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LettingFocus

Unbiased buy to let, property investment and letting coaching, mentoring, advice and seminars for landlords from top selling property author and media commentator.

Local Housing Allowance - Tips to Make Sure Rent is Paid by LettingFocus

It’s been a very busy week.
I have been speaking (twice) at the London Landlords Show, plus there was my own Seminar and Networking Event on Tuesday.
On Wednesday, it was off to an excellent meeting with people involved in the private rented sector access schemes and local letting agency models at the Crisis charity offices.

All good stuff!
At my talk at my own seminar, I looked at 12 tips for success if you are letting to tenants on Local Housing Allowance.
Here are 6 of those tips. (All attendees at the Tuesday seminar will be sent the rest. Past and present consultees will also be sent them on request.)

Getting Paid Under LHA

First, get the tenant to sign a disclosure form for the Benefits Service to allow them to share the tenants claim info and progress with you.
Second, make sure the tenant has all the documents they need with them. The form they need to complete asks for lots of documentation so you need to ensure it is all there or else there will be a delay in paying the claim.
Third, ideally go with them when they hand in the form so you can be aware it has actually been handed in and can be aware if (after all your efforts) there was still something missing.
Fourth, be proactive. Contact the Benefits Service often – for example if you are aware of any change in the tenant’s circumstances.
Fifth, if rent is late, apply immediately for the “safeguarding policy” so you can be paid direct as soon as possible.
Sixth, find out what the local authority is like in your area. Speak to them. Ask other landlords.
Some local authorities are very switched on and supportive of landlords and are fully up to speed with all the latest guidelines – which you can read here: http://www.dwp.gov.uk/docs/lha-guidance-manual.pdf Others are not supportive of landlords and are slow at paying LHA claims.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of 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.

Services to Businesses and the Public Sector

Primarily I am a consultant to banks, local authorities, social housing providers and other organisations – helping them with their landlord facing or buy to let product strategies and services.
For example, I help banks improve their buy to let mortgage lending practices and I help housing association / local authorities find private landlords (private rented access schemes, local letting agency models etc.)
I also provide other services for both sectors as a consultant and I write for property websites and am regularly quoted by the broadcast media.

Services for Private Landlords

For private landlords and other investors in the private rented sector, we do just two London seminars each year.
We also find some spare 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 either a one-to-one mentoring / coaching basis or through our occasional group seminars.
With no links to property firms, developers or bridging loan providers we can advise on where and what type of property to buy for investment and when to buy it.
We also show you how to manage tenants properly.

AT OUR WEBSITE LETTINGFOCUS.COM:

THE HOME PAGE OF THIS BLOG click here: Blog
THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page
For general info on our CONSULTING click here: Consultancy and Seminars
ONE TO ONE PRIVATE CONSULTANCY click here: Property Mentoring
NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors:
Next Property Investment Seminar and Networking Event
We have OFFERS on a range of services and products for landlords too; click here including landlords insurance, tenant referencing, tenancy agreements and more: Services and Products for Landlords
TO READ CLIENT TESTIMONIALS – both commercial and private click here: Testimonials
BUY “SUCCESSFUL PROPERTY LETTING” click here: Buy the Book at Amazon plus anything else you fancy at Amazon.co.uk
To JOIN our Free QUARTERLY NEWSLETTER simply send an email to [email protected] - Please note we WILL NOT send spam or sell our mailing list to advertisers!

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!See our TWITTER PAGE:
http://twitter.com/LettingFocus

Copyright of Blog: David Lawrenson 2009. This blog is updated roughly once a week usually on a Monday or Tuesday.TO VIEW RELATED POSTS select a “Category” at the bottom of this page.

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Private Rented Sector Access Schemes - Landlords Should Take a New Look At Letting to Tenants on Local Housing Allowance

I have to admit, I’m the original landlord who preferred my tenants NOT to be on Local Housing Allowance (the now not so new version of Housing Benefit.)
Many years ago I had a tenant hailing from Guadeloupe who was getting housing benefit. (Guadeloupe as a department of France, presumably qualified him for getting this! Not sure I would get my rent paid in Guadeloupe or even France for that matter, but let’s leave that one to the “Daily Mail” for now.)
His rent was paid in the end, but it was always late and altogether it was quite a bit of hassle.
The tenant also had an odd habit of going out and leaving the front door open, which, as you might imagine, was a bit annoying to people in the neighbouring flats.
After that experience, in future, I only let to tenants who are working and had incomes.
And that’s why many landlords shy clear of letting to Benefit Tenants - it’s the fear of non payment of rent, administrative delays at the Town Hall combined perhaps with other prejudices regarding how their property might be looked after by such tenants.
Now, some of these prejudices are unfair – there are many good Benefit Tenants who pay their rent dutifully on time every time.
And on average “Benefit Tenants” stay longer too.
But, the prejudices exist all the same.

