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Myths about renting to LHA tenants

Last week I was reminded that many people involved in the property industry don’t really know what they are doing and often provide incorrect information to landlords and property investors.

I spoke to a letting agent and was rather surprised to hear that they had completely the wrong understanding about Local Housing Authority (LHA) tenants and problems associated with renting to LHA tenants.

The letting agent said, in no uncertain terms that their landlords do not accept LHA tenants, and she unexplained the reasons why. The slight problem with this is that information she shared with me was actually incorrect.

There are some common myths regarding letting your property to LHA tenants. In this blog I would like to clarify the situation

The most common myth is that the rent is always paid direct to the tenant who then has to pass it on to the landlord and that rent can only go to the landlord once the tenant is 8 weeks in arrears.

Now let’s be honest, this would be a big disadvantage of renting to LHA tenants if it were true. But it isn’t. You can write to the local council and get them to make payments direct to you instead of to the tenant without having to wait 8 weeks.

The second myth is that if the tenant makes a fraudulent claim for benefits, which if the rent has been paid direct to the landlord, then the council can claw back the rent from the landlord. Again this is incorrect however councils will try to do this even though it is not legal.

When checking these myths out, I found that huge number of people believe these myths to be true including many from all people who work in the LHA departments of local councils.

This just goes to show that when you seek advice, you need to make sure that the people you ask really know what they’re talking about. Because investing in property is such a popular topic in the UK many people are all too happy to share their advice with you, which often is more of an opinion, with no actual experience to back it up.

19 comments

1 yvonne birch { 03.11.12 at 3:49 pm }

Interesting. My local HA sent me a letter to tell me they could claim the money back if the tenant was not entitled. I’m pleased to hear they can’t! At least I’ve got an argument!

2 David Jones { 03.12.12 at 6:51 am }

Its difficult to get Local Authorities to deviate from what they deem as their protocol and “The Rule Is”…

What authority or process can we us to get the “clawbacks” back from the local authority???

3 Peter Smith { 03.12.12 at 11:08 am }

Well done, Simon. All this needed to be said. Many “letting agents” are “letting down” their landlords through their unjustifiable ignorance.

I ensure that councils pay me directly by the simple expedient of making it a condition of the Tenancy Agreement. The Benefits Dept. has to agree because otherwise they would be depriving the applicant of a home.

To obtain a clawback in the event of a fraudulent claim, the LA would have to prove that the landlord was privy to the fraud.

4 Ethan Roscoe { 03.14.12 at 8:14 pm }

Thanks for the great advice Simon, this is good to know. Keep up the good work.

5 Sam Watterson { 03.22.12 at 12:07 pm }

Do you have a copy of the letter you send, in Leeds we have been submitting a letter stating the terms of the tenancy agreement are reliant on direct payment and the council have come back and said that this is not good enough, does it need to be specifically written intom the tenancy agreement? Also what terminolgy is used to question the rent repayment coming out of the monthly rent? Any help or guidance would be appreciated.

6 Dave Geeves { 04.14.12 at 3:39 pm }

Interesting, I know of a letting agent that struggled with Birmingham City council with claw backs, had quite an impact on his business cash flow at the time.

7 Dave Geeves { 05.09.12 at 10:04 pm }

For anyone that wants to advertise there LHA rental properties, try http://www.dssaccepted.co.uk its FREE.

8 Pamela Johnston { 05.11.12 at 11:23 pm }

From my experience with LA’s being ‘stoopid’ re. classifying property as empty for council tax purposes and landlord friends who’ve had ‘clawback amounts’ simply deducted at source from the cheque they should receive for other properties in the following month, I’m not confident simply knowing or beleiving them to be in the wrong will change much.

9 Pamela Johnston { 05.11.12 at 11:24 pm }

‘stoopid’ re council tax = asking for a removal company receipt or van hire receipt to prove unfurnished even although they know it was unoccupied when you bought it and refurb has been carried out, no furniture was moved in yet!

