The Public Liability Insurance Blog

Renting to tenants on housing benefits

This is a guest post from Urban Sales and Lettings.

As an online estate agent, we often receive questions from our landlords on renting to tenants who are claiming housing benefits. Essentially it is completely at your own discretion whether you choose to let your property to tenants in receipt of benefits, just be mindful not to miss out on good tenants due to stereotyping.

EvictionSome of the main reasons landlords and estate agents avoid letting to tenants receiving help from the government to pay their rent are:

Deposits: Tenants relying on housing benefits are often not in the financial position to provide a landlord with a deposit. In some cases local councils can assist with this although the process can be lengthy and therefore off-putting to some landlords/letting agents.

Mortgage T&C’s: Within the terms and conditions of some buy-to-let mortgages landlords are prohibited from letting to tenants who receive any form of income support or housing benefit payment from the government.

Insurance Policies: In some instances insurance premiums can be higher should a landlord rent to a tenant claiming housing benefit. Some companies will refuse to insure a property altogether although this is not standard industry practice.

Confusing Administration: Administration of assistance can, depending on the council, be a slow process involving large amounts of paperwork. The fact that councils retain the right to attempt to obtain fraudulently claimed rent back from the landlord, even if the landlord was unaware the tenant was claiming fraudulently is often a major factor in a landlord’s decision. These considerations coupled with the many amendments which have been made to the housing benefit system over the last four years has resulted in many landlords feeling that letting to tenants claiming housing benefit will be too time consuming and potentially problematic.

Stereotyping: There does exist a small minority of landlords who do not wish to let to tenants in receipt of housing benefit as they personally believe the risk to their property may be higher.

Aki Ellahi Director of Rent Me Now states “Research shows that people on housing benefit regard the place they live as a permanent rather than a short-term let; one of our tenants has just celebrated 34 years living in the same property. With the economy still struggling to pull itself out of recession, landlords and letting agents should put their prejudices aside and ask themselves the question: can I continue to ignore such a substantial part of the private rented sector?”

As with any tenants, if you decide to rent your property to someone receiving housing benefits it’s essential to carry out the relevant checks.

Partial and entire assistance

House Icon onlineIf your tenant is claiming benefits depending on their personal circumstances they could be entitled to partial or entire assistance. Either way, as the landlord of the property there are steps you can take which will help speed up the process of claiming. Keep in mind it is vital you have all the information that will be required in order to avoid unnecessary delays to the application.

To ensure claiming housing benefits goes as smoothly and quickly as possible make sure you following the following steps:

Put the application in early: The housing benefit application should be submitted in advance of the tenant’s proposed move in date. Claims cannot usually be backdated to before the application was made so sidestep potential problems by being organized.

Ensure all documents are in order: Again, organization is the key here, housing benefit officers will require all original documents including the tenancy agreement, so be sure to have them all sent off promptly.

Have a letter of authority signed by your tenants: Generally tenants will be required to sign a letter of authority; this authorizes the housing benefit office to provide relevant information to the landlord. This may seem a small detail but unless it is completed the housing benefit officers will be unable to supply you with information regarding the progress of the application under the Data Protection Act.

Offer your tenants assistance: Tenants with language or literacy issues may appreciate your assistance with completing the application form. If you provide help in this way you will need to state you have done so.

Ensure the rental figure is correct: Remember that claims are limited to an allowable rent for each tenant. For instance; a single parent with one child will require a two bed property. Should this tenant claim for a three or four bed property they will receive benefit only to the value of the two bed property deemed suitable, any difference in rent will need to be made up personally. This situation could potentially lead to rent arrears so be certain you know your property is suitable for the tenant applying.

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