Pro's and Con's of HB/DSS tenants?

[prstevo]

Hi Folks,

I have had an enquiry for my apartment from a lady who asked me do i accept DSS?
I wonder can someone give me an overview of the situation with HB/DSS tenants and the potential problems?
Do they receive their benefit themselves, or does it get paid direct to me?

thanks.

[ram]

They receive their benefit themselves.
When I received LHA ( DSS ) You had a choice tobe paid yourself
or to the landlord.
Now it is paid direct to the tenant, who, if he wishes to spend it
on a 1 mile wide plasma T.V. ( save hisrent to pay for it ) then
that is what he can do.
As a DSS has no savings, you will not get any rent due if he
chooses not to pay rent from month 2.

Rules are about to change, in that only in exceptional cases, can
the rent be paid to the landlord ( provable - cannot handle cash /
mental deficiancy / has a care worker. Things on those lines )

Remember the tenant is responsible for paying the rent.
Where he gets that money is not your concern, except that
there is a cap / tables for each area, and you will find the DSS
payout will be less than your rent.
( Due to house prices still overpriced, whatever you buy )

Even though I was a model DSS tenant, I recommend not to
consider DSS, mainly because if theydont pay the rent for 6 months,
there is no way you can get it back.

R.a.M.

[thesaint]

If you don't understand housing benefit, I advise you not to take on a tenant who is on it.

[ram]

if they don't pay the rent for 6 months,
there is no way you can get it back.

Correction.

You -can- get the rent back via ccj, but 6 months rent of £ 3000
and tenant has no money, and has to do without some food in order
to top up paying rent at next place as the DSS money is £ 50 a
month short, You will be lucky toget £ 5 per week from them
in repayments.

That's 50 years for them to pay back £ 3000 !
And for you to get the rent owing back.

Above is the worst condition, and as I said, there ARE model
L.H.A. tenants out there, but unless you are good at weighing
people up, steer clear.

Read the posts on here, go back a few years.
On the bottom of the screen when you are looking at a post, there
are / maybe suggestions to similar posts and are worth reading.

R.a.M.

[Snorkerz]

I have written this webpage which you may find useful http://tenancyanswers.ucoz.com/index..._benefits/0-54

The first thing to do is to NOT forget to carry out full referencing and credit checks on your tenants. This is likely to show if your tenant has previously defaulted on rent, or any orther recorded debt. If you do these checks yourself, it is worth questioning the 'last but one' landlord. The current landlord may have a vested interest in giving a good reference to get rid of non-paying tenants.

A deposit is essential in all cases. As your tenant is on benefits, they are unlikely to have a large amount available for a deposit - and yet their lack of assets is the very reason you need as large a deposit as possible. It is probably cheaper to wait for a tenant with a suitable deposit than run the risk of a tenant running up a large rent debt, and not being able to obtain a penny through the courts.

A guarantor is also highly advisable. The guarantor will be expected to cover any bills that the tenant can not pay. In view of this, your tenants guarantor should be a creditworthy homeowner, preferably working full time. The guarantor should be credit checked. If the guarantor is a homeowner, they are less likely to move - making them easier to find - and they have an asset that you can place a charge on if a court order is made against them

[coolandr]

Agreed with Snorkerz.

Housing benefit tenants can be very problematic since they are always paying in arrears and the councils tent to delay payments etc. The tenant is typically paid directly , but there is a regulation which I share in these forums and which I got from DWP that is worthwhile considering

''If the tenant builds up rent arrears of eight weeks or more, the local
authority is required to make direct payments to the landlord under HB
Reg 95 (1)(b) and HB(SPC) Reg 76(1)(b) unless it is in the overriding
interests of the tenant. Rent is in arrears once the payment date is passed regardless of this date being set in advance or arrears''.

HB tenants can attract much higher insurance premiums so be aware of this as well. If you are going to consider one always credit check them and get guarantoors to support their tenancy.

Depending on the market you are targetting in your area it maybe wise to target tenants that can afford to pay you as opposed to HB tenants. The cost of evicting someone in HB and recovering your money (almost impossible without guarantoor) can be very high.

[ruddy345]

Please please please do not accept them. I did and i am paying the price they know how to play the justice system and when they complained about things not working we sent our handyman to deal with it and they wouldnt let us in. We had to get HSE etc involved so it was all logged. They then took us to court for work not done but we cant afford to fight them in court as we dont have legal aid and they do. DOnt do it and get legal landlords insurance this has cost us so much money and we didnt do anything wrong!

[Snorkerz]

Please please please do not accept them. I did and i am paying the price they know how to play the justice system and when they complained about things not working we sent our handyman to deal with it and they wouldnt let us in. We had to get HSE etc involved so it was all logged. They then took us to court for work not done but we cant afford to fight them in court as we dont have legal aid and they do. DOnt do it and get legal landlords insurance this has cost us so much money and we didnt do anything wrong!

This is one specific tenant. There are bad tenants of every financial status.

I am 100% sure that ruddy345 didn't do anything wrong - but maybe with the benefit of hindsight, the problems were caused by what he didn't do - he mentions legal insurance himself, but as in any business (and this is a business) it is all about managing the risks. Hence my advice above about checks/deposits / guarantors etc.

[coolandr]

Having rent guarantee insurance manages some of the risks for not paying tenants. But it also highlights that stricter , perhaps more enhanced credit checks have to be carried out. Its definitely all about risk management and as Snorkerz says there is no way to predict what your tenants could turn around to be in a few months time even if they seem the best people in the world to begin with. Imagine a working couple living in your property who then splits and their disagreements, divorce etc etc strains them financially. I saw these incidents before and the landlords somehow take the hit.

The issue in my view with tenants on benefits is that they are MUCH HIGHER risk to begin with which has to somehow be controlled. If you have guarantoors and they all pass the credit checks then the risk can be more manageable. From my experience HSS tenants also tent to eventually want re-housing by the coucnil in which case they may welcome an eviction (probably not via section 8 for rent arrears). You have to balance the risks, most professional agents will tell you to keep away from them to begin with unless you have solid guarantees to accept them.

The other question you should ask yourself: Are you happy with the rent being paid always in arrears and not in advance?

[Claymore]

After my own experience with DSS, my preference is not to take them again. Even if you are lucky to have a decent tenant - the amount of times the HB department stop and restart payments whilst awaiting documentation or if the tenant goes on a course, or the slightest change in circumstances etc causes absolute havoc with cash-flow.

There were times my tenant was 3 1/2 months in rent arrears, and then all of a sudden you'd get a big check, followed by a month of rent paid on time, only for HB to be suspended yet again and arrears build up. Its a LOT of hassle dealing with HB tenants.