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View Full Version : HB rentals - advice please



ctaniab
23-02-2007, 09:26 AM
Hello all. What are the key issues I should consider when thinking about renting to tenant in receipt of housing benefit?
If you were to draw up your top five tips for HB rentals, what would they be?

M.A.O.H
23-02-2007, 10:15 AM
1 . be patient, hb takes a long time to get processed but runs smoothly once actioned.

2. get it paid to you not the tenant

3. give lots of notice for a rent rise, this can take ages to process too

4. tell the tenant immediately if there are delays/possible payment mistakes

5. don't look down yur nose at us;)

Esio Trot
23-02-2007, 10:31 AM
Be aware that if you get payment direct from the local authority, if there is an overpayment they will always try and get it from you not the tenant (landlords are an easier touch!).

As part of the signing of a tenancy agreement, get a separate irrevocable letter of authority signed by the tenant allowing the local authority to discuss the claim with you and to provide documentation if needed. Do it separately to the TA, that way you can send a copy to the LA whenever it is needed (they will always forget that you have authority!)

MrWoof
23-02-2007, 16:45 PM
Although the majority of landlords will not let to HB recipients, many do. Make sure that the checks you run are the same as for anyone else and personally interview the applicants. Check with your local HB department the probable level of HB they will receive and assuming this is less than the rent you charge make sure the tenant can and will pay the top up. Make sure the tenant knows that once HB is settled you will recalculate the top up and they could end up paying more.
In my area HB takes up to 12 weeks to be settled so be prepared to wait, also, make sure that it is paid to you, not the tenant although this will change when LHA comes in. As for rent increases, make sure this is allowed for in your tenancy agreement and check your local authority's system for this. My area have just changed their systems without notice to anyone, the result, before I argued it with them, was that the tenant could have ended up paying the whole increase rather than part.
I have had both good and bad HB tenants, If the worst happens, at least with HB you get most of the rent until the tenant goes, you don't run the risk of having to get rid of someone not paying any rent.

MrShed
23-02-2007, 18:34 PM
Once the initial delay is sorted, you get a guaranteed rent every month - a definite bonus!

ctaniab
23-02-2007, 19:24 PM
Thanks to all for very helpful advice.

Esio Trot, you suggest getting a separate irrevocable letter of authority drawn up. Do you know where I could get a draft one from, to get an idea about what it should say/include? Are there standard templates around that I could buy/obtain online?

Also, MrWoof: I know nothing about LHA - could you expand a bit please?:confused:

Poppy35
23-02-2007, 20:47 PM
i would point out as someone else did that should the council overpay they will claw this back from you the landlord and not the tenant if u r paid directly. tHIS evens happens if the tenant has claimed fraudulanty so even if u have received the correct amount of rent they could still claim it back.

also remember it is paid 4 weekly in arrears and not monthly so you will get paid 13 payments in a year as apposed to 12 monthly.

we have a few single mums on HB and to be fair they are great and always inform us if the council have cocked up etc. in fact they are more reliable than some "professional" tenants!! :)

Poppy35
23-02-2007, 20:48 PM
Thanks to all for very helpful advice.

Esio Trot, you suggest getting a separate irrevocable letter of authority drawn up. Do you know where I could get a draft one from, to get an idea about what it should say/include? Are there standard templates around that I could buy/obtain online?

Also, MrWoof: I know nothing about LHA - could you expand a bit please?:confused:

i believe there is on on this site already - a senior member should beable to point u in the right direction.

MrWoof
24-02-2007, 00:25 AM
Local Housing Allowance: The housing benefit is paid to the tenant who is then expected to pay this to the landlord. About 10% of landlords in the trial areas no longer accept HB tenants, many have lost money. This is a national government inspired 'empowerment' scheme, what it does not take into account is that to some people on benefits, a month's rent suddenly arriving is like a lottery win, some of them just see the money and don't realise that it is to pay their rent. I have tenants who have asked to pay a top up weekly because waiting for a month is too much temptation, that's just a top up, not the full rent. They are dreading the new system.

over graced
24-02-2007, 14:39 PM
I was not able to renew my Landlords Insurance (buildings etc) unless the HB was paid directly to me (via BACS transfer). Also, having a tenant on HB caused the premium to rise by £60-£70.

