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24th August 2018

Letting agents turn away tenants on housing benefits

Wow – Can you believe that the press wants to blame the letting agents!

I have found 3 types of letting agents out there: -

  1. The agent that does not deal with LHA tenants
  2. The agent that deals with LHA if the landlords are happy to let to LHA tenants
  3. The agent focuses with LHA tenants and they become good at it

As a landlord you can get confused as to what is the best option for you. So many landlords will simply not deal with LHA tenants and there are others that would be very happy having LHA tenants. After all a good portfolio is a balanced portfolio and when the next global resection hits people already on benefit don’t lose their jobs!

There is a genuine fear that having LHA tenants, greatly increases your risk of having your house wrecked and smashed up or used as a drugs den or brothel. On top of those concerns there is the fear that the tenant will prioritize alcohol, drugs or cigarettes over paying their rent.

And the other consideration is the implementation of ‘Universal Credit’. Specifically designed to leave claimants with no money to pay anyone for 6 to 8 weeks and no way to catch up with the arrears this loss of money has caused. Our own government thinks this is an ok way to treat everyone involved.

The consequences of any of these issues happening, to you, the landlord can be significant, however not a for gone conclusion. Many people that are in receipt of LHA payments are upstanding members of society and would never act in these ways. They often make great long-term tenants that stay in one place for many, many years with not issues.

If you do get a bad tenant, not only will you still have to pay your mortgage while not getting any rent payments, there is the additional cost of refurbishment, bailiffs, and eviction specialists. This can eliminate any profit from your investment for quite some time. Not surprising then, that there are issues in this area.

All of these issues are genuine concerns and there is a bigger risk (in my view) of this happening if you take on LHA tenants. So how do you reduce the rick? You need to use a specialist letting agency or consider letting your house to a charity and they deal with the day to day running of the property.

But this does not change the main issue as to why landlords don’t let to LHA tenants. It is because so many mortgage lenders and Buy To Let insurers will not insure you or allow you to let your property to LHA tenants. And there appears to be little or no pressure being put on the institutions to put this right.

If, as a country we need to get past this obstacle I would suggest we look at implementing several measures.

  1. Create a national list of tenants that are not appropriate for the Private Rental Sector.
  2. The offenders on the list are offered housing by the government.
  3. Outlaw the implementation of ‘clauses’ in the insurance company’s and Mortgage companies that restrict landlords trade. Making it an offence to blanket ban any groups from society.
  4. Allow swift and easy execution of a ‘section 8 fault notice’ allowing eviction within a week.

We would welcome your thoughts!