HB tenant

[chickpea]

Hi guys,

A few months ago, I posted on here that my husband and I were thinking about buying a buy-to-let and what should we be aware of.

Thanks to loads of good advice, we completed on the house purchase last week.

The story is this -

We've decided to use a letting agency to manage the house. We signed their contract, answering the question of whether we'd let to people on housing benefit with NO.

The house went onto Rightmove a few days ago, stating "no HB".

Straight away, we got a request for a viewing, which took place yesterday. Because we've only had the house a week, we haven't had chance to get keys cut for the agents, so I had to go to the house to let them and the people viewing in.

It was a young couple, who seemed very keen on the house.

Later on the same day, the agents rang me to book 2 other viewings for Monday.

We went to the house today to do some painting, and a letter had been put through the door. It was from the girl who viewed yesterday, saying she had some questions and could we please ring her. So, we did - but she wasn't able to talk, she said, so could she ring us later on this evening.

About 2 hours later, there was a knock at the door and it was her. We invited her in, at which point she informed us that she is a single mum on benefits, with no job. She told us her whole life story - the fact that she got pregnant in her first year at university, had her son and was then left by his father, stayed at uni while holding down a 16 hour a week job, made herself ill with the pressure so had to give up the job on the advice of her GP, and has finally graduated this summer.

She hopes to get a job very soon, but in the meantime, she is confident that she can afford to rent our property.

She says she is currently on HB, paying rent on a house her mother owns (but doesn't live in). The house is too big for her and she would be saving money if she downsized to ours. Her father would be her guarantor.

My issues are these -

Why did the agent allow her to view, if they knew she was on HB - and if they didn't know, why not?

Is a HB tenant more of a risk than a professional?

Is she actually a better proposition, since she says she is very keen to find a property where she will be able to stay for a couple of years - not one where the landlord will be selling up, just as her son has got settled?

It feels like such a heart v. head decision.

On the one hand, it HAS to work financially for us. On the other, she appears to be a young woman who needs a break and a chance to make a go of things, for herself and her son.

I, maybe naively, thought being a landlord would simply be a case of hoping to find nice tenants, checked out by the agents we're paying - I never thought we'd have to make an emotional decision about who lives in our property.

[Richlist]

When you received loads of good advice it presumably didn't include my list of recommendations.......I've posted it below.

Employing an agent doesn't mean they will do what you want them to do or even that they will do what they say they will do.....it should but it doesn't always work like that. There are good and bad agents and you need to check what they are doing and not assume everything will be alright because you are paying them......there are no guaratees in life except death and taxes. No 12 below covers this point.

NEVER get emotionally involved with tenants.....its a business, there is no room for it. No 17 below covers this point.

1. Get References.....bank, employer and previous landlord.

2. Take out rent guarantee insurance.....it’s not expensive.

3. Get a home owning guarantor. Carry out reference checks on the guarantor. Give the guarantor a copy of the AST. Make sure the guarantor document is drawn up as a deed.

4. Don't let to people with pets or children......the risk of them giving you problems are big.

5. Don’t let to anyone under 18 (minors). Draw up your own limits….I prefer nobody under 25.

6. Don't let to smokers........you won't get rid of the smell.

7. Don’t do Company lets.

8. Don’t let to anyone on Housing Benefits.

8a. If you do choose to let to applicants on Housing Benefit CHECK that your mortgage & freeholder (if your property is leasehold) allows it.

9. Don't let to anyone who isn't working full time.

10. Inspect properties every 3 months.

11. Only let initially on a 6 month AST.....that way you can both part company after 6 months if you don't get on.

12. Use a reputable Lettings Agent OR one who has been recommended OR do it yourself (only if you know what to do).

13. Meet your tenants personally. Make sure you ask all the right questions and gauge whether they are right for you.

14. Protect the deposit in one of the official schemes.

14a. If you have a dispute with your tenant(s) over deductions from the deposit remember…..you can either go through the DPS adjudication process OR take the tenant to the Small Claims Court for recovery of your losses where you may have a better chance of success.

15. Issue a section 21 notice as soon as the deposit has been protected.

16. Make sure there is a detailed inventory & schedule of condition……signed by both parties.

17. Remember its a business....so avoid emotion & being overly sympathetic to your tenants.

18. Read as much as you can about renting & letting i.e. educate yourself.

19. Don’t let to anyone who doesn’t speak or understand English.

20. Don’t forget that you will need an Energy Performance Certificate (EPC)…….before you market the property.

21. Don’t forget to get an annual Gas Certificate.

22. You are responsible for ensuring anything electrical in the property is safe so consider getting the electrics checked professionally….and any appliances you provide.

