Archive for the ‘Local Housing Allowance’ Category

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Social Letting Agency An approach for Local Letting Agency Models that works for Landlords

Monday, May 23rd, 2011

Some of our work at LettingFocus involves working with local authorities on setting up local or “social letting agencies” and “private rented sector access schemes.”

The aim of the various schemes is to try to encourage landlords to consider letting to tenants who are on housing benefits, who are vulnerably housed or who “present” to the local authority seeking a roof over their heads.

With the decline of the social housing sector, the housing solution (usually the only solution) the councils can offer will often be the private rented sector. But, the trouble for the councils is that so far the bulk of private landlords have been reluctant to engage with this end of the market, and especially with tenants on housing benefit (or Local Housing Allowance as it’s called.)

There are a variety of reasons for this, some of which we have discussed in previous blog posts here and at various public speaking events.

I don’t propose to go into the reasons why so many landlords don’t like this part of the market again here. Suffice to say that because of landlord antipathy towards the sector, the councils have been trying to come up with attractive incentives to get landlords interested.

Direct Lets and Lease Schemes

In the case of “Direct Lets” to tenants on housing benefit, incentives include payment of deposits, bonds to guarantee the state and condition of the property, the setting up of fast track systems to pay landlords direct and so on.

Also, there are the “Lease Schemes” in which a landlord can get a guaranteed, often fixed, rent for a period of 2, 3 or sometimes even more years.

It’s all designed to get landlords to make their properties available to this part of the population.

But I always explain to councils that there are seven reasons why this job will prove hard. These are as follows:

1 For too long borough’s strategies for using the private rented sector for housing have been tucked away on page 94 of their Housing Strategy papers, as an afterthought (though this is changing)

2. Even when they have a good product for private landlords, the landlords cannot easily find out exactly what it is the councils offer on the Net. Strategies to improve findability online are essential.

3. Even within a single borough, housing associations, council and other providers often compete with each other to offer the best product. This confuses landlords (and can be wasteful of resources too.)

4. The products offered are not communicated clearly and not reaching landlords in the places where landlords “shop” for their tenants or where they look for information.

5. The constant stream of news, much of it negative and misreported on Local Housing Allowance, especially in the last 2 years, has left landlords confused. (Some of the negative media originates with the councils’ own  representative bodies who have unfortunately exacerbated the “worry factor” in a valiant but failed bid to get the Coalition government at Westminster to “think again.”)

6. Recruitment policies for private rented sector access schemes too often look to recruit from borough Housing Departments when what’s needed is a private rented sector perspective.

7. Failure in delivery of the back end service to landlords can act as a stab in the back for the best designed and best communicated products.

The last point is worth dwelling on with some real life examples.

Real Life Examples

Recently I attended a council ran landlords event outside London. It was all going well until near the end when a number of landlords, on hearing the councils plan for the private rented sector, said things along the lines of, “That’s all very well, but why is the council telling my LHA tenant to stay put and wait for the bailiffs” and “Why has the council lost my tenants’ application forms?”

And just two weeks ago, a landlord wrote to me to complain that his East of England local authority was trying to reclaim overpaid rent to him because the tenant had left the property. As he said, “How am I to know this?” (Thanks to CT for the info on that one.)

Another landlord, from Surrey wrote to ask me if I knew a way around Lloyds Banking Group’s bizarre strategy to not allow landlords with mortgages with them to let under the Lease Scheme arrangements. Apparently, his council was no help at all in trying to resolve the problem.

Local authorities need to fix these back end issues too because a landlord who is failed will tell ten other people and destroy any other good work that the council has done.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

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

Services to Businesses and the Public Sector

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, private rented sector and buy to let product strategies, marketing and services.

We also write for property websites, speak at property shows and we are regularly quoted by the media.

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.

AT OUR WEBSITE LETTINGFOCUS.COM:

TO GO TO THE HOME PAGE OF THIS BLOG click here: Blog

To read blog posts on related posts, use the tags and categories at the bottom of each post (after the list of links), or over to the top right. Here, you can click on “Select Categories” and use the pull down menu to read all the posts on any specific topic.

THE HOME PAGE OF OUR MAIN SITE click here: http://www.LettingFocus.com

For general info on our CONSULTING SERVICES and also to find a small sample of links to articles where our comments have been featured in the National Press please click here: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS click here: Property Advice

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING” Click here to Find Out More and Buy the Book at Amazon. If you are from an organisation and would like to bulk buy at least 50 books please ask us for special rates.

To JOIN our Free NEWSLETTER containing regular news for landlords and details of our Events simply send an email to david@LettingFocus.com – Please note we WILL NOT send spam or sell our mailing list to advertisers but please put us on your “white list” to ensure you receive our emails.

Discounted Products for Landlords: Landlords Resources

This blog is updated once a week, usually on a Monday or Tuesday (or more frequently when “hot” news items come up.)

For my random thoughts on property and personal finance, plus a host of other random things that interest me from football, to 80s and 90s Indy music, to tsunamis, to politics please see our TWITTER PAGE: Twitter

Copyright of Blog: David Lawrenson 2011.

LINK TO THIS BLOG OR TO OUR WEBSITE

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Posted in Housing Benefit, Local Housing Allowance, Marketing to the Private Rented Sector, Private Rented Sector Access Schemes, Social Letting Agency | Comments Off

Local Housing Allowance and Housing Benefit not of interest for Majority of Private Landlords

Wednesday, April 13th, 2011

Many local authorities, housing associations and charities designing strategies to try to get private landlords to let to tenants on Local Housing Allowance are very fond of doing surveys of landlords.

(Readers of this blog will know how critical I was of one particular survey of landlords that, last year, was used to make some astonishing claims for the impact on homelessness in London of the current changes to Housing Benefit / Local Housing Allowance .)

Doing surveys is better than doing no surveys at all (usually!) but these surveys can be limited in value.

Typically the surveys I have seen solicit the views of landlords who the authority already has a relationship with, those few landlords who are accredited with the council (which is usually not many) and perhaps those members of landlords associations who live in the local area.

From the base of responses from these groups, strategies and initiatives are sometimes devised.

Again, all well and good, but the trouble with this approach is that it misses out the views of the majority of landlords who, right now, want nothing to do with tenants on benefits or the town halls.

For most landords, “tenants on benefits” and the various incentives the council provides for landlords are simply “off their radars.”

To illustrate this, a landlord “tenant find” website I know has 100 live properties listed in the London area – all uploaded by landlords.

When uploading properties to the site, the landlords are presented with a box to tick if they accept tenant of benefits. Not one landlord ticked the box. In Greater Manchester there were 20 live properties. Again, it is the same story – no one has ticked the box to say they accepted tenants on benefits.

Well Meaning but Wrong Strategies

Until local authorities understand how to reach landlords like these and find out what they are thinking and why they are so suspicious of the whole Housing Benefit / Local Housing Allowance system, they will be missing out on the big picture.