LHA – Using Landlords as Guinea Pigs
But what really got landlords cross was the decision by the current Government to replace Housing Benefit with the new system of Local Housing Allowance (or LHA as it is sometimes called) for landlords.
This was rolled out nationally in 2008.
LHA brought in a different way of calculating what was paid out - which we have looked at in other blog posts - but the key difference as far as private landlords were concerned, was that unless the tenant was deemed vulnerable, or was in 8 weeks arrears, the LHA would always be paid to the tenant.
This was a big change from the Housing Benefit system where it could be paid to the landlord if the tenant preferred it that way (and many did).
Now this change only affected private landlords. The lucky old councils and housing associations would still be paid direct under the old system of Housing Benefit!
In other words, as my friend Tom Entwistle of LandlordZone eloquently put it, “the private rented sector was being used as a guinea pig.”
The idea behind the change was to give tenants more financial responsibility: “Let them manage their own budgets” said the Government, loftily (possibly in the style of the ill fated Marie Antoinette - when she was discussing bread and its availability.)

Result – Chaos and Arrears for Some Landlords…….
Well, what’s happened as a result?
Well, many tenants spent the money they got from LHA on something other than the rent.
The result was arrears have risen, landlords have exited this part of the market in droves and both landlords groups and the likes of Shelter and Crisis are calling for a change whereby those tenants who don’t trust their own budgeting skills can once again opt to have the money paid direct to the landlord.
I think this policy reversal could happen eventually even under the current government who brought the original change in. (The Conservatives have already said they would reinstate the right for tenants to elect that payments of their LHA can be made direct to landlords.)
In the meantime, is LHA really that bad?
I’m not so sure.

. …An Opportunity for Other Landlords
I have always known that some landlords specialise in letting to tenants on LHA, and that’s not always because they are letting in areas where the entire population is on benefits either.
So why do they do it?
What do they know that other landlords don’t?
Over the past year, through the consultancy work I do with the public sector with local authorities and housing associations, helping them to understand and attract private landlords though things called “Private Rented Sector Access Schemes”, “Local Letting Agency Models” and the like, I have been surprised by the extent and level of help on offer to private landlords who choose to let to tenant on LHA.
I knew help was there, I just hadn't grasped the extent of it.
It varies by local authority but in many areas there is money to pay you rent in advance, to pay and safeguard deposits and occasionally even landlords finders’ fees.
Plus there is lots of help and advice from the local authority too.

New Rules
Recently, new rules have cut the actual time a tenant can be in arrears before the authorities can pay landlords direct.
And the definition of “Vulnerability” which also triggers direct payments has been eased.
Landlords should look at this sector again, but to make it work for you, you do need to be like the landlords who already let in this sector - very, very clued up on how the LHA system works.
Oh, and you need to be in a place where the local authority is landlord friendly and efficient at processing those LHA claims.

DON'T MISS OUR NEXT LANDLORD SEMINAR, MEETING AND NETWORKING EVENT for Landlords and Property Investors: Next Property Investment Seminar and Networking Event

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of 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.
I help private landlord investors (see more on this below) but these days I’m mainly a consultant to banks, local authorities, social housing providers and other organisations – helping them with their landlord facing or buy to let product strategies and services.
I also write for property websites and am regularly quoted by the media.
I have written articles, guides and documents on letting property and property investing for numerous publications including The Independent, The Telegraph and for quality landlord and property websites.

Services for Private Landlords
For private landlords and other investors in the private rented sector, we do two London seminars each year.
We also find some spare 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 either a one to one mentoring / coaching basis or through our occasional group seminars.
With no links to property firms, developers or bridging loan providers we can advise on where and what type of property to buy for investment and when to buy it. We also show you how to manage tenants properly.

AT OUR WEBSITE LETTINGFOCUS.COM:

THE HOME PAGE OF THIS BLOG click here: Blog
THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page
For general info on our CONSULTING click here: Consultancy and Seminars
ONE TO ONE PRIVATE CONSULTANCY click here: Property Mentoring
NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors:
Next Property Investment Seminar and Networking Event
We have OFFERS on a range of services and products for landlords too; click here including landlords insurance, tenant referencing, tenancy agreements and more: Services and Products for Landlords
TO READ CLIENT TESTIMONIALS – both commercial and private click here: Testimonials
BUY “SUCCESSFUL PROPERTY LETTING” click here: Buy the Book at Amazon plus anything else you fancy at Amazon.co.uk

To JOIN our Free QUARTERLY NEWSLETTER simply send an email to [email protected] - Please note we WILL NOT send spam or sell our mailing list to advertisers!

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!


See our TWITTER PAGE: http://twitter.com/LettingFocus

Copyright of Blog: David Lawrenson 2009. This blog is updated roughly once a week usually on a Monday or Tuesday.

TO VIEW RELATED POSTS select a “Category” at the bottom of this page.

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Housing Benefit and Shared Houses – More Pesky Government Meddling

Welcome to this weeks blog - a whole day early.
Well, the current government sure likes to meddle in the private rented sector - which, of course, keeps writers and consultants like me very busy indeed.
In the latest move, Housing and Planning Minister, John Healey MP has announced plans to tackle anti-social behaviour and property standards by requiring landlords to get planning permission before turning a property into an HMO or house in multiple occupation for the first time.
Also, they have announced plans to make it easier for local authorities to introduce licensing schemes.

