Council cash incentive

saajan_12

Hi all, 
Wondering if anyone has experience or background info on council cash incentive schemes to accept certain tenants they are working with. I'm a LL going through a tenant changeover, viewings, referencing etc and the council wrote to me on behalf of a prospective tenant offering the scheme. Basically how I think it works is:
* tenancy must be an AST with 2yr fixed term between LL and tenant (council is not a guarantor)
* council pay a cash amount = 2.25 x rent which is non refundable, payable after AST signed and keys handed over
* this is in lieu of deposit and first months' rent

My main concerns are below (am asking the council worker) but please shout if you see any other issues I've missed, or if I'm misunderstanding. 
1)  Council have 'automatic nomination rights for a replacement tenant' organised by the council if the tenant is rehoused to a social tenancy -> while low housing stock probably makes this unlikely, the tenant's priority may change. While I'd be happy to let them go, I would want to choose / check affordability etc for a replacement tenant. The terms are silent on this and they seem unwilling to amend. 

2) Zero deposit -> no incentive for the tenant to leave the property in good condition at the end, and if they have few assets or don't leave a forwarding address, claiming via court may be fruitless. While I am effectively paid a non refundable deposit, this is often quickly eaten up and more between lost rent and cost of fixing if there's major damage. 

3) Cash paid after tenancy starts -> While the council might not run away from paying, could they decide the tenant doesn't fit their criteria and decline the payment, after I've signed to say first month's rent is £0? 

Terms and conditions below:

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Terms and Conditions of Business

The Borough introduces a letting service to enable Landlords to rent out their properties to home seekers who are registered with the Council. We require all sizes of accommodation in a good decorative order and safe lettings condition. Our terms and conditions are set out below and in return we offer Landlords a range of different incentives.

1.0 Gas, Electrical, Energy Performance Health & Safety Regulations

The Gas Safety (installation & use) Regulations 1998

Under the above regulations, it is the Landlord’s responsibility to ensure that all gas appliances and the fixed installation are maintained in good order and checked for safety at least every 12 months by a Gas Safe registered engineer.

The Council require an initial gas safety certificate.

The Electrical Equipment (Safety) Regulations 1994

The Landlord is legally responsible for ensuring that the electrical installation and all appliances within the property are maintained in good order and regularly checked for safety.The Council require an initial electrical installation report from an electrician with one of the approved registered bodies.

The Fire and Furnishings (Fire) (Safety) Regulations 1998

The Fire and Furnishings (Fire) (Safety) (Amendment) Regulations 1993

The Landlord warrants that he is fully aware of the terms and conditions of the above regulations and any subsequent amendments or replacement Regulations (hereafter referred to as the Regulations). The Landlord declares that all furniture presently in the property or to be included in the property to which this agreement applies, complies in all respects with the regulations. The Landlord further warrants that any furniture purchased for the property after the date of this agreement will also comply with the regulations for the duration of the tenancy.

Energy Performance Certificate (EPC) (HA 2004)

The Landlord must supply an Energy Performance Certificate on all rented properties. An EPC contains information about a property’s energy use and typical energy costs and recommendations about how to reduce energy use and save money.

An EPC gives a property an energy efficiency rating from A (most efficient) to G (least efficient) and it is valid for 10 years. It should be a minimum Band E rating for all lettings.

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1.1 Fire, Carbon Monoxide, Asbestos & Legionella Risk Management

Fire Risk (The Smoke and Carbon Monoxide Alarm (England) regulations 2015)

Smoke alarms must be supplied on each habitable level (fitted/battery). Where common parts are shared (e.g. the property is a flat in a block) the Landlord will ensure that a fire risk assessment and action plan is in place and updated.

Carbon Monoxide

A Carbon Monoxide detector must be supplied where there is a gas supply in the property (fitted/battery).

Asbestos

The Landlord is responsible for the management of any asbestos in the property.

Legionella

Where required the Landlord will ensure a legionella risk assessment and a scheme of control is in place.

1.2 Heating Requirements

Minimum Heating Requirements must be one of the following:

- A full gas fired central heating system

- Economy night storage heaters

- Standard wall mounted electric heaters throughout the property.

2.0 Permissions, Proof of Ownership and Consents

The Landlord warrants that they are the legal owner of the property and will be able to supply documentation to prove this and, also warrants consent to let from his mortgage provider has been obtained, and where necessary permissions have been obtained from freeholders or grantors of the lease. If the lessee holds a lease from the Council they must ensure that they have notified the legal department of the under letting and pay the relevant fee. Landlords living abroad must appoint a managing agent.

