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Sancho Panza

Buy-To-Let Landlords Shun Benefits Tenants

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Telegraph 30/7/13

'Under changes to welfare In April, the amount of housing benefit was capped at £500 per week for families with children and £350 per week for individuals.

The rule was introduced first in the London boroughs of Bromley, Croydon, Enfield and Haringey in mid-April and is being widened out to the rest of the country in stages across the summer.

Millions of Britons have sunk money into buy-to-let, attracted by high income yields which have been buoyed by fast-rising rents.

The NLA, which estimates that one million renters receive help with housing costs, found rising concern about the effect of changes to benefits. Its research showed 38 per cent of all landlords, regardless of whether they have tenants on benefits, are worried about the impact of Universal Credit and 51pc are actively choosing not to let to benefit claimants.

Universal Credit will replace a whole range of benefits so that a single monthly payment is made to claimaints, which will include housing benefit. Currently, this is usually paid directly to landlords.

The changes are being trialled this year with Iain Duncan Smith saying he wants to "forensically understand how everything is working" and see "what might need to change".

The National Landlord Association says its members are concerned that with recipients receiving money monthly, rather than weekly or fortnightly, could lead to budgeting problems and that payments to landlords will be a low priority.

Landlords with smaller portfolios or single properties were most concerned: six in ten have ruled out letting to benefits tenants.'

Whilst not wanting to come across as petty,the claim that rents have been 'fast rising' is rather contentious to say the least according to the ONS which is showing a rough nominal raise of 10% over the last 8 years.

One does wonder quite who these landlords intend to rent to now that they're shunning those on benefits.I fear that some,particularly those who went into student lettings, are in for a shock over the next few years.

'Rental Void,meet Mr Market.'

Edited by Sancho Panza

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One does wonder quite who these landlords intend to rent to now that they're shunning those on benefits.I fear that some are in for a shock over the next few years.

While HTB is encouraging potential FTBs with paying jobs out of the rental sector...

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.

Sancho Panza

Landlords with smaller portfolios or single properties were most concerned: six in ten have ruled out letting to benefits tenants.'

One does wonder quite who these landlords intend to rent to now that they're shunning those on benefits.I fear that some,particularly those who went into student lettings, are in for a shock over the next few years.

They all want to let to the young professionals now - not quite sure how many of them there could be. I wonder will the gov reverse the clause that landlords have to repay housing benefit if a claim is found to be fraudulent? They might as well, they've given them everything else! :rolleyes:

I really will have to learn to quote - sometimes it works and sometimes not :blink:

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Love the way they think they will be able to pick and choose who they rent too, as there is this massive pool of people queuing up to rent.

Its strange because up here, and ex- council house flat/house goes on the market and weeks later is a DWP tenant moving in.

Edited by aSecureTenant

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Love the way they think they will be able to pick and choose who they rent too, as there is this massive pool of people queuing up to rent.

Don't forget that they will also just pass on any increase in mortgage interest to the tenant when interest rates rise. No such thing as a market- you get what your given and you pay what they say.... apparently.

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Love the way they think they will be able to pick and choose who they rent too, as there is this massive pool of people queuing up to rent.

On a personal level,I'm starting to see one or two substantial landlord's struggling.By substantial I mean those with in excess of 20 properties.

The space to watch I think in the near term is the student lettings market,which is reversing quite quickly compared to residential lettings.A couple of said landlords have been seeking emergency finance in a manner they wouldn't have needed to a few years ago.Banks have withdrawn substantially from this market in particular and are only lending 60% LTV ...if they feel like it.

Edited by Sancho Panza

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I wonder will the gov reverse the clause that landlords have to repay housing benefit if a claim is found to be fraudulent?