And if they believe the survey results unquestioningly and even worse – use them as a base to construct strategies for their local private rented sector, “local letting agency models”, social letting agencies and PRS Access Schemes etc – they will undoubtedly devise bad strategies.

Bad strategies for the private rented sector are not a small matter. It is wasteful and bad for society, not least because the PRS is now so big – indeed, as I explain below, it is probably already bigger than the social housing sector.

Given the size of the PRS, it is time strategies for the private rented sector stopped being a footnote on local authority planning documents.

Private Rented Sector Bigger than Social Housing Sector Now

The English Housing Survey, which is published by the Department for Communities and Local Government, indicates that for the first time since the mid 1960s the private rented sector (PRS) is now larger than the local authority / housing association sector.

The latest survey is for 2009/10. At that time there were 3.7 million households in social housing, compared to 3.4 million in the private rented sector – a difference of just 300,000.

A year earlier, the same source found the respective figures were 3.8 million (social housing) and 3.1 million in the PRS – a difference of 700,000.

So, it’s a fair bet to say that if the trend of those years continued into 2010/11 – and there is no reason to think that it hasn’t – we must have already reached the point where the PRS is the larger.

Private companies selling to the private landlord should also afford the private rented sector more space for the development of robust strategies that meet customer needs. In particular, we think this is true of mortgage lending banks and building societies where provision of buy to let mortgages is still so heavily concentrated among a few players.

Next week we will look at the reasons why the PRS has grown so big and why social housing (and owner occupation) continues to decline.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

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

Services to Businesses and the Public Sector

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.

We also write for property websites and we are regularly quoted by the media.

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 advice on a one to one basis.

AT OUR WEBSITE LETTINGFOCUS.COM:

TO GO TO THE HOME PAGE OF THIS BLOG click here: Blog

To read blog posts on related posts, use the tags and categories at the bottom of each post (after the list of links), or over to the top right. Here, you can click on “Select Categories” and use the pull down menu to read all the posts on any specific topic.

THE HOME PAGE OF OUR MAIN SITE click here: http://www.LettingFocus.com

For general info on our CONSULTING SERVICES and also to find a small sample of links to articles where our comments have been featured in the National Press please click here: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS click here: Property Advice

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING” Click here to Find Out More and Buy the Book at Amazon. If you are from an organisation and would like to bulk buy at least 50 books please ask us for special rates.

To JOIN our Free NEWSLETTER containing regular news for landlords and details of our Events simply send an email to david@LettingFocus.com – Please note we WILL NOT send spam or sell our mailing list to advertisers but please put us on your “white list” to ensure you receive our emails.

Discounted Products for Landlords: Landlords Resources

This blog is updated once a week, usually on a Monday or Tuesday (or more frequently when “hot” news items come up.

For my random thoughts on property plus a host of other random things,  please see our TWITTER PAGE: Twitter

Copyright of Blog: David Lawrenson 2011.

LINK TO THIS BLOG OR TO OUR WEBSITE

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Posted in Buy to Let Mortgages, Housing Benefit, Local Housing Allowance, Marketing to the Private Rented Sector, Private Rented Sector Access Schemes, Private Rented Sector Recent History, Social Letting Agency | Comments Off

Government Policy on the Private Rented Sector is Not Joined Up

Tuesday, March 1st, 2011

Sometimes government policy doesn’t seem to join up too well – with different policies apparently conflicting with each other.

Two good examples are (1) the lending activities of state owned banks which appear to hamper what local councils are trying to do with their private rented sector access schemes, especially lease schemes and (2) policies on HMOs which appear to be working against the recent change to the rate of LHA for single people under 35.

Let’s look at the first example first.

State Owned Banks Not Exactly Helping Those in Housing Need

Someone working in temporary housing in Exeter emailed me to complain that a state owned bank, Northern Rock, would not allow her private landlord client (whose buy to let mortgage is with Northern Rock) to let his property under a 3 year lease scheme to the council. And could I help?

First, for non-housing people reading this blog, we will briefly explain what a private lease scheme is.

Under long lease schemes a private landlord can get a guaranteed rent (albeit a little below market rents) from letting to the council or housing association. The council in turn lets the property to people in housing need. The landlord gets no voids for 3 years and the property back at the end or however long the lease term is and everyone should be happy.

But this mortgage lender apparently insists that lettings are only on a standard assured shorthold tenancy or lease of less than a year. Never mind that landlords who have entered into long leases are getting a guaranteed rent (courtesy of the taxpayer ultimately), suffering no voids and won’t have to pay letting fees and are therefore presumably less likely to default on their buy to let mortgages as a result.

As Northern Rock mortgages are now owned by the state, readers of this blog might like to consider the irony that a state owned bank won’t consider these schemes which, of course, are meant to house those in housing need.

According to James Ball at www.LannerCapital.co.uk other part state owned banks who also “Like to say No” to lease schemes of this type and length are Lloyds Banking Group (BM Solutions and HBOS) and Nat West (part of RBS.)

BM Solutions and Northern Rock go further and are among the state owned banks who will also not lend to landlords who wish to let to people on Local Housing Allowance.

Not Joined Up

At the same time, local councils that we advise and many others across the land are very busy trying to attract landlords to their private rented sector schemes (including lease schemes) as a home in the private rented sector is often the only housing option they can offer.

Much money and effort is spent on local councils’ endeavours on this kind of work only to be thwarted by state owned banks that won’t let their landlord customers let to these same people that the councils are trying to help.

Perhaps someone senior in Housing at the government or in local authorities ought to have a word with whomever controls lending at these state owned banks.

HMO Article 4 Directions Seem at Odds with Policy on Local Housing Allowance

Now let’s look at HMOs.

For the uninitiated an HMO is a House in Multiple Occupation – basically a house shared by people who form more than two “households.”

First some background. (Journalists with short attention spans should skip the next two paragraphs.)

The Coalition Government allowed the creation of HMOs without the need for planning permission. But at the same time, they made it easier for local authorities to use planning laws to restrict HMOs locally – through a mechanism called an “Article 4 Direction.”

These Article 4 Directions, where implemented, remove “permitted development rights” in a specific geographical area and require planning permission for the creation of all new HMOs. The Directions are commonly likely only to be applied for and implemented in towns and cities that have a high proportion of shared housing, such as university towns or areas with a large number of low income households.

For those with short attention spans it simply boils down to local councils being able to apply to restrict HMOs in their area.

NLA Objections

Landlords’ groups like the National Landlords Association (the NLA) have expressed concern that the Article 4 Directions are likely to displace students from the streets around universities and push them to other areas where HMOs are currently occupied by tenants dependent on Local Housing Allowance (LHA) to pay their rent and other low income households.

The result, they say could be fewer properties available for those on low incomes – potentially increasing housing waiting lists and costing local authorities significant amounts of money for temporary B&B accommodation.

We think this is possible too.

