Local Housing Allowance Tenants – Friend or Foe?

While a recent report from SpareRoom.co.uk discovered that 87% of 1,000 landlords surveyed who accept housing benefit tenants have had problems with rent not being paid on time, with 11% saying they have had tenants who stopped paying their rent altogether, it seems that not all landlords hold negativity towards Local Housing Allowance (LHA) tenants, with James Davis, CEO of innovative lettings agency Upad explaining why he believes housing benefit tenants are more friend than foe.

The poll from SpareRoom.co.uk revealed that almost 6 out of 10 landlords (59%) refuse to accept anyone on benefits, often stating ‘no housing benefit tenants’ in their adverts with nearly 30% highlighting that non-benefit tenants were more reliable. Additionally, 47% explained that they did not want the hassle of dealing with payment problems as the main reason for their reluctance towards renting to LHA tenants.

James Davis, himself a landlord for 14 years, comments,

“I am a big fan of LHA tenants! While I understand the concerns surrounding renting property to those on housing benefit, I make a point of actually selecting LHA tenants to reside in my homes. The reason this sector gets a bad name is due to a real lack of understanding by landlords. Give me a LHA family any day!”

In contrast to the SpareRoom.co.uk report, Davis believes that LHA tenants are the best of the bunch, outlining 3 main reasons he prefers renting to this group:

1. Longevity

“LHA tenancies last twice as long as private tenants, meaning that I have lower void periods and a lot less hassle. The shortest tenancy I’ve had was for 5 years, in fact, most of my properties still hold the same LHA tenants that moved in 8 – 10 years ago when I first entered the sector.”

2. Care

“LHA families in my opinion look after properties far more than young professionals who tend to see the property as a place to crash. LHA tenants tend to view their property as a ‘home’ for their families meaning they will take far better care of the property.”

3. Money spinner

“LHA rents, if you do your due diligence, can earn you more than private rents. In addition, due to the current economic climate, there is an extortionate level of tenant demand in this market, so landlords can very much afford to be choosey in selecting the very best tenants.”

Furthermore, Davis believes that a lot of the issues raised by landlords when it comes to housing benefit tenants can be easily mitigated away as long as they know how to do it, revealing 6 top tips for eliminating landlord concerns.
1. Get a ‘letter of authorisation’ so you can speak to your Council about their claim.

2. Speak to your Council before signing an agreement. Is the family on full housing benefit? Have there been claims or issues in the past? Confirm they qualify for the number of bedrooms in your property.

3. Get rents paid directly to you (very possible if tenants have defaulted in the past).

4. Only take on families looking for 2 or 3 bed properties to minimise any potential hassle (singletons move far more frequently).

5. Take out rent guarantee insurance – just in case.

6. Educate yourself on this sector; it does come with a health warning! It’s not for the faint hearted.

With over 650 properties currently available and over 20,000 tenant enquiries each month Upad are already the equivalent size of 20 average high street lettings agent offices. Upad finds fully-referenced tenants, and allows landlords to show them around themselves all for a one off fee of £99 + VAT.

For more information please contact lettings experts Upad, on 0333 240 1220 or visit www.upad.co.uk.