I had no idea that this clause existed. Quite apart from any other factor, it goes a long way to explaining why LLs are so reluctant to let to benefit-recipient tenants in itself. Does this mean that even if a LL lets to someone in good faith, s/he can demonstrate that (i.e. that without hiring private detectives, s/he had no reasonable way of knowing that the tenant is claming benefits fradulently) and there is no suggestion that the LL was in any way complicit in the fraud, s/he still has to repay all rents paid from fraudulent benefits if and when they are discovered? The potential liability there could be huge, especially if the fraud goes undetected for several years. Do BTL-ers' insurance policies typically cover this?

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I had no idea that this clause existed. Quite apart from any other factor, it goes a long way to explaining why LLs are so reluctant to let to benefit-recipient tenants in itself. Does this mean that even if a LL lets to someone in good faith, s/he can demonstrate that (i.e. that without hiring private detectives, s/he had no reasonable way of knowing that the tenant is claming benefits fradulently) and there is no suggestion that the LL was in any way complicit in the fraud, s/he still has to repay all rents paid from fraudulent benefits if and when they are discovered? The potential liability there could be huge, especially if the fraud goes undetected for several years. Do BTL-ers' insurance policies typically cover this?

This from the Salford Council website FAQs for landlords

"Do I have to repay overpayments of housing benefit?

If you do not agree with our decision to ask you to repay an overpayment you can ask us to look at our decision again. Details will be provided on the overpayment notification letter that we send to you. It is important that you write to us within one calendar month of the date of the notification if you do not agree with our decision.

Where we consider that the overpayment has been caused by fraud and the landlord has not been involved in the fraud we will normally ask the claimant to repay the overpayment, which has resulted from the fraud."

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Hmmm ... ambiguous, isn't it? This translates to me as 'We might still come after you if we think we have a realistic chance of getting the money out of you'. The cost of defending an action in a scenario whereby the council claims that the LL was complicit in the fraud but the LL denies it is not one I'd like to contemplate. I'm not surprised, therefore, that given a choice, BTL-ers simply won't have anything to do with benefit-claiming tenants. The problem for them, as others point out, is a diminishing pool of private tenants.

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In fairness, fraudulently claimed benefits paid from a claimant to a LL should not be recoverable from the LL, with caveats about complicity/knowledge aside. It's the claimant's benefit.

Which is passed pretty much directly to the LL. I'm normally pretty sympathetic - even to the enemy - but in this case, nah...

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I have no sympathy whatsoever for your average BTL-er, but I do oppose the general principle whereby the government increasingly allows/encourages/requires private individuals to carry out law enforcement work, which is what this is. They are basically saying: it's your (the LL's responsibility) to ensure that the money you are being paid in rent was not obtained by deception, and if at any point in the future we suspect that it was, then we can come after you to make good our losses. By doing this, they are absolving themselves of the responsibility to vet benefit applications properly, and to have (and pay for) the police to investigate suspected crimes as and when those suspicions arise.

Sorry, but if the government is saying that it shouldn't be responsible for criminal law enforcement, then they shouldn't pick and choose which laws are to be enforced privately. If private businesses (i.e. landlords) are to be responsible for defending the taxpayer against fraud, then how about making homeowners (and tenants) responsible for defending themselves against burglars, Tony Martin-style, too, and furthermore allowing them to avail themselves of the hardware needed to do that?

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I have no sympathy whatsoever for your average BTL-er, but I do oppose the general principle whereby the government increasingly allows/encourages/requires private individuals to carry out law enforcement work, which is what this is. They are basically saying: it's your (the LL's responsibility) to ensure that the money you are being paid in rent was not obtained by deception, and if at any point in the future we suspect that it was, then we can come after you to make good our losses. By doing this, they are absolving themselves of the responsibility to vet benefit applications properly, and to have (and pay for) the police to investigate suspected crimes as and when those suspicions arise.

Sorry, but if the government is saying that it shouldn't be responsible for criminal law enforcement, then they shouldn't pick and choose which laws are to be enforced privately. If private businesses (i.e. landlords) are to be responsible for defending the taxpayer against fraud, then how about making homeowners (and tenants) responsible for defending themselves against burglars, Tony Martin-style, too, and furthermore allowing them to avail themselves of the hardware needed to do that?

