Landlords missing out by rejecting LHA tenants

Under the current Local Housing Allowance system, instead of rent being paid directly to private landlords to cover housing costs, it now goes straight to the tenants who are responsible for passing on the rent money to their landlord.

However, in practice many landlords have been exposed to rent arrears through non-payment, forcing many to remove their properties from the system. But Graham Kinnear, MD at Landlord Assist, says landlords needn’t miss out on this share of the market should they take necessary precautionary measures.

He says:

“We believe that approximately 20 per cent of tenants are in receipt of a Housing Benefit Award, which is a substantial amount of the market.”

“Local Housing Allowance has been under a degree of scrutiny over the last 18 months and a number of landlords have decided to opt for working tenants only. However, in doing so, they are missing out on 20% of tenants, which equates to over 750,000 tenants nationally.

“Landlords should consider their strategy carefully. Many landlords accept housing benefit applicants on the basis that they have a homeowner guarantor to guarantee payment of rent, should the claim be suspended or the tenant actually keep the money themselves. The guarantor is also useful should a charge need to be made at the end of the tenancy for damage or breakages.”

Stephen Parry, Commercial Director at Landlord Assist, says:

“Almost one million people have lost their jobs since the start of the recession and so landlords who sought working tenants only may end up with a tenant in receipt of a benefit award. A guarantor is a great way to minimise risk and ensure that an appropriate income or asset is available to call upon should the tenancy degenerate in any way."