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.
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.
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.
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.
That’s so useful coming from a landlord. I have worked all my life and have never needed any support from the government. In the last couple of years I’ve needed support from universal credit due to my youngest having health problems when she was born. She’s now doing fab and I’m back at my job as a civil servant working part time and getting a top up!
I have been trying to find a place the last month and I tell you it’s the most depressing and exhausting thing ever. I have a good credit report (no CCJ’s or adverse credit). I have worked in my current job over 7 years (had two maternities in between) I have references from my current landlord…I have savings tucked away in case anything should come up…but even just to get a viewing sometimes you are shot down.
I totally understand that landlords have to be wary of letting to people whom they feel may not be able to pay the rent - but it’s just sad when you are on the other side. I never ever thought it would be me and yet here I am. So I hope there’s a few more landlords like you Steve who actually look at the whole picture and perhaps give a chance to those who won’t even get a look in.
The reasons landlords have to be wary is not just because someone doesn’t pay rent or cause damage.
Peel it back another layer and it’s because landlords have no rights by law for when such a scenario happens.
If they had rights, they would be able to take more chances secure in the knowledge that they would be treated fairly and on an even keel by the legal system as the rogue tenant.
I have noticed on here recently, more and more landlords are replying on RGI.
Therefore, the Insurance Companies are the ones setting the criteria and the landlord has no say in this.
If the insurance company is going to be stuck with the bill of rogue tenants, they are covering their backs in turn, with strict criteria to minimize the risk and loss to themselves.
The less legal rights landlords have, is actually bad news for a lot of tenants like yourself who don’t tick all the boxes on an insurance company binary check list and can’t get a look in, despite you knowing you are a good person.
Btw, we have taken tenants who didn’t pass all criteria and went on to let us down and cause a lot of stress and extra work.
Thankyou for your reply. I’ve been a bit delinquent looking at comments recently but really pleased you took the trouble to respond. I’ve been lucky with the people I’ve rented to over the last 10 years, with most staying 5-9 years!!! and no real horror stories. Other landlords won’t have been so fortunate and will have spent huge amounts getting shot of someone who has caused horrific damage, so general weariness is understandable. The are genuinely bad landlords just as there are genuinely bad tenants and it is the extremes that get the publicity and influence the behaviour of landlords and agents when finding people. If/when I have a bad experience I may think differently, but until then I’ll continue to take a compassionate route finding people who want a good long term home, whatever their circumstances.