with Accepting Housing Benefit in England and Wales
a landlord who owns a rental property this can be a very attractive proposition.
Rental paid by the local authority (Council), however there are many drawbacks
and a Housing Benefit tenant is often penalised before the process gets
under way. By
of all the local authority has the right to “claw back” rent several months after
it has been paid if they find that the tenant was not entitled to it. This means
the Landlord who has received a direct payment has to pay this back and “try”
to get it from his/her tenant. The same applies if a professional letting agent
is involved and the rent is paid to the agent. The Agent would have to cover themselves
in their terms of business and make the Landlord reimburse them. This usually
puts many agents off from accepting these payments.
the payment is made to the tenant direct. Sounds much better in theory, because
if the claw back mechanism is used the tenant has to pay this back. The downside
to this is that a) the tenant might not pay over the rent and spend it on other
needs and if they suddenly have to reimburse the Council, they could have difficulty
in paying future rent.
local authority payments are also often four weeks in arrears and this is not
so good for a landlord who likes to have the rent coming in one month in advance.
owner of the property has taken out Legal Protection Insurance or a Rent Guarantee
Policy. Unfortunately these do not normally work if the application has not been
satisfactorily referenced. If the Tenant was working from the start was satisfactorily
reverenced and lost his/her job etc, then this could be a different scenario,
however most of these types of policies require sufficient income to cover the
rent or a lump sum in advance and this will not normally work with Housing Benefit.
This now means that the property owner cannot rely on the insurance policy to
obtain the rental arrears or even possession.
the end of a tenancy the Landlord might need the property back – returning owner-occupier.
Etc. The tenant might be very happy to leave, however if he/she moves out and
requires local authority accommodation the Tenant has made herself/himself intentionally
homeless. The Local Authority would put the tenant/s right down on the housing
waiting list. The alternative would be for the Tenant/s to wait for a court order
to be evicted.
often take a couple of months to arrange and can cost several hundred pounds in
legal fees. At the same time rental arrears could be mounting up. You cannot often
even use the deposit to offset some of the rent (assuming that there is no damage)
as many local authorities no longer fund a deposit but have set up a deposit guarantee
scheme whereby instead of paying a deposit they will guarantee a “paper” deposit.
Housing Benefit is not always an attractive proposition.
Suter is a Director of JML Property Services, http://www.jmlproperty.co.uk
a UK based company offering property rentals in Berkshire and Buckinghamshire,
England and a self catering vacation home advertising service - http://www.jmlvillas.com
and management training within the uk. He is a very experienced property consultant
with over 30 years work in the Residential letting business and served in the
national council of The Association of Residential Letting Agents (ARLA). He is
a Fellow of the National Association of Estate Agents (NAEA) and a Member of The
association of Residential Letting Agents
Suter jml Property Services January 2006
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