Odd Move
The plans to require landlords to get planning permission before turning houses into HMOs, strikes me as rather odd because when the plans were first mooted they were rejected by a pretty broad lobby consisting of organisations as diverse as the National Union of Students and the British Property Federation.
The National Landlords Association said, “If the Government was really interested in dealing with anti-social behaviour and property standards in the small minority of places where they are an issue, they would have taken up the NLA's call for more targeted local management action by councils working with landlords in their areas.”
They went on to say that these measures could lead to “A 'nimbys charter', creating no-go areas for landlords, students, young professionals, low income families, migrant workers and a wide range of other groups who rely on private-sector shared housing.
I agree.

Not Enough Low Cost Housing
Surely, the government should "go back to the start" and look at why more people are living in shared houses.
And the answer is that as the population has grown faster than housing supply and there are just not enough houses for people to live in.
Doh!
And as we aren’t building enough low cost social housing, people who need a home are looking to the private rented sector to provide it.
“Simples!” as the Meerkat would say!

New LHA Arrears Guidelines
And of course, increasing numbers of tenants now get their private sector rent paid by housing benefits (or Local Housing Allowance as the new flavour is called.)
Still, there was one bit of good news on that front.
The government has just changed its Local Housing Allowance (LHA) guidance on rent arrears and payment to landlords.
Local authorities can now pay LHA direct to landlords when tenants are contractually 8-weeks in arrears, rather than waiting until 8 weeks have physically passed.
This change takes into account the situation when rent is due in advance.
So, it means most landlords (whose tenancy agreements require rent in advance) will only have to wait 4 weeks.

Housing Benefit and the Press
Of course, the likes of the more right leaning press (when they are not getting cross about inward migration and hook handed clerics) get themselves very worked up about the growing Housing Benefits bill.
Certainly from my experience the number of people of housing benefits has grown massively.
Indeed, in my patch it is hard to find any tenants whose rent is not paid via the Local Housing Allowance system.
This is all very different to 10 years ago.
Back then, 90% of my tenants were UK nationals with the remaining 10% from countries like Ireland and Aussie and the odd Frenchman and German. Nearly all were all paying their own rent (they were not on housing benefits)
Five years ago, mass inward migration really took hold and suddenly 90% of my tenants were new migrants from all points of the world. Again, all seemed to be working. None were on Housing Benefit.
Today, 90% of all the tenants I have applying for my latest property are overseas nationals with about 75% on Local Housing Allowance - for which it seems residency qualifications are minimal. Just don’t tell anyone at the Daily Mail!

Why Many Landlords Don’t Like Local Housing Allowance

Getting landlords to let to people on housing benefits is not easy (even if the payment in many areas is at least 10% above private sector rents).
Why, because quite a lot of landlords don’t like the fact that the monies are normally paid to tenants (not direct to landlords like in the old days unless they are in arrears as explained above) so there is the risk the tenants go and spend it on something else.
The Tories have pledged to reinstate tenants choice for immediate direct payments to landlords should they win the election.
As part of my consultancy work with housing associations and local government I work to help them get more landlords to let to people in receipt of LHA / Housing Benefit them.
As you can imagine, this consulting work is in demand.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of landlord information.

Hello, I’m David Lawrenson.
I have been a landlord and property investor myself for over 25 years and am author of “Successful Property Letting” – which has been the UK’s top selling commercially published property book for the last 3 years.
Our main business is at a corporate level for organisations - both public and private companies.
We provide consultancy for banks, local authorities, social housing providers and other organisations – helping them with their landlord facing or buy to let product strategies and services.

OTHER WORK

We also write for property websites and are regularly quoted by the media. In addition, we have written articles for numerous publications including The Independent, The Telegraph and quality landlord websites.

MENTORING

For private landlords, we also find some occasional spare time to help landlords and property investors make money in property by coaching them in ways that work, which are ethical and which involve minimal risk to the investor.
We pride ourselves on giving independent unbiased buy to let advice on either a one to one mentoring / coaching basis or through our occasional group seminars.
Unfortunately, in the UK today, property advice in the UK is still largely unregulated and what counts as “good advice” is too often more about making the promoter money than giving useful information to the investor.
With no links to property firms, developers or bridging loan providers we can advise on where and what type of property to buy for investment and when to buy it. We also show you how to manage tenants properly.

AT OUR WEBSITE LETTINGFOCUS.COM:

THE HOME PAGE OF THIS BLOG click here: Blog
THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page
For general info on our CONSULTING click here: Consultancy and Seminars
ONE TO ONE PRIVATE CONSULTANCY click here: Property Mentoring
NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors:
Next Property Investment Seminar and Networking Event
We have OFFERS on a range of services and products for landlords too; click here including landlords insurance, tenant referencing, tenancy agreements and more: Services and Products for Landlords
TO READ CLIENT TESTIMONIALS – both commercial and private click here: Testimonials
BUY “SUCCESSFUL PROPERTY LETTING” click here: Buy the Book at Amazon plus anything else you fancy at Amazon.co.uk

To JOIN our Free QUARTERLY NEWSLETTER simply send an email to [email protected] - Please note we WILL NOT send spam or sell our mailing list to advertisers!