23. Try to avoid having your property classified as an HMO……meeting regulations is expensive and time consuming.

24. Make sure all adults living at the property are on the AST & any other documents.

25. Minimize your income tax liability by claiming all the expenses you are entitled to…..most people don’t and therefore pay more tax than they should.

26. If one of the owners is a higher rate tax payer consider splitting the beneficial income other than 50:50 to take advantage of the lower tax payer rate.

27. Keep all capital expenditure receipts/ invoices to minimize CGT liability on disposal.

[Grampa]

She may not have told the agent she was on benefits. That does happen but ask the agent and chew his ear off about it..

Housing benefit tenants are not the best tenants for first time landlords because there is so much more to consider but if you do go with her you need to:

1 call your local benefit office to find out what they pay for a single mum with one kid because you may find the rate is lower that what you want to rent the property out for

2 Get first months rent inadvance

3 Get a cash deposit (not a council deposit bond)

4 Get a home owning guarantor and check on the land registry website that they do actually own the property.

5 Make sure the guarantor doc is drawn up as a deed.

6 Get the tenant to sign a letter giving authority for her benefit claim to be discussed with you. This then goes to the council and if there are any delays in payments you can phone up and find out the reasons.

7 Dont rent to a benefit tenant if the rent is more that then they are intitled to in benefits because you will spend a long time chasing for a shortfall each month no matter what promises you get at the start.

8 Optional: Make it a condition of granting a tenancy that any benefit is paid direct to you from the council. You may have to contact the council to confirm because you and the tenant sign on the dotted line

Having the payments direct to you has its pro and cons.

Pro's

1 You get the funds straight away

2 You find out if there is a problem with the claim straightway.

3 You can sometimes inflate the rental price to the limit they pay for for the tenants situation and therefore get a higher rent in.

Con's

1 The payments will be 2 or 4 weekly but it is best to keep the contract pcm so best to keep record on spread sheet

2 If there is a overpayment the council may ask you to repay as you recieved the funds. But a correctly worded letter tothe council normally sends them after tenant.

3 Payments always in arrears (thats why the 1st months rent is paid in advance)

4 More wear and tear on the property because the tenant is at home all day.

The above is on top of all the normall checks you would do on a tenant.

[Melboy]

You will get the simpliest of an answer from me Tracy.......No. Do not rent to this person. You are not social services in the the guise of a landlord.

All the comments that have previously been made should be uppermost in your mind.

Mel.

[chickpea]

Thanks for the replies.

Richlist, I did have your list of do's and don'ts - hence why we said no HB (and were thinking no children). The agent forgot to mention she was both.

I would choose not to get emotionally involved every time, but seemingly that has been thrust upon us - it's very difficult when you've had someone turn up on your doorstep with their life story.

I have asked around a large cross-section of my friends - the landlrds among them say step away, the people who have been in exactly her position have told me that they would have done anything to find a landlord willing to give them a chance. It's difficult not to think "there but for the grace of God"; I have 2 young children myself.

I've looked into all the info I can find on HB tenants and my gut says it's a bigger headache than we need right now. If the HB is paid directly to her, she may choose not to pay us...if it is paid directly to us and her circumstances change without her informing them, we'll be liable for the overpayments. I'm not sure what info the agency would be able to get on her, since I've read that the HB people are bound by Data Protection? Besides which, she appears to have been renting from her mother - so a landlord reference is hardly going to be unbiased!

I am also concerned that she may get a job that pays enough to get her off HB, but is not enough to allow her to afford the rent.

Ultimately, if our mortgage provider/insurers don't allow for HB tenants, the decision's an easy one.

She sent us a text late last night, thanking us for taking the time to talk to her and saying she could think of nothing else but whether she'd get the house. Hubby sees it as pushy...I'm trying to stop myself from seeing it as someone who really, really wants the house.

[Grampa]

Never be pushed by a tenant go at your own pace.

If a HB tenant starts working and the landlord is getting the payment direct. It seems to be the first option for councils to try and get the payments back from the landlord. But if you didnt know there was a change in the tenants situation they cant make you repay it is down to the person who has witheld a material fact which would be the tenant.

