Private Landlords and Housing Benefit - direct payment?

Sparky67

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?

ripplyuk

Even if it was paid direct, it's very unlikely that the housing benefit is going to cover all of the rent so your step daughter will have to pay the landlord directly for the rest.

CLAPTON

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?

only become a guarantor if you are prepared and can afford to pay the full rent yourself for a long time.

theartfullodger

You & her dad would be pretty much signing a blank cheque.

Even if it goes direct to landlord you could still be stuffed. For example (no offence to your daughter) if her claim turned out invalid (say she had, unbeknownst to you substantial savings or another property somewhere else in the world) the landlord would probably be required (when the truth came out) to repay all HB he'd had back to council - then he'd come after the guarantors for the £££ .

As clapton says

only become a guarantor if you are prepared and can afford to pay the full rent yourself for a long time.

Annisele

If you're in a precarious financial position yourselves, you might not even be accepted as guarantors. I think "we can't help because we don't meet the criteria" is an easier conversation to have than "we won't help because we don't think you're going to pay". Do you own property with a decent amount of equity in it?

This is absolutely not a risk free proposition.

Will they even be entitled to housing benefit before the baby is born? I wouldn't have thought so, but I'm not an expert in this. Even when the baby is born, will their entitlement to HB change? It probably will at some point.

They will probably get a joint tenancy. That means that if you do act as guarantors, daughter and bf split up, and bf stays in the property - you're still guarantors, and you might still have to cough up.

Financially, it's a dozy thing to do. If people only thought about the finances, they'd never guarantee anyone else's rent - it's (financially speaking) daft. But I know it's not just about the finances!

[Deleted User]

I know its hard, but they are young, you have concerns about the level of the rent and income, possibly budgeting.., so know what you might be getting into.

Tell them you can't afford it. They might not get it right now but its better than facing a nightmare of thousands of pounds of debt. Now is not the time to move for them if they already have somewhere.

fierystormcloud

I can only echo what everyone has said above. It's not easy to say 'no' to someone close, but I know half a dozen people who have said no, including several people who have said it to their own child...Either because they can't afford to pay if they fail to, or because they simply KNOW this person will fail and refuse to pick up their tab!

Several of these people said no, and the person they said no to has actually gone and gotten into rent arrears... one of them six months worth, and so if they'd agreed to be guarantor, they'd be shelling out 3 grand right now.

DON'T DO IT.

DON'T!!!




DON'T!!!!!!!!!!!!!!!!!

Seriously.........don't......unless you can afford to pay the rent yourself indefinitely, and don't mind doing it.

As one of the posters above said, just say you can't. If they ask why, just say 'I am sorry I can't go into it... I just can't.'

It will save a lot of tears in the long run.

Sparky67

On paper we are good for the money, but as we are about to relocate we know we are going to have a turbulent few months as we sell one property while living in rented near our new work.

I absolutely do not want to do it, but I can tell my husband (and Daddy, therefore finds it harder to say no) is wavering as he sees it as risk free. We had said no, but they've come back today and said that the boyfriends mum will be a joint guarantor if we say yes, and my husband's resolve is weakening - I need something concrete to put in front of him that shows him there IS some risk.

The irony is that I was a housing lawyer for many years, advising landlords and tenants, and have advised people who were up to their eyes in debt because they had acted as guarantor... and I would think they were naive to have done it.

I think my husband just thinks the HB will go direct from the Council to the Landlord, so where's the risk. And on the face of it, you would have to agree... but I still don't want to do it.

What if... they were found to be working and not declaring income? Presumably the Council could then claim back any overpayments??

Universal Credit (whenever that some in) means (I think) the HB would go to them, and there's no guarantee they would pay up?

fierystormcloud

Sparky67 wrote: »

On paper we are good for the money, but as we are about to relocate we know we are going to have a turbulent few months as we sell one property while living in rented near our new work.

I absolutely do not want to do it, but I can tell my husband (and Daddy, therefore finds it harder to say no) is wavering as he sees it as risk free. We had said no, but they've come back today and said that the boyfriends mum will be a joint guarantor if we say yes, and my husband's resolve is weakening - I need something concrete to put in front of him that shows him there IS some risk.

The irony is that I was a housing lawyer for many years, advising landlords and tenants, and have advised people who were up to their eyes in debt because they had acted as guarantor... and I would think they were naive to have done it.

I think my husband just thinks the HB will go direct from the Council to the Landlord, so where's the risk.

There isn't really any concrete way of saying no really. And it is going to be hard if your husband is wanting to says yes.

When my husband wanted to lend a mate £2000 10 years ago, (to pay off some debts!) it caused a massive row because I said no, no, no! I was really angry, especially as he was against me lending my brother £500 2 years before, and out of respect for him I said no to my brother.

So he never lent it to this friend. He was really glad after though, because about 6-7 months later, the friend went bankrupt and had his house repossessed. So the chances were high that we wouldn't have got our £2000 back! Also, shortly after that, this friend naffed off out of the area and was never seen again by us.

All you can do hun, is put your foot down, and say NO.

Good luck.

eamon

Say no. They probably wont even qualify for HB given their age and the rules are changing constantly. Additionally they are both very young and with part time jobs, what happens when the baby is born. There is a phrase "sustainable tenancy" I suspect that they would really struggle as there are other costs e.g. council tax, utility bills, tv licence etc on top of the rent. They need to stay where they are and get saving big time.

[Deleted User]

Tell him about the new rules regarding young people and housing benefit.., i.e. housing benefit may not be paid. The universal credit system is hopeless.

All this is not good for these young people. They could be the most responsible people in the world, but this would still be a bad time to move.

If they are working and still claiming benefits without telling the benefits people., its a disaster waiting to happen.