The HB is paid 4-weekly and in arrears.

:)

GG

johnboy
24-02-2007, 15:36 PM
Also try to get the tenant to pay the deposit themselves and also the first months rent. If they have some of their own money involved they can tend to be more repectfull of the property.

But bear in mind if the council pay in full when they move out you will have to repay deposit and the first months rent but not until you get it from council.

Ericthelobster
24-02-2007, 16:50 PM
I was not able to renew my Landlords Insurance (buildings etc) unless the HB was paid directly to me (via BACS transfer). Also, having a tenant on HB caused the premium to rise by £60-£70.
In my case, when I had a working tenant who lost her job and went onto HB, I notified my insurers and the only issue was a rise in premium of £10 or £20.

I can't see why an insurer would demand that HB is paid direct - although its useful ammunition for the LL to use! - I can't see why whether the landlord is actually receiving the rent or not would have any bearing on the risk or insurability whatsoever.

M.A.O.H
24-02-2007, 17:38 PM
Also try to get the tenant to pay the deposit themselves and also the first months rent. If they have some of their own money involved they can tend to be more repectfull of the property.

But bear in mind if the council pay in full when they move out you will have to repay deposit and the first months rent but not until you get it from council.

the council don't pay deposits . they can guarantee it, which means the tenant has to pay it to you in installments over a period of up to two years, each month on top of the rent, from their own pocket. if the tenant moves before it's paid in full, the council will then pay to you for delapidations, but you still have to give the tenant what they've paid you already, and i think they would probably have to give back to the council what they paid for delapidations. the council want to see an inventory, as some LLs do like to make ridiculous claims. i think this is a great scheme, that keeps many from facing possible homelessness/ending up in complete dumps.

M.A.O.H
24-02-2007, 17:40 PM
In my case, when I had a working tenant who lost her job and went onto HB, I notified my insurers and the only issue was a rise in premium of £10 or £20.

I can't see why an insurer would demand that HB is paid direct - although its useful ammunition for the LL to use! - I can't see why whether the landlord is actually receiving the rent or not would have any bearing on the risk or insurability whatsoever.

it's probably a snobbery thing. insurers maybe think all hb claimants will spend the rent money on crack and smash the place up into the bargain.

MrWoof
24-02-2007, 20:58 PM
i would point out as someone else did that should the council overpay they will claw this back from you the landlord and not the tenant if u r paid directly. tHIS evens happens if the tenant has claimed fraudulanty so even if u have received the correct amount of rent they could still claim it back.
The LA will TRY to recover overpayments from the landlord but once this is quoted they stop. I have the full text if anyone wants it:

1. Section 71 of the Child Support, Pensions and Social Security Act 2000 amends
Section 75(3) of the Social Security Administration Act 1992 relating to the
recovery of Housing Benefit (HB) overpayments. The HB (General) Amendment
(No.2) Regulations 2001 (S.I.2001 No.1190) amends HB Regulations (Regs)
governing the persons from whom overpayments can be recovered. The
amendments come into force on 1st October 2001. This circular gives details of
those amendments.
2. Prior to this amendment, Local Authorities (LAs) had the discretion to recover an
overpayment from the person to whom the benefit was paid, which could be either
the claimant, or the landlord where a rent direct arrangement was in place. The
result of this was that in many cases LAs recovered overpayments from the
landlord, that were actually caused by tenant fraud. This means the fraudulent
tenant often suffered no consequences of their actions and was therefore inconsistent
with the government’s strategy to bear down on fraud.

caroline7758
26-02-2007, 20:02 PM
Regarding the authority to discuss Hb with you, my LA includes this on the form where the tenant gives permission for HB to be paid direct to you- yours may do the same, in which case take a copy.

Esio Trot
27-02-2007, 09:42 AM
Regarding the authority to discuss Hb with you, my LA includes this on the form where the tenant gives permission for HB to be paid direct to you- yours may do the same, in which case take a copy.

As do ours - but it is not IRREVOCABLE.

Thus, if a tenant wants to be naughty with their rent money, the first thing they will do is retract the authority - as happened to me a few years ago. Then there is nothing you can do.