Council Direct Letting Scheme to LHA

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  • Council Direct Letting Scheme to LHA

    I've been a buy to let landlord now for about 3 years with a small studio flat. Whilst I've not made an outstanding profit I've managed to make ends meet and until recently was enjoying the additional capital gain.

    With the hike in interest rates I'm now looking to increase the income of my property by using the councils Direct Letting service where they supply a LHA tenant at no charge and then I do the leg work with the setting up the AST and property maintenance just as with a private tenant.

    The benefits is that I can get a good market rate and totally cut out agency fees, bring me back on track with my investment.

    I'd be interested from anyone who is on a similar scheme and if they can give me a steer on what to expect - from their own experience.

    Thanks
    Tripper

  • #2
    Hi Tripper

    This is def a viable option, however you really need to do your homework on any tenants you take on, i.e prev LL ref, proof of benefits etc.

    The Councils mission is to house their clients and discharge duty so they may not always have the LL best interest in heart.

    Saying that if you do your homework and choose the tenant your self rather than anyone the council send over you should be ok.

    Not sure what demand is like for Studios', but if you manage to find someone then you could profit as LHA doesn't difrenciate between STudios and 1 bed properties, you will automatically get a 1 bedroom flat/house rent.

    Hope this helps.

    Also most LA/Councils offer Finders Fee or incentives to landlord who use this service, typically 1 months rent (non-refudable), which borough is your property in. From my experience most LA's are looking for 2 beds.

    Comment


    • #3
      Thanks for this - its actually Brighton and Hove Council that I'll be dealing with.
      I'm told they have a demand for studio's but I guess I'll carry the risk with it being empty.

      As you mentioned I'll have to be careful on selection and make sure I get reference and proof of benefit etc.

      If anyone has any further criteria I should check (or details of there experience) then pleased to hear from you.

      Comment


      • #4
        Just wanted to pick this one up again. I'm now a the stage where the LA is introducing me to potentential tenants.
        Im just trying to put a check list together of checks that I should do. please feeling free to suggest some more
        • ask to see proof of benefits
        • reference from existing employee or previous landlord
        • ask for a gaurentor. (I can get a gaurentor form from this site, however does anyone know what checks I should get done with this information ? and how much should it cost)
        • should I also do any CCJ checks on the tenant.
        • Obtain an AST to use (whats the going rate for one of these £10 ?)


        This is my first time out of the hands of a private letting company, so any advice really appreciated.

        Comment


        • #5
          Originally posted by tripper View Post
          Just wanted to pick this one up again. I'm now a the stage where the LA is introducing me to potentential tenants.
          Im just trying to put a check list together of checks that I should do. please feeling free to suggest some more
          • ask to see proof of benefits Sounds like a good idea!
          • reference from existing employee or previous landlord Ditto - although you'll need to verify it isn't their Auntie Pam who's written it!
          • ask for a gaurentor. (I can get a gaurentor form from this site, however does anyone know what checks I should get done with this information ? and how much should it cost) The LLZ guarantor application form is very thorough; the agreement itself needs to be executed as a deed if it is to be watertight; before signing, guarantor must be sent a copy of the TA and given time to read it and seek independent legal advice if they wish. The deed must be witnessed.
          • should I also do any CCJ checks on the tenant. If you use the Tenant Verify service (advertised on LLZ) I think they do all that for you
          • Obtain an AST to use (whats the going rate for one of these £10 ?)
          The RLA one is good & downloadable for £5 or free if you join the RLA. (google RLA)

          This is my first time out of the hands of a private letting company, so any advice really appreciated.
          Good luck!
          'Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation fo the first link on one memorable day'. Charles Dickens, Great Expectations

          Comment


          • #6
            Thank you "mind the gap" this advice is really helping me. I have just a couple more questions.

            I've been sent a few people from the council approx 18 years old. The tenant that seems most appropriate is actually only 17. I've met him and his potential guarantor (his partner’s mother) and believe him to be a safe bet. (ie there’s no longer room at home and he's now been in an apprenticeship learning a trade for 6 months requiring some LHA assistance to get himself started)

            That said I need to be absolutely sure about this and have the following questions:

            Are you aware of the standard criteria that would normally be met before its decided that a guarantor is required?

            Is there usually any age restriction on AST's ie (under 18's) ?

            Should I be check the insurance of the freeholder (this is one flat of many) to check that under 18's can reside as tenants?

            Should I be looking at any other type of insurance so that I'm not liable for tenants injuries accidents etc.

            This may all sound a little belt and braces but I've found its better not to learn the hard way :-)

            Any help appreciated
            Thanks
            Tripper

            Comment


            • #7
              A minor cannot sign a valid AST. Not even with a guarantor.
              I offer no guarantee that anything I say is correct. wysiwyg

              Comment


              • #8
                By letting to an LHA tenant,the assumption is that there will be some reliance on HB.

                Be wary of the criteria used in the assessment of HB for under 25's. Quite simply, the law discriminates against such people.

                You need to find out how much the local housing allowance is. This is a comparitively straight forward exercise. There is otherwise the potential for a considerable shortfall in rental income.

                If you wish to consult with me, I will offer you some immediate advice.

                Michael Clayton
                (18years experience as a Housing Benefit professional)
                Michael Clayton

                Comment

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