10 Vance Harvey { 05.12.12 at 7:07 pm }

Mmmm – not all councils seem to want to pay the rent direct – as follows…
I’m having a battle at present with Bassetlaw DC about having the rent paid direct to myself for my 1 bed flat in Worksop.
The tenants signed a declaration in Feb to have the rent paid direct to me as they considered themselves unfit to handle monies – the council sent the first payment to me and then has sent the next one direct to the tenants – who spent the money of course.
Now the council still wont send the future payments to me till the tenants can prove they can’t handle monies – so I could end up £650 adrift cos of the stupidity of the Team Leader of the benefits section at the council – then they will send future payments to me….Ahgggggggg…
Fortunately I do have a friend who is very cognizant of the LHA rules who is guiding me so am hoping for a more positive outcome with it all :)

11 Roy Albert { 06.14.12 at 11:37 am }

It is worth adding that a lot of the myths is based on a few bad experiences of landlords who actually do not know the facts. Basically the council will always try their best to make sure lanlords get rent on time. There is also a LHA website where you can get FAQ.

12 Robert Burrage { 09.20.12 at 8:17 am }

The Councils are a law unto themselves unfortunately when it comes to payment of benefits…..Merton Council in particular I find to be irresponsible, fail to provide even basic information regarding the payments to tenants or the landlord directly. One of the most important things when it comes to LHA tenants is to get written permission from the tenant to talk to the council on their behalf. You can call the council anytime to check on payments, their claim for benefits etc and most importantly why benefits are stopped . they could be waiting for a simple piece of information that the tenant cant be bothered to do. I have found this invaluable when it comes to getting your money as regularly as possible

13 Flora Ayers { 01.15.13 at 6:47 pm }

Under LHA, it is easier for landlords and tenants to find out in advance how much help tenants may receive towards their rent. There is no longer a need to wait for a pre-tenancy determination to find out the maximum Housing Benefit payable.

14 Just - Properties { 04.03.13 at 1:28 pm }

We spoke to Bhm City Council in ref to a tenant and housing benefit claim. We were told to go to the local office and take all the following documents.
1. Proof of HB application
2. Tenants authority to talk to us
3. A rental statement showing 9 weeks rent arrears.

The above done with a request for direct payment. After waiting 8 weeks (we were told thre was a delay of 10 weeks in processing and the rent would not be paid to the tenant) We discovered at our peril that the tenant had been paid the full back dated housing benefit in error by the Bhm benefits office. We argued and argued that they made an error. 7 months later and no responce we are now thinking of taking a neglegence claim to small claims against Bhm City Council?

Any Advice.

15 Musediku Kazeem { 04.20.13 at 7:41 am }

Introduction of Universal Credit changes all of the above,Now rent money goes direct to tenant.At this time of austerity when the government is also cutting welfare benefits we know what is going to happen to the rent money. Local councils are always reluctant to grant direct payment and are also reluctant to grant exemptions where people cannot manage their money.They refuse too many applications for such exemptions. With this in mind what is the way forward. How do you stop LHA tenants spending their rent money on anything but the rent.

16 Ardva Boyes Brewer { 05.08.13 at 1:13 am }

Really interested to learn more about LHA tenants especially with the new changes to benefits coming in and how these will affect rents and their payments. Hope we cover this is MM13

17 Simon Zutshi { 07.03.13 at 11:21 pm }

There are a few ways to get rent direct from the council. This is one fo the myths surrounding UC which is just not true if you know what you are doing.

18 Simon Zutshi { 07.03.13 at 11:46 pm }

If they have made a mistake like this I believe there are services you can pay to take up the issue with them. I am sure you can find them with a goggler search.

19 Musediku Kazeem { 01.20.14 at 4:14 pm }

We all have to wait until Universal Credit is launched to see full details. The government does not seem to be sure what they want to do with it yet.

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