The boss of a lettings company that specialises in pensioners has urged agents and private landlords not to turn their backs on benefit tenants.
Peter Girling, chairman of Girlings Retirement Rentals, said it was wrong to stigmatise social housing tenants.
According to research from the National Housing Federation, there has been a 417,830 rise in the number of social housing tenants over the past three years.
It has coincided with a decline in the number of landlords willing to let properties to tenants receiving housing benefit following the Government’s cuts to Local Housing Allowances, paid to tenants in private rental accommodation.
Both the Residential Landlords Association and the National Landlords Association have reported that many landlords have either already withdrawn from the LHA market or plan to do so, with a number of agents not accepting benefits tenants.
Letting agent and landlord Aki Ellahi, founder of Dssmove and director of lettings business Rent Me Now, wrote an open letter to landlords in the Guardian Professional on October 25 (see link below).
In it, he wrote of the ‘appalling’ stigma and stereotyping prevalent amongst UK landlords with regards to accepting social housing tenants.
Girling said: “I wholeheartedly agree. Over 70% of our tenants who are aged over 55 receive some form of entitlements including housing benefit. Many of these people have paid into the system over their working lives and now need some support in their retirement, as do a number of home owners who may be entitled to social and housing support.
“Whilst I understand their commercial concerns, my view is that landlords are being short-sighted in their knee-jerk reactions.
“There are benefits to the landlord from letting property to social housing tenants. Whilst undoubtedly there are some unscrupulous people who abuse the system, it is wrong to stereotype all social tenants in this category. It is the minority giving the majority of tenants a bad name.
“I would like to urge landlords to think twice before turning their backs on social housing tenants in response to government policies. If a new government came in – the policies would change again. There is an argument for landlords to take a far longer-term view of the market which could bring great commercial success in the future.
“There are also the tenants to consider. The average age of our new tenants is 79. They are affected by government cuts, yet most of them don’t have the means to go out and earn additional income to supplement their rents. Without government assistance and landlords willing to take them on, what would become of them?”
http://tinyurl.com/cskl86e
%20-%20IMAGE%20Client%20Accounting%20%E2%80%93%20what%20are%20your%20options.jpg)
Comments
I am absolutely astonished to read that so many of you have such a stereotypical view on people recieving benefits. I am married with two children who are doing exceptionally well at school, I work very hard at work and bring my children up to be polite and respectful . My husband cannot find work after walking door to door every day for months and my earnings are low. Until our look changes we are unfortunatly on benefits, it's something we rely on, and now we have to find somewhere else to live as our landlord needs the house back for his own family to live in. All the landlords we approach are not interested in helping us because we are on benefits even though we have perfect references. This isn't a position we choose to be in, please don't tar all of us with the same brush.
I set up and managed one of the first 'social' letting agents back in 2002 which helped find private rented accommodation for those families who had approached the council as homeless.
The only was the agency attracted and retained landlords was by the council/HB guaranteeing direct payments, fast tracking applications normally within 7 days and working in a proactive way when there was a change in circumstance.
In addition, the council housing advice team only directed those tenants who they believed had the right attributes for the private rented market to us. Without such a working partnership the social letting agency model would not have worked and therefore it is sad to see many councils tend to adopt an arms length approach with agents/ landlords who maybe willing to consider HB tenants.
We can never guarantee a tenant, we reference and based on the information we obtain, the balance of probability suggests things will turn out fine. This applies to DSS tenants except it works in reverse, nothing to apologise for.
Like us agents they mostly enjoy a well earned reputation and the probability for failure and loss is high. Lets be clear here, there is serious risk involved with some DSS tenants and that statement bears only the reflection of fact.
There's not enough spin to address the fact DSS tenants are paid Housing Benefit directly instead of to a landlord/agent but ONLY WHEN THEY LIVE IN THE PRIVATE SECTOR. Government Health Warning?
Instead of incentivising us, given that we are enabling the government to fulfil its legal obligation to provide housing; we are presented with a perfect storm for the exact opposite.
When faced with a high risk tenant and an administration nightmare its easy to walk the other way. As agents we make decisions based on a duty of care to our clients and business acumen. The public sector are bound by a different code but seem intent on blurring the lines
Firstly, the failure of most DSS tenants to secure private accommodation is in their own making. Secondly, the lack of support from the government to enable this to change compounds the situation. Lastly, this is a matter of social reform which can't be laid at our feet.
I deal with tenants on benefits on an individual basis but I also understand why others don't.
Judging from the very diverse comments here it would seem that if one wants to run a business and not a potential charity - do not recommend people on benefits. However, if the landlord decides to then the agent must take a view on whether or not to accept the instructions and if so under what conditions.
If there is much more consumer legislation for landlord or agents the PRS will contract and we will soon be back at the levels of the 60's and 70's then the government will have to pick up the whole tab?
"However, your comments are typical of someone in the PRS, and they brand all housing benefit tenants with the same brush. So you are treating the couple with children who have worked all their lives and then suffered redundancy, and now need to downsize and receive benefit support exactly the same as the 20 year old couple who have never worked and just want a free house"
Damon, you misunderstand / misquote me. I only offered reasons not to let to HB tenants and why there may be a problem. I have, do and will still do lets with HB tenants, but its a fraction of my business.
