OpenRent Community

Housing Benefit

I’m a new landlord, I have had a really nice couple interested in my property. The husband works and been in rental for 5 years, the wife receives housing benefit of £250 to top up rent. They have said they have no CCJ etc however unsure if affordability would pass referencing. They have said Guarantor of their mum who has own property and director of own local company.
Would I be covered under the Rent Guarantee Insurance? Do I reference all three people? (Two tenants and Guarantor)
Are there pitfalls in accepting someone receiving benefits?
I feel they would be good long term tenants but as new to being landlord obviously I want to be protected.
Any advice greatly received.

Regards
Fi

I can only say what I would do .Reference all THREE. I dont take on benefit tenants, as you can wait 12 weeks for council to process, you are paid in arrears, the money goes to the tenant first… Other landlords will have a different view. I am no expert on the R G I as I have never taken it out . I prefer to get the rent direct myself.

Thanks Colin.

Much appreciated.

Hi Fiona, to be eligible for our Rent Guarantee Insurance (RGI), each tenant must either:

  • pass referencing, or
  • provide a guarantor who passes referencing.

So in this case, perhaps the husband would pass, and if the wife doesn’t, then you can add the mother onto the AST as her guarantor. Then you could be able insure the tenancy for just £89 per year.

I read @Colin3’s comment and just wanted to be clear: landlords still receive the rent directly if they have an RGI policy. What the policy does is, if the tenant stops paying the rent and you follow the terms of the policy, continue to pay out rent to you and cover costs of recovering money from the tenant. In this sense, it guarantees that you will receive the rental income the tenancy describes as long as you follow the terms of the policy.

If you search ‘DSS’ on this Community then you will find many interesting discussions about how housing benefits interact with the Private Rented Sector. Some of those may be interesting to you as a new landlord.

Sam

Fiona,

I’ve been a landlord for 9 years and was very concerned at the start about not making a mistake, hearing the various horrors stories. So your wariness is understandable.

I can’t tell you what to do, only offer what my thought process is. I view getting tenants as a risk management process where I’m trying to guard against the risks of rent not being paid, of the property not being looked after and whether I’m likely to have a good relationship with the prospective tenants.

I place quitea lot of emphasis on references from previous landlords. If someone has a track record of paying on time and looking after a place, I weight that higher than the results of an affordability check which is only an indication. So I want to know if anything has changed such as you now wanting a higher rent, if someone had changed jobs which might lead to more risk that they won’t cope so well in your property. I think, all other things being equal, if someone had paid for 5 years they are probably going to continue ok.

Sounds like this couple are also offering other ways to mitigate your risk such as the guarantor, so that is another way to mitigate your risk.

So I’d suggest you look at their application in the round and think how you feel about the things that make you comfortable about them against the things that are perhaps a worry. With the exception of someone clearly not telling me the truth - which is bye bye to the highway in my book- I’d don’t think any single factor would sway me one way or the other.

In terms of housing benefit, my two penneth is people tend to have problems only when they start claiming or their circumstances change, when they are somehow expected to bridge the period when the government won’t cough up any money. And you could easily find yourself in this situation if someone loses their job. So I’m pretty relaxed about people in low paid work getting to ups, since I’ve never really found it to be a problem. And outright discrimination against people trying to make ends meet in a low pay situation also personally grates with me, but others may think otherwise.

If at the end of al that you want to be cautious you could always limit the fixed period to 6 months so you have an out- albeit via section 21 - if it does not work out.

Hope this helps. Sorry for the ramble.

1 Like

Thank you, great advice.

Thanks much appreciated