Cheltenham Letting Agent Discusses Local Housing Allowance
There has been much written in the national press and property blogs/forums of late regarding whether landlords should accept tenants on Local Housing Allowance (LHA) and the discussion rages on in Cheltenham too.
On the one hand you read of landlords saying a categorical "NO" to anyone in receipt of LHA, tenants getting angry at being thought of as "substandard" and furiously asking why they are being turned away. As a letting agent it is very frustrating to hear so many tenants criticising landlords and agents for not accepting those in receipt of benefits, however many landlords and agents (and like most of us) try and make informed decisions based on the facts and on previous experience.
Many Cheltenham letting agents and landlords chose in the past to accept Housing Benefit because they had the peace of mind that it would be paid directly to the landlords. This is now not the case and rightly or wrongly many have chosen to simply refuse to take anyone in receipt of LHA.
It is easy to tar recipients of housing benefit with the same brush there are good and bad tenants on benefits just like there are good and bad private tenants. It is the risk we take as landlords when renting property. However our own experience so far of the Local Housing Allowance has not been a positive one.
It is reported that the purpose of the scheme was to make recipients of Housing Benefit "financially responsible". In Cheltenham our experience to date has not shown that tenants are being financially responsible. On the contrary the vast majority of tenants in receipt of LHA have fallen into arrears. It is immensely frustrating when we know that a tenant has received say £700 of LHA and chooses to pay only £600 in rent. Where is the rest of the money you find yourself asking? Why have you not paid over 100% of what you have received?
The Cheltenham Housing Benefit Offices will happily tell you that they will pay the LHA directly to the landlord once the tenant is 8 weeks in arrears with their rent. However, there is little change of ever receiving these 8 weeks worth of arrears. So landlords are left with a choice of either absorbing this loss or deciding to evict the tenant either by way of Section 8 notice or Section 21 notice.
Recently there was a Radio4 programme about this exact issue. A private landlord was stating how much he had lost in rent since the LHA came in and a representative of Shelter was even saying this was not a good system and that landlords/tenants should have the right to ask for rent to be paid directly. Rent is rent is rent. It is surely better for anyone in receipt of LHA to have the comfort of knowing the roof over their head is safe and that the rent is paid directly to the Landlord. Even the Local Authorities agree that this is not a good system.
We agree. Again, we can only go by our experience which has shown the arrears rising for those tenants on LHA. Being blunt one could be forgiven for assuming that under the LHA some tenants have now been given carte blanche to pocket one or two months' rent – effectively free money.
One should remember that most landlords are not cash rich millionaires enjoying a fabulous lifestyle living off rents. Landlords have mortgages to pay – mortgages which need to be paid with the rental income and when this rental income starts falling short Landlords suffer.
As a Cheltenham Letting Agent our view is that there has to be a change to this system. Landlords need again to have the right to demand that the rent is paid to them directly.
As a letting agent we act for the Landlords. We are not the landlords. We will simply put the facts regarding LHA to our Landlords in order for them to make an informed decision about local housing allowance. Cheltenham letting agents and landlords have joined the national voice protesting at this unfair system.