I am well aware that the two city bankers earning bundles are just as likely to turn out to be worse than a HB tenant. I'm not attacking the tenants, I'm attacking the system.
At not point did I say I didnt want to deal with a couple with kids, who have worked all their lives and now have fallen on hard time.....
If you treat all tenants alike then you should have no problems.
1. You don't need to even take into account HB payments to the tenants, just let them pay monthly in advance by SO.
2. Make sure you have a cast-iron guarantor.
3. Tell tenants you are not going to be interested in any problems with the HB office.
4. If they reference up then it should not be aproblem.
5. Rent Warranty/Guarantee insurance is easily obtianable with a guarantor in place.
6. Choose your tenant carefully, and preferably without children, and pets. Avoid those with poor personal hygiene.
7. Avoid anybody with "attitude".
Then you should get good HB tenants as I have.
Paul, your comments are correct in the cases where it goes wrong and your experience with local authorities is a common one.
However, your comments are typical of someone in the PRS, and they brand all housing benefit tenants with the same brush. So you are treating the couple with children who have worked all their lives and then suffered redundancy, and now need to downsize and receive benefit support exactly the same as the 20 year old couple who have never worked and just want a free house.
The point is that everything you have said is true, for a percentage of the market, but not all of it.
Ask landlords that specialise in this market place of their experience and it is good. We have been running an insurance scheme in this market place for 4 years and manage arrears level at levels consistent with private tenants. How? Through recognising that such tenants need to be referenced in a different way to identify which category they fall in to.
As for hosuing benefit processing - I agree with you again. Local authority administration is poor at best, but....
The legislation provides for all manner of tricks of the trade to ensure that benefits are paid timely and agents/landlords not fear about clawback. The problem is that the legislation is volumes in length and the councils themselves rarely understand it, so what chance does a letting agent or landlord who has need ti use it once a year.
However with the appropriate support from a company like FastTrak, then you don't need to know it, as it is all done for you.
At this point I would stress that FastTrak is a private company, not a government backed organisation. We operate purely to provide a platform that works for the lettings industry.
**is just not worth the hassle
Unfortunately the majority of housing benefit tenants ruin it for the others.
We used to deal with it on a regular basis and I admit that we still have some DSS tenants that I would recommend, however we have also been given tenants that have had a personal recommendation from the local authority and turned out to be a nightmare.
A second factor of us now refusing benefits is if their circumstances change slightly, the tenant either gets a large cut from their allowance which they can't afford to top up or it gets completely stopped altogether - Do you get any help resolving the problem from the council or help removing the tenant......the answer is No.
Again I'm not saying all housing benefit tenants cause this problem but with business as competitive as it is, losing business because it costs the landlord lost rent plus court & bailiff fees to remove
Maybe Peter needs to focus on the numerous reasons why renting to someone on HB is not the preferred choice, rather than making the assumption that they are being stigmatised. The people stigmatising them are HB themselves. If Peter is reading, here are a few reason why you wouldnt want to rent to a HB tenant.
1. Poor, slow processing.
2. HB tenants have a poor record (in my experience) of making up the shortfalls in rent.
3. Rents going to Tenants directly, one of the biggest issues landlords are faced with. Tenants using the HB money for other things and not what it is for. If they are receiving HB then ensure the money gets to where it needs to go. You here the rubbish that HB tenants should not be classed as children and learn to live on their own, well not all can, so don't put them in a position where they create a bigger problem and get evicted. How insane, they seek assistance are provided housing assistance and then get evicted!
4. Post Let Assistance - HB are not interested in helping. Won't talk to you, won't help. Occassionaly you get the odd contact that you can get a relationship going with, but then they move.
5. Snatch back of payments - Tenant no longer entitled to HB payments as circumstancs changed. Agent / LL finds out months later, has to return the rent. Little or no chance of getting money back from tenant. We are told that HB tenants must not be treated like children, yet as agents we are supposed to know what they are doing so we can keep on top of their income?! They signed a contract, they owe the rent, if a tenant owes rent back to HB, then they should sue the tenant, not snatch it back off the easy target!
6. Crazy Landlord schemes made up to try and make landlords think they are being provided the deal of the year! When it goes wrong and there are no deposits etc, HB are not interesred in helping.
7. Payment Processing - Outdated. They send payments in bulk with no sensible references that allows you to process the payments. You spend countless hours chasing HB for info, so you can get rent to LL?
In general there is also an underlying bad feeling about the way HB and the council go about their business with regards to housing.
The Housing Act is law. If you are served notice then as a tenant and a law abiding person, obey that law and move out. You have enough time.
Many tenants want to, but they go to the council, who advise them not to.
They advise them to break the law, they advise them to in some circumstances cost the landlord money, the opportunity to sell the property, the opportunity to move back into the property after returning from abroad, They cost them court costs, hotel bills etc etc.
They do this because they will not house people who intentionally make themselves homeless? How does being served legal notice do that?
So they tell people to wait for the court order and sometimes the baliff!