Worse Still

But at LettingFocus, we think the situation could be made worse still from April 2012 when the shared room rate (room in a shared house) is extended from age 25 up to age 35 – meaning that single people under 35 who are on Local Housing Allowance will be paid a shared room rate rather than a rate for a flat.

This move can only further increase the demand for just this type of HMO at the same time as local Article 4 Directions reduces its supply. Again, this does not seem like joined up policy to us.

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 best known as the 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).

Services to Businesses and the Public Sector

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.

We also write for property websites and we are regularly quoted by the media.

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.

AT OUR WEBSITE LETTINGFOCUS.COM:

TO GO TO THE HOME PAGE OF THIS BLOG click here: Blog

To read blog posts on related posts, use the tags and categories at the bottom of each post (after the list of links), or over to the top right, you can click on “Select Categories” and use the pull down menu to read all the posts on any specific topic.

If you want to reply:

If you are on the URL for this specific post, at the bottom of the post, you should see a space to “Leave a Reply.” (If you are on the Blog Home Page, click on the title of this blog first to get to the URL.)

Please note, we delete all spam.

THE HOME PAGE OF OUR MAIN SITE click here: http://www.LettingFocus.com

For general info on our CONSULTING SERVICES and also to find a small sample of links to articles where our comments have been featured in the National Press please click here: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS click here: Property Advice

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING”Click here to Find Out More and Buy the Book at Amazon. If you are from an organisation and would like to bulk buy at least 50 books please ask us for special rates.

To JOIN our Free NEWSLETTER containing regular news for landlords and details of our Events simply send an email to david@LettingFocus.com – Please note we WILL NOT send spam or sell our mailing list to advertisers but please put us on your “white list” to ensure you receive our emails.

Discounted Products for Landlords: Landlords Resources

This blog is updated once a week, usually on a Monday or Tuesday (or more frequently when “hot” news items come up.

For my random thoughts on property plus a host of other random streams of consciousness, please see our TWITTER PAGE: Twitter

Copyright of Blog: David Lawrenson 2011.

IF YOU HAVE A SITE WHY NOT LINK TO THIS BLOG OR TO OUR WEBSITE?

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Posted in Article 4 Directions, Buy to Let Mortgage Strategy, Buy to Let Mortgage Terms and Conditions, Buy to Let Mortgages, Government Private Rented Policy Not Joined Up, HMO, House In Multiple Occupation, Housing Benefit, Local Housing Allowance, Private Rented Sector Access Schemes, Private Rented Sector Management, Private Renting Schemes, Private Sector Leasing Schemes, Social Letting Agency, Uncategorized | Comments Off

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

Tuesday, February 22nd, 2011

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 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).

Services to Businesses and the Public Sector

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.

We also write for property websites and we are regularly quoted by the media.

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.

AT OUR WEBSITE LETTINGFOCUS.COM:

TO GO TO THE HOME PAGE OF THIS BLOG click here: Blog

To read blog posts on related posts, use the tags and categories at the bottom of each post (after the list of links), or over to the top right, you can click on “Select Categories” and use the pull down menu to read all the posts on any specific topic.

If you want to reply:

If you are on the URL for this specific post, at the bottom of the post, you should see a space to “Leave a Reply.” (If you are on the Blog Home Page, click on the title of this blog first to get to the URL.)

Please note, we delete all spam.

THE HOME PAGE OF OUR MAIN SITE click here: http://www.LettingFocus.com

For general info on our CONSULTING SERVICES and also to find a small sample of links to articles where our comments have been featured in the National Press please click here: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS click here: Property Advice

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING”Click here to Find Out More and Buy the Book at Amazon. If you are from an organisation and would like to bulk buy at least 50 books please ask us for special rates.

To JOIN our Free NEWSLETTER containing regular news for landlords and details of our Events simply send an email to david@LettingFocus.com – Please note we WILL NOT send spam or sell our mailing list to advertisers but please put us on your “white list” to ensure you receive our emails.

Discounted Products for Landlords: Landlords Resources

This blog is updated once a week, usually on a Monday or Tuesday (or more frequently when “hot” news items come up.

For my random thoughts on property plus a host of other random streams of consciousness, please see our TWITTER PAGE: Twitter

Copyright of Blog: David Lawrenson 2011.

IF YOU HAVE A SITE WHY NOT LINK TO THIS BLOG OR TO OUR WEBSITE?

Here is that link:

http://www.estateagenttoday.co.uk/news_features/Agency-boss-furious-over-cheap-tactics-of-council-run-agent

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Posted in Deposit Bonds, Housing Benefit, Letting Agent Fees, Local Housing Allowance, Local authority Tips for Housing Departments, Marketing to the Private Rented Sector, Private Rented Sector Access Schemes, Private Rented Sector Management, Private Renting Schemes, Social Letting Agency | Comments Off

How Not to Market to Private Landlords and the Private Rented Sector

Tuesday, February 15th, 2011

Landlord readers of this column will know that LettingFocus’s stance these days is now very much built around consulting with organisations who sell products and services to the private rented sector. Basically we tell them how to do it better!

Our two biggest client groups are banks / financial institutions who sell mortgage loans to landlords (commonly known as “buy to let mortgages”) and local authorities / housing associations who face a huge task trying to get private landlords to make their properties available to people on low incomes who turn up at councils offices in droves needing a roof over their heads. (The local authorities often cannot help them so the private rented sector is now the default option.)

As well as doing consulting work for organisations, I still do some one to one consulting work with private landlords and keep “in the mix” with mortgage brokers too. I really like to do this because it is by talking to landlords and brokers that I get to see first hand why the products and services that the banks, local authorities and other clients groups are trying to sell to landlords miss the target so often.

As an example, on Friday, I had lunch up in the city with a mortgage broker called James Ball. A good guy, he tears his hair out at the banks’ complete lack of understanding about what private landlords need.  “In their mortgage criteria they even still talk about DSS Tenants”, he laments. (DSS Tenants is a term that has long since been replaced in landlords’ vocabulary with Housing Benefit or Local Housing Allowance.)

Fast Forward

Fast forward to later on Friday and I’m perusing a local authority website in the Midlands area that is supposed to attract private landlords to get them to let their properties to people on DSS, sorry, Local Housing Allowance.

This site has been lauded a bit and spoken of in glowing terms in some quarters.

As I’m also working in this area, but for a different group of local authorities to set up something better, I call up the number on the site posing as a tenant. After a 60 second wait to be answered (well it’s better than most utilities cos, I guess) and being handed off to other people three times (including one who couldn’t understand how I got through to him at all), it turns out there are actually no properties on their site at all.

“Oh, I was hoping you were a landlord with some properties to put on our site,” says the man at the other end of the line with more than a hint of disappointment in his voice.

Competition and Solutions

Mmm, I am not surprised. Competing in this on line space against the likes of the free spending big portals like Rightmove and the internet savvy landlord facing sites like Upad, Gumtree and Discount Letting, and hoping somehow to be found by landlord punters was never going to work in the first place.

