Best way to collect rent from Benefits tenant?

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    Best way to collect rent from Benefits tenant?

    My tenant will start receiving Local housing allowance direct as of next month and was wondering which is the best way to collect rent from her.
    I don't know yet if she has a bank account, but if she does. Can i set up a direct debit from her account on the days that the rent is due? I'm not sure if this can be done because as you may know the LHA payment will fall on a different day every 2 weeks.
    The other thing that concerns me is, what happens if the LHA payment is late by a day or more? will the money still pass from her account to ours potentially causing her to overdraw, or if she has no money in her account will we simply not get paid?
    And finally - what is the best option if she has no bank account? (she was repossessed before she became our tenant and we have received direct LHA payments for a year due to her vulnerable tenant status)
    If the only other option is to rely on her making payments to me, are there any reasonable incentives i could give to motivate her to pay on time.
    Anyone with experience in this who can give me some advice?
    Many thanks in advance :-)

    #2
    Why don't you discuss the options with her?

    Comment


      #3
      Why has the Council started paying her the HA after a year of paying you direct? Did she request it or is this normal council procedure after a given period?

      Comment


        #4
        Originally posted by irishgem1 View Post
        Why has the Council started paying her the HA after a year of paying you direct? Did she request it or is this normal council procedure after a given period?
        Yes this is very common on review.

        Eli.
        Is theer a credit union in your area. Some of them have a facility where (for a fee) the LHA is paid to them and then forwrder on to you.

        If not, if any payment is missed contact the LA immediately. Dont wait the 8 weeks you may think you need to, especially if T also wants you to have direct paymenst.

        HtH
        Lurking for over a year.......

        Comment


          #5
          Originally posted by Eli View Post
          My tenant will start receiving Local housing allowance direct as of next month and was wondering which is the best way to collect rent from her.
          I don't know yet if she has a bank account, but if she does. Can i set up a direct debit from her account on the days that the rent is due?
          Unlikely, unless you are a resonable size company. For the rest of us, standing order will be your best bet.
          I'm not sure if this can be done because as you may know the LHA payment will fall on a different day every 2 weeks.
          standing order can be set to go out weekly, fortnightly, monthly - whatever you select.
          The other thing that concerns me is, what happens if the LHA payment is late by a day or more? will the money still pass from her account to ours potentially causing her to overdraw, or if she has no money in her account will we simply not get paid?
          If there is no money in her bank account on the day when it is due to go out, then the payment will bounce. This may incur a fee for the tenant depending on the terms of the account. If she has an account that allows overdraft, then she will go overdrawn instead. If you don't get your payment, you will have to get her to withdraw the cash when it is there and pay you cash.
          And finally - what is the best option if she has no bank account? (she was repossessed before she became our tenant and we have received direct LHA payments for a year due to her vulnerable tenant status)
          If the only other option is to rely on her making payments to me, are there any reasonable incentives i could give to motivate her to pay on time.
          Anyone with experience in this who can give me some advice?
          Many thanks in advance :-)
          If she has no bank acount, she will need to open one, very few people can't open a basic bank account - although these don't always offer standing order facilities or similar. With regard to motivation, and I don't know how legal this would be, how about you offer a free fortnights rent on the rent day before Xmas if she has paid everything without problem? Presumably you could factor the cost of that in when you next re-assess the rent. As a back-up I would also issue a s21 notice so you can start that process the moment things start looking un-reliable, thus avoiding the need for/uncertainty over the s8g8 2 month rule.

          Comment


            #6
            Originally posted by Eli View Post
            Can i set up a direct debit from her account on the days that the rent is due? I'm not sure if this can be done because as you may know the LHA payment will fall on a different day every 2 weeks.
            Yes, you can do this through a third party agency. We currently collect our rents by DD, and every new tenant we take on fills in a DD mandate on the day they move in, giving us time to set it up for the next month's rent.

            DD can be taken weekly, every other week, or 4 weekly on the dates you specify.

            Originally posted by Eli View Post
            The other thing that concerns me is, what happens if the LHA payment is late by a day or more? will the money still pass from her account to ours potentially causing her to overdraw, or if she has no money in her account will we simply not get paid?
            The last thing you want is for bank charges to accrue, which will eat into her available funds.

            Originally posted by Eli View Post
            And finally - what is the best option if she has no bank account?
            Depending on the area the property is located, you should look into the option of getting a Credit Union account opened for her. Check this list to see if there is one in your area. These CUs run specific accounts for LHA payments and will safeguard the LHA for you, and pay it directly into your account. This account should be used only for the LHA payments and nothing else. I also have tenants who use this method and it works well. You still have the limitation that you won't know if the money is not paid until it is due and remains unpaid by the council. But at least you know its not been misappropriated.

            Whatever you do, it must be discussed with her so she can see its in her interest to cooperate.

            HTH

            PM me if you need any more info

            Comment


              #7
              Originally posted by havensRus View Post
              These CUs run specific accounts for LHA payments and will safeguard the LHA for you, and pay it directly into your account. This account should be used only for the LHA payments and nothing else. I also have tenants who use this method and it works well. You still have the limitation that you won't know if the money is not paid until it is due and remains unpaid by the council. But at least you know its not been misappropriated.
              Very useful info - thanks HRU

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