Private Landlords are continuing to shy away from Housing Benefit applicants.
Recent data from nationwide online letting agency, lettingaproperty.com indicates that 64% of all tenant enquiries are from tenants in receipt of housing benefits. When the same agency reached out to their landlords who recently listed their properties privately online, only 11% would consider tenants in receipt of such benefits.
Lettingaproperty.com added ‘the number of calls we receive from Tenants and councils looking for private rented properties that accept housing benefits continues to rise day by day. To add further frustration to Tenants needing help finding accommodation, almost half of these Landlords that do accept benefit applicants do so because their property has been on the market for some time and they change their mind after 40 days or so just to secure a rental income. These end up being properties generally at the lower end of the rental market.’
It can be notoriously difficult for individuals in receipt of benefits to secure rented accommodation and all too often landlords or letting agents advertising rental property will clearly state ‘no housing benefit’, meaning that tenants on benefits will not be given consideration.
This may seem both extremely harsh and somewhat prejudice but landlords do have their reasons and in this article we will take a closer look at some of those reasons to get a clearer understanding of the predicaments a landlord faces with tenants on housing benefits.
The two benefits used to subsidise a tenant’s rent are Housing Benefit or HB and Local Housing Allowance or LHA. A prospective tenant may find they have a better chance of renting a property if they are in receipt of HB rather than LHA.
A claim for LHA will take into account the area in which the tenant resides, the property size and the number of occupants who will be living in the property. LHA also ensures that all tenants living in the same locality under similar living circumstances will receive the same amount of benefit. A tenant in receipt of LHA is also far less likely to have a shortfall in their rental payments.
These rules don’t apply to HB but Housing Benefit is still the preferred choice of benefit for landlords and this is because the payments are made directly into the landlord’s bank account. LHA is paid directly to the tenant, which could prove problematic when the landlord tries to recover his monthly payments.
Why are Landlords put off by Tenants on Housing Benefits?
Below we take a look at some of the reasons why landlords have been put off renting their properties to LHA tenants.
• Housing benefit and LHA is paid four weeks in arrears rather than a month in advance like most rental payments. This means the landlord has to wait for his payments
• Obtaining deposits to secure the rental property may prove more difficult with a LHA tenant due to their limited income and minimal assets and the government doesn’t make the provision to pay deposits on properties for individuals on benefit
• Housing Benefit doesn’t always cover the full rental amount meaning the tenant will be left to cover the shortfall and landlords may have problems recovering this shortfall
• If a tenant makes a fraudulent claim for Housing Benefit or Local Housing Allowance the landlord may also be held liable and the council making the benefit payments have the right to retrieve all the benefit payments received by the landlord
• LHA is paid directly to the tenant and should the tenant default on their rental payments the landlord may find it very difficult to retrieve monies owed, even through the courts
• Obtaining references may prove problematic, employer’s references will be virtually impossible if there is no previous employment history and bank account checks may also prove futile if the individual doesn’t actually have a bank account and receives their benefit via giro or payment book. References from previous landlords may prove the most successful way of obtaining some information about the tenant but even here the landlord may hit a stumbling block if the tenant had previously lived in housing association accommodation
• A landlord may find that his insurance company will refuse to cover the property if there are LHA tenants living there
• Even in this day and age there is still a stigma attached to individuals in receipt of benefits. Sadly, even though there are many people who have legitimate reasons for claiming Housing Benefit and other forms of support they are tarred with the same brush as those who claim benefits but is perfectly capable of working. Landlords shouldn’t generalise but, unfortunately, they do and have to make decisions that they feel are in the best interests of their investment
Pointers to help Tenants on Housing Benefits Secure Rented Accommodation
There is no sure fire way for a tenant claiming benefits to secure rented accommodation and often, once a landlord has made up his mind not to rent out his property to LHA tenants, then there is little that can be done to change his decision.
However, there are a few pointers below which my help the tenant appeal to the landlord’s better nature and show that they are just as reliable and worthy as a tenant who is not in receipt of benefits.
• If possible it’s a good idea for the tenant to provide the landlord with a guarantor to give him the assurance that the rent payments will be met
• The tenant should try to find out in advance how much Housing Benefit or Local Housing Allowance they will be likely to receive and what the shortfall in rent will be and supply the landlord with these figures
• Where possible the tenant should make arrangements for the benefits to be paid directly to the landlord. This is generally only possible with LHA under very specific circumstances but it’s worth the tenant doing some research to find out if they fit into the one of those specific categories
• If the benefit cannot be paid directly to the landlord the tenant should find out the date in which the benefit will reach their account and inform the landlord so that it can be collected immediately on receipt
• If there is a shortfall the tenant should make arrangements with the landlord to pay the shortfall as promptly as possible each month
• Where possible the tenant should provide the landlord with current bank statements, paid bills and other proof of payment to show they are reliable and pay their debts on time
• It may also be useful for the tenant to compile a list of individuals who are willing to give them a character reference. These should be professionals who know the tenant well, perhaps a doctor, social worker, or, where applicable, a previous landlord. If the tenant has worked in the past then a reference from their previous employer would also be advantageous
• The tenant should offer the landlord as much as information as they can and always cooperate. It may seem unfair that, just because the tenant is out of work and receiving benefits, they are treated so differently but if they put in the time to reassure the landlord that they would make a reliable, honest and trustworthy tenant then, hopefully, all their hard work should pay off
• Although they are under no obligation, a tenant may wish to inform the landlord of why they are in receipt of benefits to show they are a genuine claimant. It could be that the tenant has suffered an accident or illness that prevents them from working, are a single parent with children under the legal school age or are a full time carer for someone with an illness or disability. What ever the legitimate reason for the claim most landlords will both appreciate and respect a tenant’s honesty and will, hopefully, see that the hardship they suffer deserves to be eased a little.
Supplied to LandlordZONE by www.lettingaproperty.com