There are solutions and ways that would allow this local authority to attract landlords, but doing it this way isn’t one of them. The right strategy has to be designed by someone close enough to the private rented sector to understand how it really works for the end customer, the landlord. Often this expertise won’t be found internally within the local authority.

Thinking about my mortgage broker friend again, we talked about how my properties in Kent were probably going to be clobbered, both price and rent wise, by the closure of the only big employer in the area, Pfizer.  Donny Rumsfeldt would call the closure an “unknown unknown” – one I could not have predicted 6 years ago when I bought there, but heh, that’s life!

We chatted some more, James and I.

Then I said, “If I was a smart lender, I would anticipate the negative impact on house prices and rents, so I would cut the loan to value ratio for new applications for mortgage loans in areas where such a thing had happened. And I would raise the loan to value where positive regeneration was happening.”

We thought for a few seconds then laughed. But that would require a clever underwriting approach, which would be unlikely from the kind of bank that still calls Housing Benefit, “the DSS.”

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. 25,000 copies sold (to Jan 2011).

Services to Businesses and the Public Sector

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.

We also write for property websites and we are regularly quoted by the media.

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.

AT OUR WEBSITE LETTINGFOCUS.COM:

TO GO TO THE HOME PAGE OF THIS BLOG click here: Blog

To read blog posts on related posts, use the tags and categories at the bottom of each post (after the list of links), or over to the top right, you can click on “Select Categories” and use the pull down menu to read all the posts on any specific topic.

If you want to reply:

If you are on the URL for this specific post, at the bottom of the post, you should see a space to “Leave a Reply.” If you are on the Blog Home Page, go to the very end of this specific post and the biog (i.e. after the tags) and click on “No Comments” or “Comments” which should open a Reply Box. (Spammers please note: We delete all spam.)

THE HOME PAGE OF OUR MAIN SITE click here: http://www.LettingFocus.com

For general info on our CONSULTING SERVICES and also to find a small sample of links to articles where our comments have been featured in the National Press please click here: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS click here: Property Advice

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING” A new edition of the book is coming out within the next few weeks. Click here to Buy the Book at Amazon (new edition) plus anything else at that Amazon sell. (If you are from an organisation and would like to bulk buy at least 50 books please ask us for special rates.)

To JOIN our Free NEWSLETTER containing regular news for landlords and details of our Events simply send an email to david@LettingFocus.com – Please note we WILL NOT send spam or sell our mailing list to advertisers but please put us on your “white list” to ensure you receive our emails.

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This blog is updated once a week, usually on a Monday or Tuesday (or more frequently when “hot” news items come up.

For my random thoughts on property plus a host of other things that make me grumpy or happy, please see our TWITTER PAGE: Twitter

Copyright of Blog: David Lawrenson 2011.

IF YOU HAVE A SITE WHY NOT LINK TO THIS BLOG OR TO OUR WEBSITE?

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Posted in Accommodation in private rented sector, Buy to Let Mortgage Strategy, Buy to Let Mortgages, Housing Associations, Housing Benefit, Local Housing Allowance, Marketing to the Private Rented Sector, Private Rented Sector Access Schemes, Private Rented Sector Management, Private Sector Leasing Schemes, Social Letting Agency | Comments Off

2011 and the Outlook for the Housing Market, for Landlords and for the Buy to Let Sector

Monday, December 27th, 2010

In the last year the private rented sector continued to be in the news.

At LettingFocus.com we are not surprised and landords and suppliers to the private rented sector should not be surprised either.

A key reason is of course Housing Benefit, (or Local Housing Allowance (LHA) as it is known when private landlords are involved), and it is the large and growing cost of this benefit that’s the cause of all the trouble and it’s this that the coalition government has vowed to tame.

A range of treatments are being applied to douse the fire of the Housing Benefit dragon – from applying absolute maximum caps to housing benefits, to cutting the local payment rate to the 30th percentile of local rents to cutting it by 10% for those who have been on Job Seekers Allowance longer than 12 months.

All these measures come on stream at different times in the next 2 years though the first measure (cutting to the 30th percentile) will bite for new LHA claims from April.

Policy Fiddles and Sticking Plasters

Later on, from 2013, the government wants to break the link between the rate of LHA paid and local rents and instead make increases in LHA linked to the rate of inflation. At LettingFocus we think this particular idea will be hard to “make stick” but this is still a long way off and far away enough in time to be quietly dumped as policy.

Just in the last few weeks, the government has come up with a new idea – to allow local authorities the discretion to go back to paying LHA direct to landlords in return for a lower level of rent “if the direct payment to the landlords secures the tenancy for the claimant.” Now that’s an interesting idea and represents the latest in a long line of small concessions from the government on the Housing Benefit issue.

It makes some sense for the taxpayer, though landlords won’t like the idea of getting a lower level of rent.

As an independent observer of all this I also note with some amusement how  the government has, at great cost, also widened and fiddled with the  definition of homelessness in order to deal with the consequences of cutting Housing Benefit rates.

For example, lots of money will still be available to councils at the old median rates of Housing Benefit to set up long lease schemes with landlords (and so far the Daily Mail and the like who whinged so much about the cost of Housing Benefit haven’t noticed!)

Big Impact

The changes to Housing Benefit will have big implications for the whole private rented sector, including for private landlords whose tenant clients are not on any type of benefit.

Landlords in the more expensive London boroughs who are currently letting to tenants on LHA at rates above the new maximum caps will see the biggest negative impact as it will be them who will be most affected by the new maximum caps and this will have a knock on impact on local rents at the lower end of the market in the more expensive London boroughs. However, tenants and landlords in all parts of the UK will be affected by all the other measures to a greater or lesser degree.

One interesting consequence of the changes – and which we were the first to predict  – is that cheaper areas in London could actually see more demand from tenants migrating from more expensive areas hit hardest by the new caps. It’s hard to be sure how great this impact will be but any increase in demand in the currently cheaper London boroughs will increase rents in these areas.

Also, the government’s move to set new social rents closer to market levels will tend to make more former social tenants think harder about the private rented sector as a viable housing option. This will help stoke the overall level of demand for private rented accommodation going forward.

The implications of all these changes to Housing Benefit are great and we are working hard in a consultancy capacity to help local authorities and housing associations plan for these changes.

Rents are Booming

Meanwhile, over the last year, private sector rents are booming in most parts of the UK.

To some extent rising rents represent something of a long overdue “catch-up” because rents have grown much more slowly than house prices since house prices started their long (and occasionally stuttering) march upwards back in 1996.

Most commentators think a big factor in recent strong tenant demand must be the difficulties experienced by would-be home buyers in getting a mortgage – leading them to rent instead.

We don’t find this argument terribly convincing because mortgages at 90% loan to value are readily available for first time buyers who have good credit records. We think the more likely explanation is that would-be buyers are just choosing to rent because renting gives them more flexibility and is much less risky than being saddled with a mortgage in a time of uncertain job prospects.