You could also take the view that if you knowingly receive stolen goods then you're complicit.

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Tell me....if they won't rent to benefit claimants, who do they think will pay the price they have been used to getting, that all of us have effectively been paying....low paid workers can only afford less than the cap...many of these places are dumps, in bad areas, some are not fit for human habitation........do they think they will borrow more money to do them up to put the rent up. :lol:

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Would the instance where the benefit is paid directly to the LL's account change matters? Genuine question,

Not sure why that would make a difference to what I'll admit seems a fairly unsupportable transfer of responsibility. The only possible caveat that would make the LL more responsible would be if there was any general reason why the LL would be more likely to know that fraud was taking place.

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In my city (Coventry) there are roughly 119,000 dwellings.

Guessing that there is a 70 /30 split between OO and rentals would mean approx 35,700 rentals.

When i did a freedom of info request from the council (as did many on HPC early in 2011) I was informed there were 28,700 live cases of housing benefit. (Obviously some are low paid workers who only get top ups)

Thats roughly 80% of the rental market in the city

So, if every landlord shuns all those on housing benefit they will all be chasing 20% of renters.

Its simply not going to happen as described in the Telegraph. The landlords are benefit dependent.Of course, a journo couldn't possibly imagine a scenario where landlords would have to accept a lower rent

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I had no idea that this clause existed. Quite apart from any other factor, it goes a long way to explaining why LLs are so reluctant to let to benefit-recipient tenants in itself. Does this mean that even if a LL lets to someone in good faith, s/he can demonstrate that (i.e. that without hiring private detectives, s/he had no reasonable way of knowing that the tenant is claming benefits fradulently) and there is no suggestion that the LL was in any way complicit in the fraud, s/he still has to repay all rents paid from fraudulent benefits if and when they are discovered? The potential liability there could be huge, especially if the fraud goes undetected for several years. Do BTL-ers' insurance policies typically cover this?

If the rent was paid directly to the landlord from the council.

The rent paid from the tenant to the landlord has been paid. The tenant would then be responsible for the repayment.

rent is paid to tenants these days. So you have the risk of them not paying.

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In my city (Coventry) there are roughly 119,000 dwellings.

Guessing that there is a 70 /30 split between OO and rentals would mean approx 35,700 rentals.

When i did a freedom of info request from the council (as did many on HPC early in 2011) I was informed there were 28,700 live cases of housing benefit. (Obviously some are low paid workers who only get top ups)

Thats roughly 80% of the rental market in the city

So, if every landlord shuns all those on housing benefit they will all be chasing 20% of renters.

Its simply not going to happen as described in the Telegraph. The landlords are benefit dependent.Of course, a journo couldn't possibly imagine a scenario where landlords would have to accept a lower rent

Yep, fun times ahead for BTL.

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Not sure why that would make a difference to what I'll admit seems a fairly unsupportable transfer of responsibility. The only possible caveat that would make the LL more responsible would be if there was any general reason why the LL would be more likely to know that fraud was taking place.

Missed this post, apologies.

Yes, unless the LL is complicit in a fraudulent claim, I don't think it is fair to ask them for the dough.

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Missed this post, apologies.

Yes, unless the LL is complicit in a fraudulent claim, I don't think it is fair to ask them for the dough.

No, but it is funny.

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[/b]

Yep, fun times ahead for BTL.

yep - not like this info was not freely available to them in the past - this should just count as business risk IMHO

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Anecdotal;

Friend of a friend etc (don't want to put too much detail/identifiers) - man is currently divorcing wife and splitting the several houses and five btl flats between them.

All the flats are let and all are in arrears with rent due to tenants not passing on HB payments.

One of the tenants recently moved out without telling LL. Neighbour eventually alerted LL who went round and found place in a mess and two starving cats. LL put padlock on door.

Tenant has suddenly moved back in and refuses to move out or pay rent.

Flats are on outskirts of London.

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