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Wednesday, 29 July 2009

LOCAL HOUSING ALLOWANCE TENANTS CAUSE ARREARS CONCERNS

Landlords concerned about tenants claiming Local Housing Allowance and not paying their rent can protect their monthly income by taking out Rent Guarantee insurance.

Following reports that some landlords whose tenants claim housing benefit are finding it increasingly difficult to collect money that’s owed to them John Boyle, Managing Director of HomeLet, is encouraging landlords to seriously consider insurance.

In April 2008 the government changed the way it made payments to private landlords and instead of rent being paid directly to them to cover housing costs, it now goes straight to the tenant.

The Local Housing Allowance (LHA) was introduced so people could manage their own lives and their budgets.

However, according to research published by the National Landlords Association (NLA), a year after the new system was introduced many tenants are failing to pass on these payments to landlords which is causing major problems. In the most serious cases, landlords are facing repossession because rent money paid by the government to the tenant is never passed on to the landlord.

The research also reveals that 52 per cent of landlords surveyed have decided they would not let, or be less likely to let, to LHA tenants. A further 43 per cent of those landlords who have already tried the new system said they would now be leaving this failing market because of increased uncertainty about rent payments.

According to John, HomeLet can help mitigate the risks associated with renting a property to tenants who claim LHA.

“Under the current system landlords have to wait for eight weeks of rental arrears before the tenant is deemed unable to manage their own affairs and the rent is then paid to them directly,” he said.

“However, in reality it can be as long as three months before the landlord receives their first payment as the benefit is paid monthly in arrears. If the landlord chooses to try and reclaim the lost money, they must pursue the tenant privately through the courts.

“By letting their property through an approved HomeLet agent, landlords can safeguard their monthly income. HomeLet’s market-leading products and services cover rental payments for up to 12 months, should a tenant fall into arrears, and there are no restrictions on the types of tenants.*

“Our Prestige Rent Guarantee for example, not only covers non-payment of rent but any breach of tenancy and all legal costs incurred in evicting the tenant up to a maximum of £50,000. HomeLet also has a specialist in-house Legal and Claims team who will handle the entire eviction process from obtaining vacant procession to recovering costs for damage to the property.

“Landlords renting their properties to tenants claiming housing benefit no longer have to worry about not receiving their rent or not being able to meet their mortgage payments.”
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