Mortgage Finance is Easing

And what of finance for private landlords?

Since Lloyds Banking Group got cold feet, the arrival of some new entrants into the buy to let mortgage market has meant access to credit has got a little easier. But the effect is very slight and compared to the “Golden Years of Easy Credit” from 2003-2008, today’s buy to let mortgages still come at high margins over base rate and high fees. Mortgage rates for loans over 70% LTV come with especially high margins and fees.

Mortgage applications are no longer waved through either – landlords seeking buy to let mortgages can expect lenders to pore over new mortgage applications and ask about everything, stopping just short of enquiring about a borrower’s inside leg measurement.

But at least the base rate itself is low though. And the low base rate is the reason why long term private landlord players are in a very good place because the majority of landlords who took out mortgages before the summer of 2008 still enjoy buy to let mortgages at between just 0.5% and 1.75% over base rate. Much lower than any new mortgage deal on offer today!

Add rising rents to this low cost money and it adds up to plenty of cash flow which means “old hand” landlords can rely mostly on cash for their next property foray. This gives them the edge over other buyers who are more dependent on mortgages to fund house purchases.

These equity rich buyers, with low historic mortgage rates may have “never had it so good” as the now sacked Tory politician correctly said.

And the Outlook….

What’s the outlook? Well, of course, it depends where in the country you are.

Overall, the UK economy remains very depressed and public and private sector job cuts are biting. Plus the Euro is in a terrible mess (though German exporters continue to benefit hugely from the resulting low Euro, thus making the death of the Euro a very unlikely outcome.)

Unsurprisingly, given the economic backdrop, UK house prices have slipped down over the last 12 months though many areas continue to defy the gloom. In particular, London house prices continue to hold up in the more “prime areas”, though even here the picture is very mixed.

The key for private landlords is as simple as it has always been. First, you must “stress test” your borrowings – which means if you are thinking of taking out a mortgage loan, ask how easily you could meet mortgage payments if interest rates rise. Could you increase rents to compensate? How would you cope with a void period when the property is empty?

If you have done this and still feel confident, then take the leap but make sure to buy in the right area where the economy is turning up and where housing demand, and especially tenant demand, will grow in the future. And above all, carefully pick your tenants only after thorough reference checks have been carried out.

Suppliers to the Private Rented Sector are Getting Smarter

Private landlords can also enjoy the fact that more suppliers -from mortgage lenders to insurers to local government – are getting smarter at selling products and services to the sector.

At LettingFocus we advise many organisations, both public and private – to help them improve their strategy, marketing, training and operations in our sector. There is still a long way for many suppliers to travel but as they get better at what they do, private landlords will continue to benefit, providing they are prepared to shop around a bit.

There will be no blog next week. We’ll be back and blogging around 10th January.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector expertise and  Information for Landlords.

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. 25,000 copies sold.

Services to Businesses and the Public Sector

Primarily I am a consultant to a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors in the PRSI and insurers – helping them improve their landlord facing or buy to let product strategies, marketing and services.

For example, I help banks improve their buy to let mortgage lending practices and I help housing associations / local authorities find private landlords (private rented access schemes, local letting agency models etc.)

I also write for property websites and am regularly quoted by the media.

Services for Private Landlords

We also find a limited amount of time to help landlords and property investors by coaching them on 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

AT OUR WEBSITE LETTINGFOCUS.COM:

TO GO TO THE HOME PAGE OF THIS BLOG click here: Blog

You can use the tags and categories at the bottom of each post or click on the categories and use the pull down menu over to the top right to find all the posts on a specific topic.

If you want to comment, click on “No Comments” at the bottom of this specific post. (Spammers please note: We delete all spam.)

THE HOME PAGE OF OUR MAIN SITE click here: http://www.LettingFocus.com

For general info on our CONSULTING SERVICES and also to find a small sample of links to articles where our comments have been featured in the National Press please click here: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS click here: Property Advice

TO READ CLIENT TESTIMONIALS – click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING” click here to Buy the Book at Amazon plus anything else at that Amazon sell. (If you are from an organisation and would like to bulk buy at least 50 books please ask us for special rates.)

To get in touch or to JOIN our Free NEWSLETTER containing regular news for landlords and those selling to the private rented sector and for details of our Events simply send an email to david@LettingFocus.com – Please note we WILL NOT send spam or sell our mailing list to advertisers but please put us on your “white list” to ensure you receive all our emails.

IF YOU HAVE A SITE WHY NOT LINK TO THIS BLOG OR TO OUR WEBSITE?

This blog is updated once a week, usually on a Monday or Tuesday (or more frequently when “hot” news items come up.

TWITTER PAGE: Twitter

Copyright of Blog: David Lawrenson 2010.

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Posted in Buy to Let Mortgages, Buy to Let Not Dead, House Prices, Housing Benefit, Housing Benefit Row, Local Housing Allowance, Private Sector Leasing Schemes, Rising Rents | Comments Off

Local Housing Allowance Concessions Likely and Innovative Thinking Sought from Lenders

Tuesday, November 30th, 2010

I hope you are not too bored by our coverage of the Housing Benefit story.

If you are an organisation or public body and are providing / selling services or products to the private rented sector, you should still be riveted because it has big implications for the whole market.

Even if you are a landlord who never lets to tenants on Housing Benefit, the changes that are coming will have a significant impact on all rent, except for in the very upper end of the private rented sector. So, we think it is worth covering.

Anyway, the Government continues to tinker with what has been proposed. Here is the latest:

Concessions on Housing Benefit / LHA Changes Expected

It looks likely that the Government will make further concessions in its cuts to Housing Benefit by delaying cuts for existing private sector claimants.

The caps to the amount of Local Housing Allowance (LHA) existing claimants can receive look like being delayed until “anniversaries of review” starting from January 2012.

However, from April 2011, Housing Benefit will still be capped for new claimants (The caps depend on property size and range from  £400 a week for 4 bed properties down to £250 a week for 1 bed properties.)

We expect to see some other concessions too, including possibly concessions for jobseeker’s allowance claimants who have a disability.

Coming soon is the report by the Department for Work and Pensions internal social security advisory committee which is due to be published at the same time as the statutory instruments are laid down. I expect the report may criticise the cuts. Should be interesting reading.

Once all the concessions are counted up and once the cost of the increased use of temporary accommodation has been added in (see 2 blogs ago for more on this) we wonder if the out-turn for savings from these big changes will be much to shout about.

Still, this is politics and it will keep some in the press happy that something has at least been done to try to tame the soaring cost of the Housing Benefit beast!

Local Government Grapples With the Changes

Local government officials that we meet in the course of our consulting work are doing an honourable job of grappling with the Housing Benefit changes. And it’s not an easy job.

To get new ideas they must constantly look over at what other boroughs do and how they go about accessing the private rented sector supply.

But with other boroughs also chasing the private rented sector supply too, they actually have to compete to some extent – so not the ideal environment for idea sharing!

