Lettingagent.com has warned UK landlords of the dangers of accepting tenants who pay park for their rent under the Housing Benefit Scheme.
If landlords are keen to go ahead regardless, three key considerations need to be taken into account:
- Will the housing benefit meet the rent you are charging? The rules on how much housing benefit a council will pay are complicated and involve an inspection of the property by an independent rent officer to ascertain how much they will offer. If they will not cover the whole rent you must be sure that the tenant can cover the remainder.
- When will the payments be made? It can take several weeks before the first payment of housing benefit is made, some councils may even take 12 weeks to make the first payment and in this instance it is advisable to obtain some money and a deposit from the tenant until the benefit is paid to avoid any shortfall.
- Will the housing benefit be paid directly to the landlord? With the new Local Housing Allowance, which comes into force in April 2008 (as opposed the current Housing Benefit Scheme) the money is handed directly to the claimant rather than to the landlord. The tenant may well then use this to pay for other items, which could lead to failure to meet the rent on time and eventually rent arrears. If there is no guarantee you will receive the rent, then it is questionable whether you should be providing the accommodation.
“Rents are calculated on the basis of per calendar month, whereas the housing allowance is paid bi-monthly. This means that landlords cannot be certain of receiving their full rent on the same due date each month.
“If you are a landlord with a mortgage, then you need to see the same amount of money in your account on the same day each month, which is impossible under the present housing benefit procedures.
“If the Government want to see more buy-to-let investors housing tenants on benefit – they must improve the housing benefit system to make the venture work for landlords.”