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!

See our Twitter page: http://twitter.com/LettingFocus

Copyright of Blog: David Lawrenson 2009. This blog is updated roughly once a week usually on a Monday or Tuesday.

TO VIEW RELATED POSTS select a “Category” at the bottom of this page.
WANT TO ADD A COMMENT OR VIEW OLD COMMENTS?
To add a comment or view other people's comments on this post, simply click on “link to this post.”

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Predictions for 2010, ALL Change on Housing Benefit and the Pre Budget Report. News from LettingFocus

‘Tis the time of year to make predictions about house prices and the like.
As I have said before there are so many different micro markets in UK property market, it is more or less impossible to make a sweeping forecast about house prices which will apply in every locality.
However, my general view is that the story of increasing population / increasing number of households combined with a lack of housing supply is more important than the opposing factors constraining growth in property prices - like unemployment, debt and lack of mortgage finance.
And because of this I expect prices to increase overall in 2010.
However, there will undoubtedly be areas of the UK where local unemployment and business failures will mean house prices will fall.

Local Housing Allowance – All Change

The Conservatives have said they will reinstate direct rent payments to landlords (where housing benefit tenants choose it) if they should become the next Government.
And now the current Government has put it under review too.
Local Housing Allowance (LHA) came in for new tenancies in April 2008 when it replaced the old housing benefit system.
With the old system where rent could be paid straight to landlords in the private sector, it now goes direct to the tenants who are then responsible for passing on the rent money to their landlord. (Only in special circumstances like where the tenant is deemed vulnerable or if the payments to the landlord are over two months behind can rent be paid direct to the landlord – but even then it can take longer than two months before LHA is paid direct by some councils.)

Big Sums of Money

Faced with a big wodge of money which they are not used to having, some tenants spend the money on other things and often fail to make their rent payments - so increasing numbers of landlords are now refusing to let to tenants who are in receipt of Housing Benefit.
According to research from the National Landlords Association (NLA) of 1,000 landlords operating 13,000 LHA tenancies, the total rent arrears bill accumulated by these landlords since LHA started is a whopping £4,400 per landlord.
It is thought there are about 675,000 LHA tenancies which means that total rent arrears across the UK could be in excess of £220 million.

Temptation


It is claimed that many tenants would prefer not to be put in the way of temptation and would rather the LHA was paid direct to the landlord.
At LettingFocus.com, we have also been critical of the way the LHA is set – as it is based on very wide Broad Market Rental Areas.
This means that in some areas the rates of LHA are too high and in other areas they are too low – with knock on impacts for tenants who don’t qualify for LHA.
My old pal, Tom Entwistle of Landlord Zone has criticized the way landlords were used as guinea pigs in the current system - which does not apply to council tenants.
Check out the Government’s consultation document for more on this….…www.dwp.gov.uk/docs/hb-consultation.pdf

Pre Budget Report

No real news here.
Stamp Duty Land Tax went back to being applied for all properties over £125K
And there is so some money to replace old inefficient boilers – but not a lot – and we don’t know if it will be available for let properties yet.

Merry Christmas to all our readers.

ABOUT US


LettingFocus.com is the home of landlord information.

Hello, I’m David Lawrenson.
I have been a landlord and property investor myself for over 25 years and am author of “Successful Property Letting” – which has been the UK’s top selling property and buy to let book for the last 3 years.

We help landlords and property investors make money in property by coaching them in ways that work, which are ethical 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 and coaching basis as well as through occasional group seminars.
Unfortunately, in the UK today, property advice in the UK is still largely unregulated and what counts as “good advice” is too often more about making the promoter money than giving useful information to the investor.
With no links to property firms, developers or bridging loan providers we can advise on where and what type of property to buy for investment and when to buy it.
We also show you how to manage tenants properly.
We also do consultancy for banks, local authorities and social housing providers – helping them with their landlord facing or buy to let product strategies. We also write for property websites and are regularly quoted by the media.

AT OUR WEBSITE LETTINGFOCUS.COM:

THE HOME PAGE OF THIS BLOG click here: Blog
THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page
ONE TO ONE PRIVATE CONSULTANCY click here: Property Mentoring
NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors:
Next Property Investment Seminar and Networking Event
We have OFFERS on a range of services and products for landlords too; click here including landlords insurance, tenant referencing, tenancy agreements and more: Services and Products for Landlords
For general info on our SEMINARS AND CONSULTING click here: Property Seminars, Networking Evenings and Consulting
TO READ CLIENT TESTIMONIALS – both commercial and private click here: Testimonials
BUY “SUCCESSFUL PROPERTY LETTING” click here: Buy the Book at Amazon plus anything else you fancy at Amazon.co.uk

To JOIN our Free QUARTERLY NEWSLETTER simply send an email to [email protected] - Please note we WILL NOT send spam or sell our mailing list to advertisers!

IF YOU HAVE A SITE WHY NOT LINK TO THIS BLOG OR OUR WEBSITE?
SELLING SERVICES TO LANDLORDS – YOU COULD BE A PARTNER ON OUR AFFILIATE PROGRAMME. PLEASE GET IN TOUCH!

