I am assisting a friend to rent out her flat.
We have had two applicants through from Open Rent since it was listed two weeks ago.
Option 1 - Friends renting, One employed full time as pub manager and earning £28k per annum, the other earning £20,000 as a self employed stunt man and has a home owning guarantor.
Option 2 - Family, Father is full time carer for disabled wife, receive Universal credits, carers allowance and disability allowance, this totals £45K per annum.
The rent is £1,425 per month.
Who would you say was the more stable solution? With all the cuts to benefits, I am worried that benefits will be cut and then the rent isn’t affordable.
I cannot understand the lack of applicants - nice flat, central location, parking etc.
Any advice will be greatly received. Thanks so much,
Stunt man is a first for me! Self employed has risks, but self employed with high risk of ending up broke in all senses of the word, well, as least it’s different.
Not great options…i would get more details on guarantor, if a good guarantor then may be viable but there will be plenty of homeowners who will be struggling with own costs. It would need to be a guarantor for the whole rent not just 1 of the friends.
I’d be inclined to reduce rent by £30 pm which would get it back to top of rightmove lists and sends updates to those with searches set up.
As you’ve asked about stability, I’d say the second is the clear winner. Friends are not going to rent together long-term. Also one of them is self employed and neither are earning well. Each would be legally responsible for the whole rent, but unable to pay it all if one left/defaulted.
The family are likely to stay long term. Their affordability is £1500 a month, but their benefits will increase, so moderate rent increases should be able to be accommodated.
Option two - The family are likely to stay long term. Though there is going to be a change to benefits, those that are able to work will see the big change. Those who unfortunately have a long term health condition and unable to work their benefits will continue to increase, so rent increases should be able to be met.
The local housing allowance which determines the benefit payable for rent will be frozen again indefinitely after it increases in april 2024 so i wouldn’t bet on ongoing rent increases being affordable.
The family may be great and stay long term. They also may be unable to afford the rent and stay long term without paying it and be very difficult to evict. Friends with a guarantor have less risk of this as if someone gives notice the tenancy ends without the need for courts.
The benefits system isn’t generous and some of the benefit will presumably be to cover increased costs of being disabled. Even after the increase in lha in most cases the rent from benefits isnt close to market rents so a proper affordability check should be made rather than using a standard income multiple.
Of course, a lot depends on the individuals involved and if you have a positive view on someone then by all means go with one of them but if you dont then I’d wait and find someone else, it’s a lot quicker getting someone in than out and with all the costs and regulations it isnt worth it if you have serious doubts at the start.