And before someone tells me that you can't possess a property without the necessary court order, that's not the point.
The point is people are asked to leave, so they should, they should not be told to stay there because the council are unable to fulfil their obligations to the homeless.
But if we are to go down this route then fast track the 21 process. How hard is it. As long as you can submit a pack with all the necessary documents, you should be able to sign off an order in a week.
If a tenant wants to challenge the possession on legal point they have two months to do it. If a genuine legal argument is not recevied by the expiry of the notice then they have to leave. If they have not left at this point, the agent / landlord submits the pack and order given for 7 day time.
A landlords hands are tied by a system in which the council works against them and then wants them to helpt them - madness!
Then you have a court system that allows tenants to play that system and rack up tens of thousands of arrears before they are evicted? (Moving away from the HB issue here!!)
And lastly...... if you are a landlord and you don't treat your tenants right and fulfil your obligations as a landlord, then I haven't got any time for you either!
It is interesting that this subject always sparks a debate and the reality is that both sides of the argument are valid.
There is a prejudice and stereotype around the housing benefit tenant for a reason, and this reason is that amongst this market place there is a significant percentage of problems tenants and even when you get a well meaning tenant, the benefit system itself and government legislation can cause problems for the agent/landlord.
The flip side to this is that there is also a large percentage (and it is the majority percentage) of tenants receiving housing benefit assistance, that represent the model tenant. Statistically they stay in the same home for much longer periods of time (reducing void periods) and make improvements to the property over time from their own money, as they truly perceive the property as a home. Housing benefit being a state benefit is also government backed and is far more secure than a persons income in the present climate.
The important distinction to understand is that it is not as simple as; Housing Benefit tenant = bad tenant and Professional Tenenat = good tenant. We all know that professional tenants can be just as problematical if you get the wrong one. It is all about tenant selection and then with housing benefit ensuring that the administration is dealt with effectively.
Micheal and others might be interested to know that the solution you are looking for does already exist. FastTrak created a bespoke housing benefit referecing and insurance solution which has been in the market place since 2008. Not only, does this insure the landlord without any excess, it provides a bespoke referncing platform that includes an assessment of the clients entitlement to housing benefit before they move in and also has an intelligent deposit alternative. Anyone interested can get more information at www.fasttrak.co.uk/LettingAgents
I agree with some on Michaels points.
We rent of a number of benefit claimants in Westminster, they used to pay £500 towards repairs at the end of a tenancy, but now won't even do that, the capped rents are now typically lower than the private market too.
Other problems we have often resolve around poor communication from the council, for instance in cases where they pay the rent directly to us (and they pay in arrears and in 4 weekly instalments rather than calendar months which makes the accounting more difficult) they will make a transfer but it can take up to 2 weeks for paperwork to arrive so until we receive that we can't be 100% sure which client the rent is for. You call them but they will most likely refuse to discuss the case with you etc.
Other issues are refusing to re-hosue a tenant until you have a court order for possession, obviously this is every tenants right, but the majority of private tenants will move out when asked without the need to go to court.
At the end of the day, as a agent, is it really worth all that extra hassle involved? We do have some lovely elderly people who are council tenants (it is more often the younger ones who cause problems i have to say), but I just can't see us accepting any more in future and that's mainly down to the way the council operates.
One of my staff was on benefits for her first few months here, we are not morally opposed to them at all, BUT:
1. It is pretty tricky to get rental income protection insurance for the landlord for the full rent where the tenant is on benefits.
2. Our ARLA/NFOPP training highlighted a clawback law to the effect that up to 6 years after a benefits fraud is discovered ... fraud could even be taking a part time cash job on the side & not telling the authorities ... then the whole amount of the benefit paid during the fraud period will be claimed back from whoever received it ..... so if the agent has the benefit paid directly into the agent's account, it is the agent, not the person who committed the fraud, who must repay the full amount.
3. Most benefits people don't have the money for a bond. Councils offer some form of notional bond but don't actually pay one, its just a vague promise to do the right thing. Anecdotally, as I have never risked it, it is sheer murder to get real money out of the Council where a benefit tenant has not left the property as they found it ... a great way for agents to lose reputation with landlords.
4. As tenants who have paid a bond out of tehir own money often leave a property worse than they found it, what chance the average benefits tenant who has NOT paid a bond being more responsible than a conventional tenant?
For me to be happy to take on Benefits we need proper rental protection insurance, a real bond paid by the tenant and not by the tax-payer, and penalties for committing benefits fraud falling on the person who committed the fraud and not on the estate agent or lanlord! Then, and only then, will i consider encouraging my landlords to consider benefits tenants ... whom morally I would like to help.
Strangely, one can tell 35% of the benefits tenants within seconds of them walking in the door .... a judgement I know but so many absolutely reek of cigarette smoke, have kids with arty names climbing in the display window or all over keyboards, and occasionally some sort of 'no its not a pit-bull, he's so gentle' tied up to the railings outside. Great.
My understanding is that we should always aim to place the strongest prospective tenant possible. In many cases benefits backed applications are simple not the strongest candidate. Our local authority are taking a minimum of 8 weeks to process applications so this places benefit backed applications at a disadvantage from the get go.