See our Twitter page: http://twitter.com/LettingFocus

Copyright of Blog: David Lawrenson 2009. This blog is updated roughly once a week usually on a Monday or Tuesday.

TO VIEW RELATED POSTS select a “Category” at the bottom of this page.
WANT TO ADD A COMMENT OR VIEW OLD COMMENTS?
To add a comment or view other people's comments on this post, simply click on “link to this post.”

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Local Letting Agency and PRivate Rented Sector Access Schemes. Local Authorities Engage With Landlords by Letting Focus

One of the findings of the Rugg Review into the private rented sector was that local authorities should be actively encouraged to explore ways in which to “improve their engagement with private landlords” in their area.
Hooray, say many landlords.
The fact is that local authorities need landlords to house people on Local Housing Allowance (Housing Benefit) and whilst some councils have a negative view of landlords, some other local authorities actually do a very good job of trying to think of innovative ways to get landlords on board in such a way that the landlords worries about tenant default are reduced.
But even in the better local authorities, all too often, the ways and means that the councils have devised are not really what landlords want.

Understanding the Needs of Landlords
At LettingFocus we think we understand the needs of landlords.
As a landlord for over 20 years and the author of the UK’s best selling book on property – which happens to be all about the subject of letting from a landlord point of view - I do claim to have an understanding of what landlords actually need.
And since the Rugg Review was published a growing number of local authorities have found me via the internet and asked to consult with them and benefit from my advice on how to set up Local Letting Agency Models and Choice Based Lettings schemes so they can better engage with landlords and meet their needs.
I do find public sector employment / consulting contracts and the rather long winded process of being hired as a consultant by a local authority rather daunting - but it is fun and it is nice to do something which is for landlords and the social housing sector and which will, I hope, be to the benefit of all.

Local Housing Allowance Payments and Default
Of course one of the problems for local authorities is that the present government decided that Housing Benefit would in future (unless the tenant was classed as vulnerable or other special circumstances were in place) be paid to the tenants rather than direct to the landlord.
(This was to encourage tenants’ financial responsibility, since you ask.)
Paul Shamplina of Landlord Action at our seminar last night said that this move has led to a huge increase in his workload of evicting non paying tenants because all too often tenants spent the money on other things rather than hold it and pay the rent due to the landlord.
As a result, a large number of landlords have completely stopped letting to people on Housing Benefits.
The Conservatives have said they will, if elected; once more offer the option of having Housing Benefit paid direct to the landlord.

Housing Benefit Bill Growing
All the while, the bill for Housing Benefit is growing and lots of landlords are still be prepared to let to people on benefits, despite the higher default risk.
(They know that good Housing Benefit tenants tend to stay a long time and often make model tenants. The hard bit is finding such good tenants.)
With the continued growth of people on Housing Benefits, it is imperative that local authorities do all they can to make letting to people on benefits attractive to landlords.
Through my consultancy with RSLs and local authorities I can help them with this objective.

ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
We are LettingFocus.com - the landlords’ expert and I’m David Lawrenson, the author of “Successful Property Letting” - the UK’s top selling property and buy to let book for the last 3 years.
I have been a landlord and property investor myself for over 25 years.
At LettingFocus we offer independent unbiased seminars for buy to let investors and landlords as well as one to one advice covering all aspects of being a landlord and investing in property.
I am able to give unbiased independent advice on where to buy (which areas), what type of property to buy, when to buy and how to buy property at a low price. I can also explain how to reduce the risk of getting a bad tenant.
I also do a lot of corporate consulting work in the private rented sector with banks, property websites and local authorities and RSLs - helping with their buy to let and landlord facing products and services.

CHECK OUT THESE PAGES AT OUR SITE LETTINGFOCUS.COM:
Our Events only take place twice a year.
For our NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors click here:
Next Property Investing Seminar and Networking Event
We have GREAT OFFERS for landlords too, Click here: Services and Products for Landlords to see our Landlords Resources (Useful Links) page. (Selling services to landlords and property investors and have a national coverage? You could be a partner, please get in touch!)
For general info on our SEMINARS AND CONSULTING click here: Property Seminars, Networking Evenings and Consulting
ONE TO ONE CONSULTING click here: Property Consulting
CLIENT TESTIMONIALS from past customers click here: Testimonials
BUY THE BOOK click here: Buy the Book at Amazon
THE HOME PAGE OF THIS BLOG click here: Blog
THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page
To JOIN our Free QUARTERLY NEWSLETTER simply send an email to [email protected] - Please note we WILL NOT send spam or sell our mailing list to advertisers!

IF YOU HAVE A SITE WHY NOT LINK TO THIS BLOG OR OUR WEBSITE?
Copyright of Blog: David Lawrenson 2009. This blog is updated roughly once a week usually on a Monday or Tuesday.

Related Article:
http://www.lettingfocus.com/pages/myarticles_Local_Housing_Allowance.html

Also, have you seen this article on Choosing a Letting Agency?
http://www.lettingfocus.com/pages/myarticles_ChoosingaLettingAgency.html

TO VIEW RELATED POSTS select a “Category” at the bottom of this page.

