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Problems
with Accepting Housing Benefit in England and Wales
For
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.
First
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.
Alternatively
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.
These
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.
The
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.
At
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.
These
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.
Unfortunately
Housing Benefit is not always an attractive proposition.
Philip
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
©Philip
Suter jml Property Services January 2006
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See
also
Part
"P" Building Regulations (Electrical Safety in Dwellings)
england and Wales Click
Here
See
Also Condensation Click
Here
Buy to Let Click
Here
Inventories
in the UK Click
Here
Housing
Act 2004 Click
Here
Tenancy
Deposit Protection Scheme Click
Here
See
also:
Statutory
code of Practise on racial equality in housing
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