They ask the L/L first because they think they have more chance of recoving the funds from the L/L and a lot of L/L just pay up without questioning it.

[chickpea]

Grampa - one of the advice sites I looked at last night, said that landlords must always remember that their contract is with the tenant, NOT the council and we would have to pay the claw-back to the council and then try to recover the losses from the tenant.

Am I also right in thinking that we can only change the payment arrangements with her say-so? Reading between the lines, it seems to be very much in the HB tenants favour.

I don't even know why I'm letting this get to me, when it seems we have people queuing up to take the property!

[Melboy]

You say......

If the HB is paid directly to her, she may choose not to pay us...if it is paid directly to us and her circumstances change without her informing them, we'll be liable for the overpayments. I'm not sure what info the agency would be able to get on her, since I've read that the HB people are bound by Data Protection? Besides which, she appears to have been renting from her mother - so a landlord reference is hardly going to be unbiased!

I am also concerned that she may get a job that pays enough to get her off HB, but is not enough to allow her to afford the rent.

Ultimately, if our mortgage provider/insurers don't allow for HB tenants, the decision's an easy one.

Hubby sees it as pushy.

There! You have answered your own questions Tracy.

Just to be a 100% certain why did she not tell the LA she was DSS? Did the LA know she was DSS? If the LA tells you that she did not reveal this DSS information to them that is a clincher isn't it? Anyway apart from that scenario I still wouldn't take her on.

It's a tough old world out there Tracy and that is why they have Social Services to look after people like this person..... and they get paid for doing so.

Mel.

[chickpea]

You say......

If the HB is paid directly to her, she may choose not to pay us...if it is paid directly to us and her circumstances change without her informing them, we'll be liable for the overpayments. I'm not sure what info the agency would be able to get on her, since I've read that the HB people are bound by Data Protection? Besides which, she appears to have been renting from her mother - so a landlord reference is hardly going to be unbiased!

I am also concerned that she may get a job that pays enough to get her off HB, but is not enough to allow her to afford the rent.

Ultimately, if our mortgage provider/insurers don't allow for HB tenants, the decision's an easy one.

Hubby sees it as pushy.

There! You have answered your own questions Tracy.

Just to be a 100% certain why did she not tell the LA she was DSS? Did the LA know she was DSS? If the LA tells you that she did not reveal this DSS information to them that is a clincher isn't it? Anyway apart from that scenario I still wouldn't take her on.

It's a tough old world out there Tracy and that is why they have Social Services to look after people like this person..... and they get paid for doing so.

Mel.

I know, I know...head very much says DON'T DO IT! Heart says think carefully. But you make a good point about social services, Mel - and I have to remember that she has 2 parents with 3 houses between them, so not exactly homeless.

She told us yesterday that she was going to talk to the LA, but chose not to because she was worried they wuld twist her story when they relayed it back to us. She said she was ashmed t have t say she was on benefits, and that people only had the stereotype to go on.

I'm 99% decided that she's a no go. Of course, it would be so much easier if she hadn't been first through the door and I hadn't met her. I'm going to talk to the LA first thing tomorrow, to tell them what's happened and make sure it doesn't happen again - not a great start t things.

[Carryon Regardless]

Tracey you wouldn't believe the problems I am having in life at the moment. I am so working hard to overcome all the issues that keep appearing from no where, but it is all so overbearing.

I am sure that the future will be easier if I can only see a way to get there, oh oh it's hard.

The beautiful person that you are I am sure you would like to help me, and if you could just send me a couple of hundred quid it 'will' make all the difference and restore my faith in human nature. And imagine how special you will feel for involveing yourself in my problems enough to sort out my problems.

Bless you.

By the way I know a Somalian who wants your bank details.

[chickpea]

Tracey you wouldn't believe the problems I am having in life at the moment. I am so working hard to overcome all the issues that keep appearing from no where, but it is all so overbearing.

I am sure that the future will be easier if I can only see a way to get there, oh oh it's hard.

The beautiful person that you are I am sure you would like to help me, and if you could just send me a couple of hundred quid it 'will' make all the difference and restore my faith in human nature. And imagine how special you will feel for involveing yourself in my problems enough to sort out my problems.

Bless you.

By the way I know a Somalian who wants your bank details.

Ok, I get the picture - I'm a fool.

[Carryon Regardless]

Just naively lining yourself up for abuse, many of which we see here.