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Buy to Mortgage Rates Deviod of Competition as Lloyds and Nationwide Clean up says Letting Focus

Whilst a little bit of competition is slowly creeping into residential mortgage lending for owner occupation, buy to let mortgage rates and fees are still as high as ever and showing no signs of coming down.
No surprise there because buy to let mortgage lending is now dominated by Lloyds Group (now the lucky owners of the old Halifax Bank of Scotland brands) and Nationwide (via the Mortgage Works brand) and they are keeping rates high.
There is hardly any competition that they face so they can charge pretty well what they like.
It means buying property with a buy to let mortgage is still very expensive, even despite the low BOE base rate.
We are now typically seeing mortgage fees of at least 3% and a margin over base of around 4%. Maximum loan to values are 75%.
Hopefully competition will come soon, but as usual the other mainstream lenders (the likes of Woowlch and the Chelsea BS) are all too terrified to be in buy to let mortgaes just at the time when they perhaps should be lending.
But surely, they could afford to lend up to 75% loan to value without any undue risk.
The centralised lenders – the likes of Paragon - who require wholesale funds to re-lend to Joe Public are not lending new money because the market for wholesale money has died along with the credit crunch and it will be a very long time until it starts again.

HARDER TO MAKE PROPERTY DEALS STACK UP
All this is blowing away deals that were doable 3 years ago out of the water, unless you are a landlord who is really gung ho about capital growth and happy to put up with low or even negative cash flow in the interim.
Of course, if you don’t need a mortgage for cash to buy, you are sitting very pretty right now.
As Lloyds and Nationwide are heavily dominant in buy to let, they are cleaning up (and no doubt making a healthy profit too) that should easily outwieght the minimal risk they can be taking if the borrower is putting up 25% of the equity.
I would say that this could be a good time to buy Lloyds shares but after the disaster of Lloyds’ purchase of HBOS, I’m not saying you should even go there.

STRESS TEST YOUR PROPERTY INVESTMENTS
Linked to all this talk about mortgage rates, you really should occasionally stress test the financing of your buy to let portfolio – even if you only have one or two properties.
Adjust the numbers on a spreadsheet and see how your income from your properties would look if mortgage rates were to go up.
Find out at what point (what rate) you would actually be losing money on your portfolio.

LOCAL HOUSING ALLOWANCE RATES (LHA)
Following on from a recent blog post, I see in the excellent “Letting Update” journal published by The Letting Centre that a landlord in Acton is making hay having bought a property in Acton for £1.2 million and letting for £144,000 a year - all rent paid for by the LHA.
A tidy yield of 12% gross I think.
This is a good example of the daftness of the way the Rent Service sets LHA rates.
Here it is a high rate because it is worked out on the BMRA rate for the whole of Westminster, a considerably more expensive area overall than Acton.
The same thing applies in mnay areas where BMRA are too widely defined.
Well done that landlord for sniffing out a good deal but what a waste of taxpayers’ money. The people in government and in the Valuation Office and Rent Service who set this up should answer some tough questions from said taxpayers.
To find information on local housing allowance rates and areas, go to this website and follow the prompts under "Find your LHA" at https://lha-direct.voa.gov.uk/
To find great buy to let mortgages, try Mortgagesforbusiness.co.uk. Click on http://www.lettingfocusbtl.co.uk/ and quote LettingFocus for their special offer of £250 brokerage on buy to let mortgages - set up especially for us.
Click on Local Housing Allowance to read up more on how LHA works.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the landlord experts. Read Property Articles.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - buy Property Investment Book. The new edition is for accidental and experienced landlords and is fully up to date with all the recent changes to tenancy deposit schemes, landlord registration and capital gains taxes.
I’m a property expert and property speaker - and I run the well known property blog that you are reading now.
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general advice on property letting to anyone looking to buy property for themselves or to let.
What’s unique about lettingfocus.com is that we offer independent unbiased advice on letting property because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier.
For landlords' insurance products such as rent guarantee cover and property insurance click on Ukinsurancenet. Don't forget to quote our reference code, LFOC, to get the best rates from them too. And find out about OTHER great deals we have arranged at our Property Affiliate page.
More will be added over the next month, once we have checked them out.
Copyright: David Lawrenson 2009. This blog is updated roughly once a week.
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Local Housing Allowance Benefit Rates Are Too High & Open to Fraud say Lettingfocus.com. What’s Your Experience?

