Pro's and Con's of HB/DSS tenants?

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  • Pro's and Con's of HB/DSS tenants?

    Hi Folks,

    I have had an enquiry for my apartment from a lady who asked me do i accept DSS?
    I wonder can someone give me an overview of the situation with HB/DSS tenants and the potential problems?
    Do they receive their benefit themselves, or does it get paid direct to me?

    thanks.

  • #2
    They receive their benefit themselves.
    When I received LHA ( DSS ) You had a choice tobe paid yourself
    or to the landlord.
    Now it is paid direct to the tenant, who, if he wishes to spend it
    on a 1 mile wide plasma T.V. ( save hisrent to pay for it ) then
    that is what he can do.
    As a DSS has no savings, you will not get any rent due if he
    chooses not to pay rent from month 2.

    Rules are about to change, in that only in exceptional cases, can
    the rent be paid to the landlord ( provable - cannot handle cash /
    mental deficiancy / has a care worker. Things on those lines )

    Remember the tenant is responsible for paying the rent.
    Where he gets that money is not your concern, except that
    there is a cap / tables for each area, and you will find the DSS
    payout will be less than your rent.
    ( Due to house prices still overpriced, whatever you buy )

    Even though I was a model DSS tenant, I recommend not to
    consider DSS, mainly because if theydont pay the rent for 6 months,
    there is no way you can get it back.

    R.a.M.

    Comment


    • #3
      If you don't understand housing benefit, I advise you not to take on a tenant who is on it.
      Allow tenants to protect their own deposits. I want free money when they do it wrong

      Comment


      • #4
        Originally posted by ram View Post
        if they don't pay the rent for 6 months,
        there is no way you can get it back.
        Correction.

        You -can- get the rent back via ccj, but 6 months rent of £ 3000
        and tenant has no money, and has to do without some food in order
        to top up paying rent at next place as the DSS money is £ 50 a
        month short, You will be lucky toget £ 5 per week from them
        in repayments.

        That's 50 years for them to pay back £ 3000 !
        And for you to get the rent owing back.

        Above is the worst condition, and as I said, there ARE model
        L.H.A. tenants out there, but unless you are good at weighing
        people up, steer clear.

        Read the posts on here, go back a few years.
        On the bottom of the screen when you are looking at a post, there
        are / maybe suggestions to similar posts and are worth reading.

        R.a.M.

        Comment


        • #5
          I have written this webpage which you may find useful http://tenancyanswers.ucoz.com/index..._benefits/0-54

          The first thing to do is to NOT forget to carry out full referencing and credit checks on your tenants. This is likely to show if your tenant has previously defaulted on rent, or any orther recorded debt. If you do these checks yourself, it is worth questioning the 'last but one' landlord. The current landlord may have a vested interest in giving a good reference to get rid of non-paying tenants.

          A deposit is essential in all cases. As your tenant is on benefits, they are unlikely to have a large amount available for a deposit - and yet their lack of assets is the very reason you need as large a deposit as possible. It is probably cheaper to wait for a tenant with a suitable deposit than run the risk of a tenant running up a large rent debt, and not being able to obtain a penny through the courts.

          A guarantor is also highly advisable. The guarantor will be expected to cover any bills that the tenant can not pay. In view of this, your tenants guarantor should be a creditworthy homeowner, preferably working full time. The guarantor should be credit checked. If the guarantor is a homeowner, they are less likely to move - making them easier to find - and they have an asset that you can place a charge on if a court order is made against them

          Comment


          • #6
            Agreed with Snorkerz.

            Housing benefit tenants can be very problematic since they are always paying in arrears and the councils tent to delay payments etc. The tenant is typically paid directly , but there is a regulation which I share in these forums and which I got from DWP that is worthwhile considering

            ''If the tenant builds up rent arrears of eight weeks or more, the local
            authority is required to make direct payments to the landlord under HB
            Reg 95 (1)(b) and HB(SPC) Reg 76(1)(b) unless it is in the overriding
            interests of the tenant. Rent is in arrears once the payment date is passed regardless of this date being set in advance or arrears''.

            HB tenants can attract much higher insurance premiums so be aware of this as well. If you are going to consider one always credit check them and get guarantoors to support their tenancy.

            Depending on the market you are targetting in your area it maybe wise to target tenants that can afford to pay you as opposed to HB tenants. The cost of evicting someone in HB and recovering your money (almost impossible without guarantoor) can be very high.

            Comment


            • #7
              Please please please do not accept them. I did and i am paying the price they know how to play the justice system and when they complained about things not working we sent our handyman to deal with it and they wouldnt let us in. We had to get HSE etc involved so it was all logged. They then took us to court for work not done but we cant afford to fight them in court as we dont have legal aid and they do. DOnt do it and get legal landlords insurance this has cost us so much money and we didnt do anything wrong!

              Comment


              • #8
                Originally posted by ruddy345 View Post
                Please please please do not accept them. I did and i am paying the price they know how to play the justice system and when they complained about things not working we sent our handyman to deal with it and they wouldnt let us in. We had to get HSE etc involved so it was all logged. They then took us to court for work not done but we cant afford to fight them in court as we dont have legal aid and they do. DOnt do it and get legal landlords insurance this has cost us so much money and we didnt do anything wrong!
                This is one specific tenant. There are bad tenants of every financial status.

