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Guarantor for Rental - Housing Benefit

Hi

My stepdaughter has asked me and her Dad to act as guarantor for a private rented property. She has told us that they can opt for the rent to be paid direct to the landlord - therefore my husband is saying there is no risk and we should go ahead.

I have serious concerns about their ability to afford the flat and we are in a precarious financial position ourselves as we are in the process of relocating for work reasons. They currently have somewhere entirely suitable to live with relatives, have only part time work but want to live on their own (they are 17 and 18... and having a baby...)

My understanding was that only social landlords that can be paid direct. Private landlord can only be paid direct once there are payment issues or 8 weeks of arrears. Are we being told porky pies?

Also, once universal credit comes in then (even if it were possible now) HB would be paid to the claimant as part of the whole claim?

Comments

  • pmlindyloo
    pmlindyloo Posts: 13,099 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    I rarely use capitals but DON'T DO IT!
  • Sparky67 wrote: »
    Hi

    My stepdaughter has asked me and her Dad to act as guarantor for a private rented property. She has told us that they can opt for the rent to be paid direct to the landlord - therefore my husband is saying there is no risk and we should go ahead.

    I have serious concerns about their ability to afford the flat and we are in a precarious financial position ourselves as we are in the process of relocating for work reasons. They currently have somewhere entirely suitable to live with relatives, have only part time work but want to live on their own (they are 17 and 18... and having a baby...)

    My understanding was that only social landlords that can be paid direct. Private landlord can only be paid direct once there are payment issues or 8 weeks of arrears. Are we being told porky pies?

    Also, once universal credit comes in then (even if it were possible now) HB would be paid to the claimant as part of the whole claim?

    You are correct.
    These are my own views and you should seek advice from your local Benefits Department or CAB.
  • HappyMJ
    HappyMJ Posts: 21,115 Forumite
    10,000 Posts Combo Breaker
    Sparky67 wrote: »
    Hi

    My stepdaughter has asked me and her Dad to act as guarantor for a private rented property. She has told us that they can opt for the rent to be paid direct to the landlord - therefore my husband is saying there is no risk and we should go ahead.

    I have serious concerns about their ability to afford the flat and we are in a precarious financial position ourselves as we are in the process of relocating for work reasons. They currently have somewhere entirely suitable to live with relatives, have only part time work but want to live on their own (they are 17 and 18... and having a baby...)

    My understanding was that only social landlords that can be paid direct. Private landlord can only be paid direct once there are payment issues or 8 weeks of arrears. Are we being told porky pies?

    Also, once universal credit comes in then (even if it were possible now) HB would be paid to the claimant as part of the whole claim?
    Claimant is almost certainly going to receive the fortnightly payments from council and is required to pay the monthly rent from that. Some people find that hard to manage. It's amazing how often an urgent expense comes up and that housing benefit payment is just sitting there in the bank account and it's so tempting to use....the rent then goes unpaid and you're called upon to pay the rent for the period of the fixed term.

    My advice don't do it...the other option is to lend them 6 months rent upfront and require them to repay you on a fortnightly basis. Paying the rent upfront usually negates the need for a guarantor as it's all been paid for.
    :footie:
    :p Regular savers earn 6% interest (HSBC, First Direct, M&S) :p Loans cost 2.9% per year (Nationwide) = FREE money. :p
  • Sparky67
    Sparky67 Posts: 1,147 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    They are telling us they can opt for the landlord to receive direct payment. Will the council do that? I didn't think they did for private landlords.
  • nannytone_2
    nannytone_2 Posts: 13,004 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Sparky67 wrote: »
    They are telling us they can opt for the landlord to receive direct payment. Will the council do that? I didn't think they did for private landlords.

    they can do it, but only with good reasons.
    people unable to manage their own finances, that don't have someone to handle their affairs for instance
  • BigAunty
    BigAunty Posts: 8,310 Forumite
    1,000 Posts Combo Breaker
    Councils are only supposed to pay the landlord directly with the HB for private tenants when the tenants are deemed to be vulnerable in some way - it is up to the council to determine if they qualify.

    Here is some guidance on the policy from a council website - what does your local council website say?

    "The Department for Works and Pensions have provided guidance on when direct payments to the landlord may be appropriate, where a tenant can pay or wont pay. These are expanded below:
    )a) If the tenant is likely to have difficulty managing their own affairs.
    For example, if a tenant is known to have a learning disability or their drug/alcohol misuse would mean they are likely to have difficulty handling a budget.
    b) If it is improbable that the claimant will pay their rent. For example,
    if the authority is aware that the tenant has consistently failed to pay rent on past occasions without good reason."


    Even if the council consented, it doesn't remove all risks - a change in circumstance or admin error might trigger the HB from being paid, then you are obliged to step in.

    The housing forum is full of posts from people regretting the decision to become guarantors for friends and relatives - ask for opinions and experiences there.

    Also, have you checked the cost of the rent for the property versus what the council will pay for a 2 bed property in that area? Many tenants on HB have rents above their HB allowance and have to top it up from their employment or other benefit income and this can be a stretch.
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