Also, watching what others do can sometimes lessen the potential for innovative thinking. (With our understanding of the sector, how it’s structured and what landlords want, we do our best to help people break out of their paradigms.)

But there is some very clever thinking around Government too.

Picture This

Picture this – we have mortgage lenders repossessing properties. Lots of them!

The properties sit empty for ages while an estate agent tries half heartedly to sell them. (Fees for this work are low, so it isn’t top of an agent’s “To Do” or “To Sell” list at their Monday briefings.)

If they don’t sell via an agent, the property eventually goes to auction where it is often sold at below market value. And the properties sit empty all this time.

Meanwhile, the local councils are desperate for property.

Now, we know that mortgage lenders can act as “receivers of rent” so it would be nice if some kind of deal could be done where councils could use the repossessed property for temporary accommodation with the lender getting a gilt edged rental income.

Local and national government are predictably keen, but we would need some real innovative thinking from the mortgage lenders for this to happen.

I’ve said before that many lenders seem to lack the innovation of those involved in housing within Government so I’m not holding my breath that anything could happen here. I expect repossessed houses will continue to sit empty for ages and be sold off cheap.

School Closures – How You Know When You are Old

You know you are old when you have lived long enough to recall your school days and how they never shut schools then just because of a teensy bit of snow.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector and Landlord Information.

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. 25,000 copies sold.

Services to Businesses and the Public Sector

Primarily I am a consultant to a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors in build to let and insurers – helping them with their landlord facing or buy to let product strategies, marketing and services.

For example, I help banks improve their buy to let mortgage lending practices and I help housing associations / local authorities find private landlords (private rented access schemes, local letting agency models etc.)

I also write for property websites and am regularly quoted by the media.

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 coaching basis or through our (very occasional) group seminars.

AT OUR WEBSITE LETTINGFOCUS.COM:

TO GO TO THE HOME PAGE OF THIS BLOG click here: Blog

You can use the tags and categories at the bottom of each post and over to the right to read blog posts on related posts.

Just click on the categories and use the pull down menu over to the top right to find all the posts on a specific topic. (If you should want to find relevant posts from before 30 April 2010 (on our old system) you can also click on LettingFocus’s Old Blog  - Categories, then search from the list for a topic that interests you.)

If you want to reply, please make sure you are on the URL for this specific post – if you are on the Blog Home Page, you’ll need to make sure you click on the link for this post to the right of the page. At the bottom of the post, you should see a space to “Leave a Reply.” (Spammers please note: We delete all spam.)

THE HOME PAGE OF OUR MAIN SITE click here: http://www.LettingFocus.com

For general info on our CONSULTING SERVICES and also to find a small sample of links to articles where our comments have been featured in the National Press please click here: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS click here: Property Advice

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING” click here to Buy the Book at Amazon plus anything else at that Amazon sell. (If you are from an organisation and would like to bulk buy at least 50 books please ask us for special rates (which are lower than Amazon)).

To JOIN our Free NEWSLETTER containing regular news for landlords and details of our Events simply send an email to david@LettingFocus.com – Please note we WILL NOT send spam or sell our mailing list to advertisers but please put us on your “white list” to ensure you receive our emails.

IF YOU HAVE A SITE WHY NOT LINK TO THIS BLOG OR TO OUR WEBSITE?

This blog is updated once a week, usually on a Monday or Tuesday (or more frequently when “hot” news items come up.

For my random thoughts on property and various other things that typically make me grumpy, please see our TWITTER PAGE: Twitter

Copyright of Blog: David Lawrenson 2010.

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Posted in Buy to Let Mortgages, Estate Agents and Mortgages, Housing Benefit, Local Housing Allowance, Private Leasing Schemes, Private Renting Schemes, Private Sector Leasing Schemes | Comments Off

Private Sector Leasing and Housing Association Lease Schemes for Landlords A Story of Guaranteed Rent and No Voids

Tuesday, November 16th, 2010

Do you want to know a secret?

Well, it’s not actually a secret at all but it’s something that’s been kept a bit quiet up to now. (And true to form the mainstream press has not reported it.)

So what’s the story?

Well, from October 2011, Housing Benefit / Local Housing Allowance rates will be set at the 30th percentile of local market rents, not at the 50th (median) percentile as at present.

When this was announced and ever since, there has been much leaping about in the media with everyone from Ken Livingstone to Boris Johnson and even renowned Housing and Benefit Experts like the venerable Archbishop of Canterbury putting in their penny worth about rapacious private landlords – though to be fair much of the hysteria comes not from the cut to the 30th percentile of local rents but from the maximum caps on Housing Benefit and the effect of these on London.

So, if you are an outsider to the confused world of Housing Benefits, you may be thinking everyone will move onto the 30th percentile rate, then?

Way Out

Well, er, not exactly, because a rather big “Work Around” has been allowed by the Government for the local authorities to use.

Smart landlords already know that the councils and housing associations of our land use a number of what are called “Private Sector Leasing” (or PSL) Schemes (PSLS) including a variant called “Housing Association Leasing Schemes” (HALS) to provide provision for homeless households and potentially homeless households. They can also be used as what’s called “Move On” accommodation for people in supported housing schemes.

Sometimes they are run direct by councils, sometimes by housing associations and often by the likes of private providers of which Orchard and Shipman are one of the biggest players. Often more than one scheme will be operated in a single borough (yes, plenty of duplication – we know!) and clever landlords have long been in the game of picking and choosing among the various schemes on offer.

Guaranteed Rent

These Private Lease Schemes are used to provide temporary accommodation for priority homeless or potentially homeless households and the leases set up with private landlords usually run from 2 up to 5 years and provide guaranteed rental incomes for landlords.

So, if you are a landlord the good news is that with these schemes you can get a gold plated guaranteed rent (paid for by the taxpayer) for that period of time with no void periods, usually no need to provide moveable furnishings, no agent fees to pay and in some cases some basic management will even be provided too. (There are only two real downsides: 1) You lose control of who is in your property – so think hard about this if the neighbours at your let property are sensitive types. and 2) Though any damage will be fixed, you’ll probably need to redecorate fully and replace carpets at the end of the period.)

With these schemes it is “happy days” for landlords or, at least it is for those who know about these schemes. (By the way, if you are a landlord and if this is the first you have read about this and are cursing that you have missed out all these years on a guaranteed rent, you are not alone, the marketing of these crazily duplicated and competing schemes by councils et al could be a whole bunch better. Some of our work with the public sector involves working with councils to show them how to market them better.)

But enough of the digression.

50th Percentile or 30th Percentile

Anyway, when the proposed cut in LHA from the 50th percentile of local rent values to 30th percentile was announced, there were concerns this would have a major impact on private sector initiatives like these.

However, pretty early on, the Department for Works and Pensions (DWP) announced that Housing Benefit rates payable in respect of temporary accommodation provided by the Council to households who are homeless or at risk of homelessness will in effect be exempted from these changes until the middle of 2013. (The “at risk of homelessness” term is pretty important because we expect that definition to be stretched a long way in the future.)