[Richlist]

No you are not a fool......you are just making the same mistakes as many before you..

BUT, you do have to separate emotion from business.

Just say NO. Practice it a few times and then telephone your agent saying:-

1. I don't let to benefits tenants or people with children. Please inform Miss XX of that fact.

2. You already knew this so why did you send her to view the property ?

3. Can you confirm that in future you will ONLY send people who meet my selection criteria ?

In the agents defence.....I do know from my own experiences that agents who handle many hundreds of properties/ landlords all with different criteria are occasionally going to get it wrong. So, provided their response is appropriate then a little flexibility wont go amiss. Everyone is entitled to make at least one small mistake.

[Grampa]

Grampa - one of the advice sites I looked at last night, said that landlords must always remember that their contract is with the tenant, NOT the council and we would have to pay the claw-back to the council and then try to recover the losses from the tenant.

Am I also right in thinking that we can only change the payment arrangements with her say-so? Reading between the lines, it seems to be very much in the HB tenants favour.

I don't even know why I'm letting this get to me, when it seems we have people queuing up to take the property!

First off I agree with the others dont take this person on as a tenant as you dont need to.

Regarding the above post yes the L/L has a contract with the tenant not the council but speaking as someone who recieves about 25k per month direct from from the council and have at a guess about the same where the tenants get the benefit themselves (not even counting working tenants) i have had a little bit of experinance with dealing with the council.

Too many landlords just roll over and pay the council when asked but if you were not aware of any change to the tenant they CANNOT make you pay. The only time I have to repay now is if the council pay me for a period after the tenant vacated the property and the council havent stopped the payment in time.

[weenie]

I think a point to remember is that if you say 'no', there will be another landlord who will say 'yes' because they don't mind DSS.

It's not as if you will leave her and child begging on the streets if you use common sense and say 'no'.

[chickpea]

After all that, the decision was never ours to make - our mortgage provider doesn't allow us to have tenants on HB.

I've now spoken to the agency and made very clear that they are not to give viewings to anyone on HB - problem solved!

[Carryon Regardless]

I often use insurance restrictions a polite excuse for refusal.

[Richlist]

......and I always advertise the fact that I do not accept tenants on benefits.

Some of them appear to have difficulty reading or understanding this simple requiremrent because I still get applicants enquiring if the property is still available.

I never resort to making polite excuses instead I tell them exactly how it is.

The same goes for people with cats & dogs (or worse), the unemployed, under 21's and smokers along with a long list of other groups I don't rent to.

[Carryon Regardless]

I have so much to learn,

I, I just thought like that f' off scumbag could mean busted windows while I drive home.

[grouse]

She says she is currently on HB, paying rent on a house her mother owns (but doesn't live in). The house is too big for her and she would be saving money if she downsized to ours. Her father would be her guarantor.

This is the bit that would make me suspicious,

I didn't think you could rent to your own children if they were claiming HB..........

[zak100]

I did rent out to a DSS person (who was virtually begging me). Initially, the rent was not coming in full. I would get about 75%. The excuse was always things like bills and other issues. I informed the council, who subsequently paid me direct into an account.

The tenant then found a job and now pays rent.

The tenant has been in the house for about 4 years. We are friendly and respect each other.

I did get emotionally involved, which probably was an error on my side; but, it fortunately worked out.

I know BTL is a business, but I can't help thinking that tenants are human beings....they are aren't they!

[Richlist]

but I can't help thinking that tenants are human beings....they are aren't they!

No, I'd describe them as scum.

Tenants are a lot of things.....including:-

1. The biggest risk to your wealth that you are likely to meet.

2. Your worst nightmare.

3. Every problem you have ever had can manifest itself in your tenant.

Some are not worthy of being described as human beings.......especially

1. Those that don't pay rent......expecting something for nothing

2. Those that wilfully damage/ trash a property.

3. Those that choose to ignore the rules.

But I sleep better knowing that I can avoid these wasters because they can always find gullible people around who will fall for their lies, take pity and become emotionally involved.

[Grampa]

Come on Richlist dont sit on the fence say what you mean.

[Richlist]

Yes sorry, I did tone it down a little and then felt somewhat embarresed because I hadn't said what I really think about tenants.

I'm sure someone else will be along shortly to balance the argument.

[Chestnut]

Our tenants are our customers!

Looking after the pockets of their landlords is not their top priority, particularly after reading such comment on a forum.