no one in the property, rather than someone that moves in and right from the start will not pay the rent it will cost thousands before you get them out.

Obviously as you know very little about LHA I would be very, very careful before I would let to a LHA tenant.

nannytone_2

bebewoo wrote: »

Don't do it.

Or come back on this board in a couple of months asking how to go about evicting the tenants who seemed so nice at first but now have stopped paying rent.

so every person that claims benefit is a bad tenant/doesnt pay their rent?

HappyMJ

nannytone wrote: »

so every person that claims benefit is a bad tenant/doesnt pay their rent?

No....but a tenant with no income and doesn't have enough money upfront to pay the deposit and first months rent is not a very good tenant to rent to. I'm sure they will try as hard as they can to pay the rent on time to keep the roof over their heads. I can only guess this tenant will always be in arrears and that's not a good start to a tenancy.

gayleanne

The only way you will be able to check if this person will be able to pay the rent, is to have a full credit/reference check carried out, but I can see there will be problems, as you will not be able to hang around waiting for the rent to be paid, you will be using the rent for the mortgage.

bebewoo

You cannot use the bond as the first month's rent as you have to put it in a deposit scheme within 15 days of the start of the AST and serve the tenant the proscribed deposit information.
If you don't do that then you have no chance of evicting should you need to via the legal route. Also the tenant can claim 3x deposit if it is not protected within the required timeframe (possibly).

nannytone_2

HappyMJ wrote: »

No....but a tenant with no income and doesn't have enough money upfront to pay the deposit and first months rent is not a very good tenant to rent to. I'm sure they will try as hard as they can to pay the rent on time to keep the roof over their heads. I can only guess this tenant will always be in arrears and that's not a good start to a tenancy.

tens of thousands are now in that exact position due to the rediction in housing benefit for social housing.

so if people advise private landlords against letting to them ....

just gets better for them doesnt it?