This means that all leased schemes, be they Private Sector Leasing or Housing Association Leasing Schemes and used for temporary accommodation or prevention, will continue to be set at an LHA figure calculated on the 50th percentile, and this will be preserved for at least two years.

As the other changes outlined in the June 2010 budget (especially the new caps) are likely to have a significant impact in increasing homeless demand and reducing supply through “Direct Lets to LHA Schemes”, this little “Work Around” should give councils a great way of increasing the supply of leased accommodation to make up for anticipated shortfalls.

Increase in Private Leasing and Housing Association Leasing

We expect the councils to significantly increase the numbers of households placed in temporary accommodation. So, expect to also see a huge growth in the use of these schemes and a much wider use of the term “at risk of homelessness.”

At the moment the existence of this work around and out of the Great Housing Benefits Cuts Quandary has been kept quite quiet – which is fair enough when you consider that the likes of the London councils and the landlord associations all want to get more out of Housing Minister, Mr. Shapps to ameliorate the effect of the Housing Benefit shake up. (Good luck to them too, though we think they are wasting their time.)

Mr. Shapps hasn’t pointed to the existence of this work around either because he probably doesn’t want to tacitly admit that there could be more homelessness as a result of the Housing Benefit / Local Housing Allowance changes he’s bought in. And to be a backstop against homelessness is, of course, what these schemes were originally designed for!

Perhaps he is watching to see how things settle down.

If you are reading this Mr. Shapps, we must salute the clever game you are  playing.

We also rather enjoy the way no one “in the know” is talking about this great work around the current conundrum. Having just got back from Moscow and a  country where for many years and still today  “some things just could not be said”, we find the politics of this rather fascinating.

NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors – click here: Next Property Investment Seminar and Networking Event

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector and Landlord Information.

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. 25,000 copies sold.

Services to Businesses and the Public Sector

Primarily I am a consultant to a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors in build to let and insurers – helping them with their landlord facing or buy to let product strategies, marketing and services.

For example, I help banks improve their buy to let mortgage lending practices and I help housing associations / local authorities find private landlords (private rented access schemes, local letting agency models etc.)

I also write for property websites and am regularly quoted by the media.

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 coaching basis or through our (very occasional) group seminars.

AT OUR WEBSITE LETTINGFOCUS.COM:

TO GO TO THE HOME PAGE OF THIS BLOG click here: Blog

You can use the tags and categories at the bottom of each post and over to the right to read blog posts on related posts.

Just click on the categories and use the pull down menu over to the top right to find all the posts on a specific topic. (If you should want to find relevant posts from before 30 April 2010 (on our old system) you can also click on LettingFocus’s Old Blog  - Categories, then search from the list for a topic that interests you.)

If you want to reply, please make sure you are on URL for this specific post – if you are on the Blog Home Page, you’ll need to make sure you click on the link to the right of the page. At the bottom of the post, you should see a space to “Leave a Reply.” (Spammers please note: We delete all spam.)

THE HOME PAGE OF OUR MAIN SITE click here: http://www.lettingfocus.com

For general info on our CONSULTING SERVICES and also to find a small sample of links to articles where our comments have been featured in the National Press please click here: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS click here: Property Advice

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING” click here to Buy the Book at Amazon plus anything else at that Amazon sell. (If you are from an organisation and would like to bulk buy at least 50 books please ask us for special rates (which are lower than Amazon)).

To JOIN our Free NEWSLETTER containing regular news for landlords and details of our Events simply send an email to david@LettingFocus.com – Please note we WILL NOT send spam or sell our mailing list to advertisers but please put us on your “white list” to ensure you receive our emails.

IF YOU HAVE A SITE WHY NOT LINK TO THIS BLOG OR TO OUR WEBSITE?

This blog is updated once a week, usually on a Monday or Tuesday (or more frequently when “hot” news items come up.

For my random thoughts on property and various other things that typically make me grumpy, please see our TWITTER PAGE: Twitter

Copyright of Blog: David Lawrenson 2010.

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Posted in Boris Johnson and Housing Benefit, Guarantors in Tenancy Agreements, Housing Association Leasing Schemes, Housing Associations, Housing Benefit, Housing Benefit Row, Ken Livingstone Rent Cap, Local Housing Allowance, Private Leasing Schemes, Private Renting Schemes, Private Sector Leasing Schemes | 3 Comments »

Housing Benefit Row and London Mayor Boris Johnson

Thursday, October 28th, 2010

I see the London Mayor has now waded into the debate about Housing Benefit rate changes. This is all terribly interesting.

Readers of this blog will know that back in July we were the first to highlight how the changes to Housing Benefit (Local Housing Allowance) rates could actually result in hugely pushed up rents and house prices in some areas whilst reducing it in others. Here is the link to that blog post: http://bit.ly/cFWg7D

It’s nice to see that the mainstream media has finally cottoned on to the story.

Also, having seen the Housing Minister Grant Shapps’s rather solid performance on “Newsnight” last night, (why did Shapps’s opponents not put up a more suitable case study from say Westminster borough to illustrate their point?), we rather think he may have read our open letter to him (also posted in our blog a few weeks back) which suggested there was a lot more that local authorities could do to improve the way they engage with the private rented sector. We hope that he in enjoying our book too!

The same letter also suggested that whilst the London Councils group was right to sound the alarm, their forecast that there could be 82,000 homeless people as a result of the Housing Benefit cuts was a bit questionable. The link to that blog post is here: http://bit.ly/cCE7sv

This story is going to run and run.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector and Landlord Information.

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. 25,000 copies sold.

Services to Businesses and the Public Sector

Primarily I am a consultant to a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors in build to let and insurers – helping them with their landlord facing or buy to let product strategies, marketing and services.

For example, I help banks improve their buy to let mortgage lending practices and I help housing associations / local authorities find private landlords (private rented access schemes, local letting agency models etc.)

I also write for property websites and am regularly quoted by the media.

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 coaching basis or through our (very occasional) group seminars.

AT OUR WEBSITE LETTINGFOCUS.COM:

TO GO TO THE HOME PAGE OF THIS BLOG click here: Blog

You can use the tags and categories at the bottom of each post and over to the right to read blog posts on related posts.

Just click on the categories and use the pull down menu over to the top right to find all the posts on a specific topic. (If you should want to find relevant posts from before 30 April 2010 (on our old system) you can also click on LettingFocus’s Old Blog  - Categories, then search from the list for a topic that interests you.)

THE HOME PAGE OF OUR MAIN SITE click here: http://www.lettingfocus.com

For general info on our CONSULTING SERVICES and also to find a small sample of links to articles where our comments have been featured in the National Press please click here: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS click here: Property Advice

NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors: Next Property Investment Seminar and Networking Event

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING” click here to Buy the Book at Amazon plus anything else at that Amazon sell. (If you are from an organisation and would like to bulk buy at least 50 books please ask us for special rates (which are lower than Amazon)).