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3.0 Service Charges

It is the responsibility of leaseholders who underlet their property to the Council to ensure that all service charges are up to date and continue to be paid during the tenancy.

4.0 Tenancy Agreements

It is the responsibility of the Landlord to provide the tenancy agreement document, to ensure the provisions are fully compliant with relevant housing legislation and legal procedures are adhered to. All agreements entered into are strictly between the named tenant and the Landlord. The Council does not act as a guarantor.

5.0 Keys

At the commencement of the tenancy the Landlord must ensure that the tenant has been provided with a full set of keys including all accessible parts of the property, including the communal areas.

It is the Landlord’s responsibility to ensure that when the tenant vacates the property, all relevant keys are retrieved directly from the tenant. The Council does not accept the responsibility for the return of keys.

6.0 Repairs and Maintenance

Landlords must ensure that the property and its installations are maintained and repaired where necessary in accordance with the Landlord and Tenant Act 1985.

Landlords must provide a contactable address (within England & Wales), a 24- hour contact number and ensure that when the Landlord is uncontactable (e.g.

abroad) that a nominated representative (not the Council) is available in cases of emergency.

7.0 Landlord Responsibility

The Landlord ensures that these responsibilities are met on an ongoing basis.

Please note that where a nominated tenant from the Council’s scheme is rehoused to a social tenancy within the first 12 months, the Council will have automatic nomination rights for a replacement tenant. This will be organised by the Council without further financial incentive due to the landlord. The Council will not accept any rental liability for the tenant’s early termination of the tenancy.

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By entering into this lettings scheme, you are accepting our Terms and Conditions of Business as set out in this document.

elsien

Might you be getting ASBO tenants who have been moved on from elsewhere? 

canaldumidi

Biggest concern is whether the rent will be paid (after the initial month paid by the council)? I guess S8 still applies (it's an AST), but what happens if you evict? Does council still have "'automatic nomination rights for a replacement tenant'"? Tied in to the council somehow? or just walk away from the scheme?

What if the T is a nightmare (eg to neighbours) but no rent arrears? S21 won't work for 2 years.......

theartfullodger

Unless very brave and with loads of savings to pay for voids and legal costs, walk away.

eddddy

From talking to LLs who've used similar schemes, their biggest problem was the tenants sent by the council. They seemed to range from "not very good tenants" to "terrible tenants". But maybe those LLs were just unlucky.


A "not very good tenant" - the council said the tenant had one child, but they seemed to have two. Cupboard doors pulled off hinges, a radiator pulled off the wall, etc. The LL suspected the children did it, but ended up having to pay as "wear and tear".

A "terrible tenant" - the tenant started dealing drugs from the flat - punters visited the flat, paraphernalia left lying around in communal areas, mini-crimewave with neighbours cars broken into, etc. 

The neighbours found out the LL's contact details, and started giving the LL a very hard time about the tenant.


And another tenant -  the police raided and broke down the door on a couple of occasions. 

Slinky

Are you having problems finding good tenants for your property? If not, what is it about the council offer that makes you want to consider it?

saajan_12

canaldumidi said:

Biggest concern is whether the rent will be paid (after the initial month paid by the council)? I guess S8 still applies (it's an AST), but what happens if you evict? Does council still have "'automatic nomination rights for a replacement tenant'"? Tied in to the council somehow? or just walk away from the scheme?

What if the T is a nightmare (eg to neighbours) but no rent arrears? S21 won't work for 2 years.......

Thanks for comments. So my understanding was the AST with the tenant would function as normal - rent arrears risk applies to any tenant and S8 still applies, can add a break clause and Section 21 after say a year if other issues. My read of the T&Cs (in the 'spoiler' section in my OP for brevity) is that the 'automatic nomination rights' only apply if the council rehouse the tenant, not to a usual S8 + court eviction. 

Slinky said:

Are you having problems finding good tenants for your property? If not, what is it about the council offer that makes you want to consider it?

Good point. TBH this property worked well for sharers, but with recent HMO rules coming in even for 3 co-tenants (vs 5+ before) that's much more painful. So favouring families who would also likely stay longer. Each of the prospective tenants have a their pros and cons, just trying to weigh up whether the council offer is really a pro / con / neutral.