In our patch and the patches of many other landlords it is clear that Local Housing Allowance (LHA) rates are some way above private market rents.
Here in our area the local authority pays tenants the equivalent of £996 per month for a 2 bed property. But if you tried letting to private tenants who are not in receipt of this benefit it is not easy to get much over £870 for that kind of property.
So, no surprise that recently I have seen a few ads on letting sites where it says something along the lines of, “If you’re interested in letting to tenants on DSS/ LHA and are willing to say the rent is higher than it really is when I make a claim so we can share out the extra, then please contact me.”
Mmmm, this sounds a bit like fraud to me.
So the over-high LHA rates are making sure the taxpayer is being well and truly ripped off by being a green light to a few rogue landlords and tenants to try to “ring” the system.
So, please tell me if you are in an area where LHA is well above local rents.
We would also be interested in hearing about any cases where you know this kind of fraud is taking place. You don’t have to give details – we would just be interested in how widespread this practice is.
Let me know by emailing [email protected]
Oh - and you may be wondering why are LHA rates so high?
Is it just that the Broad Market Rental Areas (BMRB) set by the Rent Service are just too wide and encompass too many diverse areas within a single BMRB? Yes, I would say so.
Could it also be that the high rates be a bribe by the government to get landlords to let to tenants on LHA (because landlords don't like the new system in which LHA is now normally paid to the tenant).
I think so.
The simple (though costly) solution to all this would be more council houses, but maybe I'm still living in the 1970s.
Thanks to LS for the tip off on this story. Local presence can help!

MORE TIPS ON USING A LETTING AGENT
Tell the letting agent what kind of tenant you want and don’t want. Think about who you want as well as how you do tenant reference checks.
Will you accept students? Animals? How about Student animals? Will you accept DSS? What should the tenants’ minimum income be?
Why tell the agent all this? Well, if you muck an agent about he will rightly have nothing more to do with you. So, be straight and be upfront. And confirm every conversation in writing too.
Tell the letting agent you will want to see the application form the tenant completed and the Tenant Report the agent gets back from the referencing company. Insist on reserving the right to speak to a prospective tenant before you agree to the letting. But only reject a tenant if there is a good reason to do so.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the landlord experts. Read Property Articles.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - buy Property Investment Book. The new edition is for accidental and experienced landlords and is fully up to date with all the recent changes to tenancy deposit schemes, landlord registration and capital gains taxes.
I’m a property expert and property speaker - and I run the well known property blog that you are reading now.
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general advice on property letting to anyone looking to buy property for themselves or to let.
What’s unique about lettingfocus.com is that we offer independent unbiased advice on renting out property because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier.
Find out about some great deals we have arranged at our Property Affiliate page.
For landlords' insurance products such as rent guarantee cover and property insurance click on Ukinsurancenet. Don't forget to quote our reference code, LFOC, to get the best rates from them too.
Copyright: David Lawrenson 2009. This blog is updated roughly once a week.
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Local Housing Allowances and Housing Benefit and its Impact on Landlords by David Lawrenson of LettingFocus.com

I recently had an interesting email discourse with a tenant who was very upset that many landlords insist on guarantors and two months rent before they will take people on Local Housing Allowance, the new name for Housing Benefit.
I replied that I had some sympathy and that personally I would accept someone on benefits but in the absence of any evidence of employment income and a guarantor I would want to see very strong proof from a former landlord that rent had been paid on time.
I pointed out that the reason why landlords are nervous about people on benefit and who have no guarantor is because many have had a negative experience in the past.
In the past the govt could pay allowances (or housing benefit as it then was) direct to landlords. Now, in their wisdom, they have decided to pay this direct to the tenant (in most cases)
And that’s made landlords nervous because whilst there are many good people in receipt of housing benefits, there are unfortunately some who receive the local housing allowance and go and spend it on things other than paying the rent – like the bookies.
In the worst case they could stay for months until evicted leaving the landlord with a big bill, which of course he has no way of recovering because the defaulting tenant will usually have no assets.

LACK OF HOUSING PROVISION IS NOT LANDLORDS FAULT
I suggested the tenant’s issue should surely be with past governments who have failed to make adequate housing provision at the lower end of the market. They are the ones who sold off the council houses for goodness sake!
And the current govt too are hardly at fault, because they changed the rules on local housing allowance – i.e. they stopped paying it direct to landlords and then expected landlords to take on the increased risk of tenant default at no cost.
Some landlords had told the government what they thought of that by exiting this end of the market or demanding guarantors.
Sadly, it was the honest tenants who didn’t chuck their local housing allowance away on booze and the bookies who were now suffering as a result of this shift in govt policy.

NOT ALL BAD FOR LANDLORDS
But it’s not all bad for landlords.
If the tenant doesn’t pay over his LHA for two months, the landlord can still apply to have it paid direct. And for some vulnerable tenants with social problems it’s still possible to have the money paid direct to the landlord from the off.
In some areas the LHA rates are actually pretty generous.
One of the landlords I’m in touch with in Rochdale says it is far too generous compared to local rent levels - and as such hardly encourages people to come off benefits and get back into work.

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ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the property letting experts. Read Articles for Landlords.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - buy Landlords Book.
The new edition is for accidental and experienced landlords and is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on sale and rent back.
I’m an expert property writer and property speaker - and I run the well known landlords blog that you are reading now.
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general property letting advice and consulting to anyone looking to buy property for themselves or to let out. I can help private individuals with any aspect of buying property or buy to let.
What’s unique about lettingfocus.com is that we are independent property investment advisors because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from these sources.
We simply give one to one unbiased advice and are often asked to evaluate other property investments.
Find out about some great deals we have arranged at our Landlords Resources page.
Copyright: David Lawrenson 2009. This blog is updated roughly once a week.
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Sale and Rent Back in the Dock says Lawrenson of LettingFocus.com. Also, Local Housing Allowance and Rents.