To JOIN our Free NEWSLETTER containing regular news for landlords and details of our Events simply send an email to david@LettingFocus.com – Please note we WILL NOT send spam or sell our mailing list to advertisers but please put us on your “white list” to ensure you receive our emails.

IF YOU HAVE A SITE WHY NOT LINK TO THIS BLOG OR TO OUR WEBSITE?

IF YOU SELL SERVICES TO LANDLORDS, YOU COULD BE A PARTNER ON OUR AFFILIATE PROGRAMME. Ask for details.

This blog is updated once a week, usually on a Monday or Tuesday (or more frequently when “hot” news items come up.

For my random thoughts on property and various other things that typically make me grumpy, please see our TWITTER PAGE: Twitter

Copyright of Blog: David Lawrenson 2010.

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Posted in Boris Johnson and Housing Benefit, Housing Benefit, Housing Benefit Row, Local Housing Allowance, Private Rented Sector Access Schemes | Comments Off

Letter to Grant Shapps on Housing Benefit Plus Making Accommodation Available in the Private Rented Sector with Private Landlords

Tuesday, September 28th, 2010

NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors (which now take place just once a year): Next Property Investment Seminar and Networking Event

In September 2010 we sent the following letter to all London Authorities Heads of Housing, to Housing Minister Grant Shapps and to Sir Steve Bullock who is Exec Chair of Housing at the Mayors Office.

“The coming changes to Housing Benefit will have a big impact on landlords and local authorities in charge of housing, especially in London. Preparing for this should be an urgent requirement for all boroughs.

LettingFocus has done research which shows that local authorities could save hundreds of thousands of pounds each year by simply adjusting existing processes and improving the ways in which they manage their relationships with the landlords in the private rented sector.

The challenges posed by the Housing Benefit rate changes are many, but are all interlinked with meeting the needs of both tenants and private landlords whilst delivering the most cost effective and efficient service.

We suggest the following solutions:

Examples of possible solutions:

  1. Landlord recruitment  and supply – Some localised “letting agency model solutions” are good but some that we have seen, come at a very high cost compared to solutions using existing lettings portals and may also introduce new “hand offs” into the process, thus complicating it unnecessarily. We review these schemes and suggest alternatives.
  2. Landlord incentivisation – Private landlords want to minimise their time, cost and risk in their letting business. They also want low void periods (which some tenants on Housing Benefit can provide) and rent paid on time, each time. If processing of payments is efficient, we question whether other cash incentives, currently paid out by local authorities are either needed or are cost effective.
  3. Efficient systems for rent payment backed up with support – If the authorities make late or incorrect payments they will lose private landlords. But if mistakes are made, they should have in place the right support processes, built around landlord needs to put them right.
  4. Tenant referencing – We have seen examples of local authorities paying private companies for expensive solutions which complicate the process or introduce additional “hand offs”. Simple low cost solutions are available and additional data could be provided, if required, in house by the local authority.
  5. Damage and Rent Guarantees – Using knowledge of tenants, local authorities should “self insure” and / or use lower cost external solutions thus saving the premiums often paid to external providers as part of the landlord recruitment process.
  6. Even after the rate changes, many private rented sector landlords may still be happy to let to Housing Benefit dependent tenants (though there is undoubtedly an issue in Westminster and parts of some other central boroughs). A recent survey done by London Councils claims that 82,000 tenants on Housing Benefit and with private landlords in London will be evicted as a result of the changes to Housing Benefit. We received one of these surveys. In our opinion the structure of the survey made the likely number of evictions much higher than we think it will be. As only 270 landlords responded we also question the statistical validity. (As part of our work we suggest appropriately designed surveys that will tease out private landlords true intentions post the changes)
  7. Private Rented Sector Access Schemes should be placed at the heart of the local authority’s housing strategy – At the moment, strategies for the PRS are very low down on most local authorities strategy papers. This must change.

Different local authorities face different challenges. The more expensive central London boroughs may need to look to outer boroughs to find housing solutions for those priced out of central areas by the new caps. Outer London boroughs need to defend their private rented sector supply from attrition by other boroughs and may also see rents rising due to more demand.

All local authorities will have an even greater need to make sure Housing Benefit / Local Housing Allowance processing systems are efficient, especially at making payments direct to private landlords if their Housing Benefit dependent tenants default.”

At LettingFocus we help local authorities and housing associations to design and implement the types of low cost solutions that will help them house people in the private rented sector.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector and Landlord Information.

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. 25,000 copies sold.

Services to Businesses and the Public Sector

Primarily I am a consultant to a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors in build to let and insurers – helping them with their landlord facing or buy to let product strategies, marketing and services.

For example, I help banks improve their buy to let mortgage lending practices and I help housing associations / local authorities find private landlords (private rented access schemes, local letting agency models etc.)

I also write for property websites and am regularly quoted by the media.

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 mentoring / coaching basis or through our (very occasional) group seminars.

AT OUR WEBSITE LETTINGFOCUS.COM:

TO GO TO THE HOME PAGE OF THIS BLOG click here: Blog

You can also use the tags and categories at the bottom of each post to read blog posts on related posts or click on the categories pull down menu over to the top right. (If you want to find relevant posts from before 30 April 2010 you can also click on LettingFocus’s Old Blog  - Categories, then search from the list for a topic that interests you.)

THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page

For general info on our CONSULTING SERVICES and also to find a small sample of links to articles where our comments have been featured in the National Press please click here: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS click here: Property Mentoring

NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors (which now take place just once or twice a year): Next Property Investment Seminar and Networking Event

We have OFFERS on a few services and products here: Services and Products for Landlords

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING” click here to Buy the Book at Amazon plus anything else at that Amazon sell. (If you are from an organisation and would like to bulk buy at least 50 books please ask us for special rates (which are lower than Amazon)).

To JOIN our Free QUARTERLY NEWSLETTER simply send an email to david@LettingFocus.com – Please note we WILL NOT send spam or sell our mailing list to advertisers but please put us on your “white list” to ensure you receive our emails!

IF YOU HAVE A SITE WHY NOT LINK TO THIS BLOG OR TO OUR WEBSITE?

IF YOU SELL SERVICES TO LANDLORDS, YOU COULD BE A PARTNER ON OUR AFFILIATE PROGRAMME. PLEASE GET IN TOUCH!

This blog is updated once a week, usually on a Monday or Tuesday.

For my random thoughts on property and various other things that typically make me grumpy, please see our TWITTER PAGE: Twitter

Copyright of Blog: David Lawrenson 2010.

Tags: , , , , , ,
Posted in Accommodation in private rented sector, Boris Johnson and Housing Benefit, Housing Benefit, Housing Benefit Row, Local Housing Allowance, Local authority Tips for Housing Departments, Private Rented Sector Access Schemes, Social Letting Agency | 2 Comments »

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