Most letting agents and many private landlords refuse to let to people claiming benefits. Yet they may well be letting to tenants claiming benefits without ever knowing anything about it.
In this article I hope to provide enough information that will mean you look more thoughtfully before ruling out a tenancy application from someone in receipt of benefits.
It is so easy to say benefit claimers are a problem – but is it right? In my experience the majority are not a problem. Tenancy issues are not just related to those claiming benefits. There are issues with all types of tenants including employed (high medium and low income), corporate and students.
All landlords really want just 2 simple things from a tenant;
1) they pay their rent
2) they look after the property
Important points to consider
- A tenancy with a tenant claiming benefit may run for a much longer term reducing lost rent between tenancies.
- A tenant in receipt of disability allowances may not be means tested.
- It is much safer to let my property to someone who is employed. So many issues can arise during the tenancy such as; redundancy, separation, road accident, sickness with no pay and more. If one of these unfortunate situations occurs to your tenant it is highly likely they will have to claim benefits.
- Local Housing Allowance (the housing benefit) is not guaranteed. It is an award made to a claimant based on circumstances and reviewed at times. Claimant’s circumstances change and so can LHA rates.
Methods you can use that will help protect your rental income
- Ask the applicant if they have a relative or friend who will stand as a guarantor.
- Ask the guarantor to agree to pay you the rent monthly in advance (the tenant claimant can reimburse the guarantor when the LHA has been paid)
- If they do not have a guarantor arrange with the tenant for the LHA payments to be made to a credit union for onward payment to you.
- Arrange a time to visit the applicant at their current home to see how they live.
- Speak to or even better visit their current landlord (or agent) and find out why they are moving and how they have conducted themselves during the tenancy.
I hope this will help you see letting to someone who is a benefit claimant is not necessarily going to be any more problematic than it is letting to employed renters.
Take care to ensure you get advice from a professional letting agent in the selection, marketing and management of your investments. Check to see if the agent is a member of the Safe Agent scheme or a member of ARLA (Association of Residential Lettings Agents). It is a requirement for a member of Safe Agent and ARLA to have Client Money Protection and have their accounts audited annually.
If you are considering using an agent that isn’t a member of Safe Agent or ARLA ask yourself a question – would you visit a doctor who wasn’t qualified?
This article was prepared and written by Terry Lucking owner of Belvoir Lettings Peterborough and Cambridge. Terry offers free buy to let advice and free property visits to all investors who are considering buying property in Peterborough.
