Hi, I've never rented to LHA tenants before, so where do I begin? The LHA rent is higher than privately renting in my area, so how do I do it? Is there a register or anything like that I need to be on, do I contact the council, or do I just place an advert for a tenant on gumtree, and then the rent part comes via them? Where do I start? Thanks.
LHA - How to get tenants
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In general, the tenant gets paid UC/LHA these days, not the landlord. The powers that be may well challenge claims that exceed the open market rent.
I would wonder if any arrangement that favours a rent set to the full allowance, when it is more than the market rent, might be treated as collusion by the landlord.
From your point of view, the only considerations should be whether rent you charge covers the increased risk of default (there will be a significant delay before you start getting direct payments), the difficulty you will have in evicting (councils will advise tenants to hang on until the bailiffs arrive), and that such tenants are statistically more likely to cause other problems.
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It's unusual for the LHA to be higher than market rents, but it can happen.
The thing to remember is that LHA is the maximum that a council will pay in Housing Benefit.
If the rent is lower then they only pay the rent amount, if the rent is higher then they only pay the LHA and the tenant makes up the difference.
If your rent is higher than other similar properties in the area then the council will be asking why, and checking if any fraud is going on.
Inflated rent to make money from the benefits system is benefit fraud.
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Originally posted by JK0 View PostLHA rates are higher to entrap gullible landlords. Don't be one of them.
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Before you make the quantum leap into letting to a LHA, check that your lenders is prepared to allow you to Let to such persons and importantly your insurers as many will not accept such Tenancy arrangements and if they do the premium will possibly be much higher.
I too find your assertions that the rate is higher than that for private renting given that the amount has been frozen for some period of time and shows no sign of this being relaxed.
Better safe than sorry.
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Originally posted by RayG View Post..... Sorry to say but benefit claimants pose a greater default risk and all L should be wary. ..............
Artful, 70, in receipt of 6 benefits thank you you generous taxpayers you....
I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...
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Originally posted by theartfullodger View PostThere are unsuitable tenants from the rich, the highly paid as well as benefit claiments.
It is a high risk market and landlords need to be 100% aware of what they are getting in to.
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Originally posted by nukecad View PostIt's unusual for the LHA to be higher than market rents, but it can happen.Originally posted by loanarranger View PostI too find your assertions that the rate is higher than that for private renting.
There are exceptions but generally speaking;
If you have a property that is in the lowest 1 percentile of market rates, charging a 30th percentile rent, it may be worthwhile doing.
If you have a property that is at the lowest 30th percentile of market rates and charging a 30th percentile rent then you are a mug (or very altruistic).
The skill comes in assessing and managing that risk between the two extremes.
IMO, when it was set at median rent (50th percentile) it was worth doing on some lower end properties, now it isn't.
If your rent is higher than other similar properties in the area then the council will be asking why, and checking if any fraud is going on.
Inflated rent to make money from the benefits system is benefit fraud
given that the amount has been frozen for some period of time and shows no sign of this being relaxed
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Interesting thread, but take this scenario (it is real btw).
A family of 5 with 1 working adult who earns over £40k per year. Renting a 2 bed property and the rent is not that high for the area. They still receive Housing Benefit, which currently covers 20% of their rental liability.
Their rent x salary is over 45x, which would more than satisfy any affordability checks.
Says something about the market when the above scenario means they are still in need of financial assistance.
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im a recent landlord letting through estate agents who will manage the rent. However the tennants who are moving in are on housing benefit and have been given housing benefit which is less a month than the rent. I know them well and they are prepared to pay the extra without the housing benefit and...18-01-2017, 23:13 PM
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