Local Letting Agency Model and Councils. Can Local Authorities Make A Success In This Area

In this blog post we say that local authorities face big challenges trying to make a success of the “Local Letting Agency” concept – and we highlight the areas they will have to work hardest in if they are to be successful.

Some groups of local authorities are setting up their own local letting agencies – a topic we have written about before at this blog.

One objective of these new letting agencies will be to attract private landlords prepared to let to people on low incomes and / or Local Housing Allowance (LHA). The properties will then be advertised / made available to tenants who are in housing need and who approach the local authority for accommodation.

If the Coalition has its way, by making an offer of suitable accommodation in the private rented sector, a local authority will be able to say it has discharged its housing homelessness duty to a household. This means that in the future for most people who approach the councils for help, if they reject private rented accommodation they will not be able to remain on the social housing waiting list.

The move to set up local letting agencies is tied up with this and it follows the Rugg Review commissioned by the previous government which recommended local authorities should consider setting up local letting agencies to help facilitate this and other objectives to help them better engage with the private rented sector.

Background

Why is all this happening?

Well, obviously, there is a housing shortage. Councils do not have homes available to give to all people in housing need and so the idea is to allow them to discharge their obligations by offering tenants who are in housing need suitable accommodation in the private rented sector.

This is obviously a big political issue and there are some who work in borough housing departments who don’t like it, not least because many of them think accommodation in the private rented sector is less secure and the properties less good (but we won’t delve into that particular discussion here and we should note that there are many others in council’s housing departments who support a discharge of homeless duty into the private sector.)

And whilst some of the more experienced private landlords manage tenants who are on Housing Benefit (or Local Housing Allowance, LHA), the greater chunk of landlords are very wary of letting to people on benefits (or likely to go on benefits.)

Why Many Private Landlords Will Not Let to “Benefit Tenants”

Our analysis of the available research reveals a number of reasons given for why many private landlords and letting agent don’t like to let to tenants who are on benefits unless they are “underwritten” by a home owning guarantor:

  • Payments of LHA are always made in arrears
  • The tenants don’t always have access to a deposit
  • The government’s past decision to (in most cases) pay tenants direct and not the landlords (as was case before 2008) made landords concerned that tenants would spend the LHA payments on something other than rent
  • They think their properties will not be looked after properly and that the tenants are more likely to have “issues”
  • Local Housing Allowance applications are complex, take too long to process and when tenants’ circumstances change, the payments can stop without warning
  • Some landlords think insurers will not insure them if tenants are on LHA or that they cannot get a mortgage for a property to be used to let to tenants on LHA

Some of these concerns have some validity, some much less so. Some are true but can be ameliorated using products available from the local authorities such as “deposit bonds”.

All Change Again

Recently, the government has changed things again – reducing the level of housing benefits (introducing caps, setting payment at the 30th percentile level of local rents instead of at the median, reducing rate for Under 35s to a room rate etc.) This makes letting to LHA tenants even less attractive.

However, other recent changes have once again allowed, in many cases, for payments to be made direct to the landlord again.

So, there has been a lot of change. Indeed, there has been so much change in this area that we are sure the average private landlord is now confused and  not aware that payment can now, once again, be made direct to them in most cases where the tenant has approached the council for help.

Private Letting Agents and a Row in Wales

Also, by way of further background, it is worth noting that the majority of letting agencies nationally will not accept people on benefits. However, in some areas tenants on benefits form the majority of tenants so agents must have to deal with them. (We await some statistics from the Association of Residential Letting Agents (ARLA) on this and will add it to this blog post when we get it.)

One issue is to what extent will local authorities local letting agencies compete with private letting agencies?

One scheme in Neath Port Talbot is causing a bit of a fuss with a group of private local letting agents who claim it is undercutting their business. (See link to story below from “Estate Agent Today” at the very bottom of this post (under the links.))

Some of the criticisms made by the private letting agents will need to be considered very carefully by local authorities setting up their own local letting agencies and a big issue will be the extent to which they will compete with private letting agencies in lettings to non-LHA tenants.

LettingFocus.com

At LettingFocus.com we often work with local authorities to help them better engage with private landlords, in particular helping them understand what landlords want and how to reach them through effective marketing.

Our view is that councils are going to have to work very hard to first reach private landlords and then persuade them to make (and keep making) their properties available to tenants on low income and housing viagra without prescriptions benefits.

It is doable but it is a huge challenge for the councils and from our work to date we think the really hard bits will be in reaching the landords in the first place and then delivering a quality service to them.

It’s not going to be easy for them to do this unless they learn to be marketing savvy and deliver excellent service for the landlords and tenants they are trying to help. They will need to adopt working methods that mirror the best of the best private letting agencies.

It’s possible they can, but only if they bring in new thinking from outside, including in my view, working in partnership with the best private letting agents and others who understand the private rented sector – using them to help with both the design and delivery of schemes.

We are working with some forward thinking local authorities to facilitate this.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector Information and expertise and I’m David Lawrenson, a landlord and property investor myself for over 25 years and author of “Successful Property Letting” – the UK’s top selling commercially published property book for the last 3 years. 26,000 copies sold (to Feb 2011).

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Primarily we are consultants to a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers. We help them develop and improve their landlord facing or buy to let product strategies, marketing and services.

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Services for Private Landlords

We also find a limited amount of time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor. We pride ourselves on giving independent unbiased Buy to Let Advice on a one to one basis.

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