                I am 100% sure that ruddy345 didn't do anything wrong - but maybe with the benefit of hindsight, the problems were caused by what he didn't do - he mentions legal insurance himself, but as in any business (and this is a business) it is all about managing the risks. Hence my advice above about checks/deposits / guarantors etc.

                Comment


                • #9
                  Having rent guarantee insurance manages some of the risks for not paying tenants. But it also highlights that stricter , perhaps more enhanced credit checks have to be carried out. Its definitely all about risk management and as Snorkerz says there is no way to predict what your tenants could turn around to be in a few months time even if they seem the best people in the world to begin with. Imagine a working couple living in your property who then splits and their disagreements, divorce etc etc strains them financially. I saw these incidents before and the landlords somehow take the hit.

                  The issue in my view with tenants on benefits is that they are MUCH HIGHER risk to begin with which has to somehow be controlled. If you have guarantoors and they all pass the credit checks then the risk can be more manageable. From my experience HSS tenants also tent to eventually want re-housing by the coucnil in which case they may welcome an eviction (probably not via section 8 for rent arrears). You have to balance the risks, most professional agents will tell you to keep away from them to begin with unless you have solid guarantees to accept them.

                  The other question you should ask yourself: Are you happy with the rent being paid always in arrears and not in advance?

                  Comment


                  • #10
                    After my own experience with DSS, my preference is not to take them again. Even if you are lucky to have a decent tenant - the amount of times the HB department stop and restart payments whilst awaiting documentation or if the tenant goes on a course, or the slightest change in circumstances etc causes absolute havoc with cash-flow.

                    There were times my tenant was 3 1/2 months in rent arrears, and then all of a sudden you'd get a big check, followed by a month of rent paid on time, only for HB to be suspended yet again and arrears build up. Its a LOT of hassle dealing with HB tenants.

                    Comment


                    • #11
                      Originally posted by Claymore View Post
                      After my own experience with DSS, my preference is not to take them again. Even if you are lucky to have a decent tenant - the amount of times the HB department stop and restart payments whilst awaiting documentation or if the tenant goes on a course, or the slightest change in circumstances etc causes absolute havoc with cash-flow.

                      There were times my tenant was 3 1/2 months in rent arrears, and then all of a sudden you'd get a big check, followed by a month of rent paid on time, only for HB to be suspended yet again and arrears build up. Its a LOT of hassle dealing with HB tenants.
                      I somewhat agree, I have been on and off benefits for years and my current landlord got the payments got paid to him as officially I was 8 weeks in arrears, in reality it was just someone had wrongfully told them I was still in education so they wanted proof them messed me around getting the claim reopened and I was literally 1 month behind but as rent is due in advance it showed as 2 months.

                      Being a reasonable but not perfect rent paying tenant myself I find it hard enough as is to find a property as cant afford to pay 1 month in advance, moving costs etc without getting my deposit back, I am the sort of person who at most pays rent a few days early or late depending on when I get a chance to pay the rent, when I had a agency that was literally 2 minutes walk from house it was always early

                      Working tenants are only better in that respect that they are more likely to have savings but that doesn't mean they will, an ex landlord of mine had a working tenant owe about 5 months rent then found out the person owned their own home in London but claimed they were poor! or many places I have shared the working tenants were the ones that paid late as they partied and didn't have enough for rent, or didn't find it worthwhile.

                      Essentially bad tenants are bad tenants, its just benefit claimants are lowest someone can go therefore thats where many of the bad ones are if working tenants were much better than this site wouldnt exist!

                      Comment


                      • #12
                        My gripe with HB isn't so much the tenants, but the system which supports the payments. It's one massive headache.

                        And yes I agree that bad tenants are bad tenants and they can be HB or working.

                        Comment


                        • #13
                          As a Landlord on LHA myself, I have a sympathy with other LHA tenants, but the problem is simple.

                          If they don't pay, then you won't get your money back as the system in place enables people with no morales to simply lie to bailiffs about who they are.

                          Court orders for money are a waste of time as the tenants generally wont have any assets or full time work.

                          My local LHA continued to pay LHA to tenant who finially left 27 weeks in arrears, they kept paying after receiving 6 different letters pleading them to stop paying a tenant with drug / gambling issues.

                          I will no longer touch any LHA tenants, I feel that only 1 in 5 are honest and in the situation whereby they require help, 3 in 5 are OK, but the system lets them down, or they get to know that you can take LHA and spend on anything you want, and the Landlord generally wont even bother to make a claim.

                          The final 1, which is the worse, have already made thousands from going from Landlord to Landlord getting the LHA and using it for there own needs, then once LHA is suspended, they simply leave a pile of crap in your property and move to the next Landlord, leaving you to decide do you start legal proceedings etc on a ghost in your room, which means months without a rental income or risk illegal eviction.

                          I know this is a long rant, but I have had too many LHA tenants who set out to abuse the system and a council who feel that its perfectly right to keep paying tenants who have problems and don't pay their rent.

                          AVOID I PERSONALLY AND MANY OTHER LANDLORDS WHERE I RENT, WOULD RATHER LEAVE ROOMS EMPTY THEN RENT TO LHA TENANTS

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