I see that the OFT has asked eight firms in the, er, Sale and Rent Back “industry” to come to see them for coffee and biscuits and while they are there, try to justify the advertising claims they made to try to get hapless home owners to sell them their property at knock down prices.
Of course, this is all part of an overdue investigation into that industry which is now ongoing.
I’d like to have been at that meeting to see some of the less straight of these firms struggle to explain the quite outrageous advertising claims they had been making in the past.
Another meeting I’d like to be at is the one today where Sir Fred Goodwin of RBS and his pals try to explain how they just about destroyed a bank and helped b****r up the UK economy in the process.
I trust they will entering the building by the back door and well away from angry protestors.

WHY ARE RENTS FALLING?
Lots of people (well five this week actually) keep asking me why rents are falling and how much longer and further they have to fall.
Well, there are various reasons for the fall in rents.
First, there is a lot more property about which is available for rent.
Many would be house sellers cannot bear to take 15 or 20% less on their property than they would have got 18 months ago and so they opt to rent the house out instead.
With lots of stock about tenants can be choosy. In London and the South East, which have seen the local economy hit hardest due to the large number of financial services firms, rents are down about 10% on last year overall.
Second, as many landlords’ mortgage payments have fallen in line with the falls in the base rate, they can afford to cut the rents a bit.
Some people think rents will keep falling slowly as long as this situation persists.
But I am not so sure because there are a few things that will underpin rents.
First of all, at the lower end of the market, the Local Housing Allowance (LHA) rent levels provide a sort of buffer below which private rents will not fall much. OK, I know LHA is supposed to reflect private rents but the process by which the government adjusts them is slow. Think of the big Afghan family in the large house in Hampstead that recently made the news as a good example of this!
Second, mortgage lending is only going to unfreeze very slowly. Heck those bankers have still got bonuses to pay so they need to keep up both high mortgage margins over base rate and high product fees for quite a while.
Add in all the doom and gloom in the news plus the fear over jobs and I think we can see a scenario in which an increasing number of would-be first time buyers will opt to be tenants for some time yet.
And with this increased demand for renting, rents will not fall too far.
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ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the landlord and property letting advice experts. Read More Articles on Property by David Lawrenson.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - Buy Successful Property Letting - How to Make Money in Buy to Let.
The new edition is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on sale and rent back.
I’m an expert freelance property writer and property speaker - and I run the well known property investment blog that you are reading now.
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general property letting advice for a fee to anyone looking to buy property for themselves or to let out. I can help private individuals with any aspect of buying property or buy to let.
What’s unique about lettingfocus.com is that we are independent property investment advisors because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from these sources.
We simply give one to one unbiased advice and are often asked to evaluate other property investments.
In my corporate consulting role I also advise banks, building societies, housing associations and web portals with their buy to let and property products and services.
You can read more of my blog & find details of my networking, advice and property training programme at my website.Copyright: David Lawrenson 2009. This blog is updated once a week.
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You then just copy the link that comes up into your News Reader or News Aggregator. Even a non techie like me managed to do all this.
Please note if you have a website & are thinking of reproducing material here - that’s fine but we DO require the full links shown in each blog to be included, including also the links in this section. The full article including all links must be available to ALL VIEWERS of your site and not restricted to members.

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Below market value property, BMV - One good tip from LettingFocus.com

What is the best way to get a good deal when buying property?
Well there are many ways to get good deals.
However, in today’s blog, I just thought I’d highlight one particular technique that always works well when you are viewing a property and the vendor is showing you around.
As you go around, the key thing of course is not to give much away, whilst also trying to find out in a non pushy way as much as you can about the vendor’s circumstances in order to gauge if they will accept a hard offer. (It is also worth finding out what you can about the seller’s circumstances are in advance from the agent too.)
Then just as you are about to leave, you whip out the estate agents blurb on the property, pause for a few seconds and then just slowly say the price as if you were contemplating the meaning of life. Then allow the silence to hold for a few seconds. If the seller really wants to sell for less, they won’t be able to resist filling the gap by indicating what price they will accept.
It’s a great technique and it works most times. Try it.

FLOOD RISK
Now, a quick word about flood risk.
The property I am in the process of buying is close to a flood risk area.
To find out the extent of flood risk, all you need to do is look at the environment agency maps (at their website) and put in the postcode of the property.
This will bring up a general map of the area showing the extent of the flood risk – but this can actually vary a lot depending exactly where in the road the property is.
To find out the risk for a specific house you then have to click on the spot on the map at exactly where the property is. This will then bring up another more detailed statement which will state if the flood risk is “significant”, “moderate” or “low”. It is this which is the thing you really need.
Also, use Norwich Union too. They have among the most sophisticated flood maps in the UK which use other data which are laid on top of the environment agency maps – so if you are buying in an area that could be at flood risk, always call them for an insurance quote.
If they won’t cover you or charge a very high premium then you need to think about buying that property very carefully.

MORTGAGES
Out in the mortgage market mortgages are being withdrawn almost as soon as they show up and lending by the building societies continues to be restricted to certain areas and types of property. I continue to enjoy your stories about how hopeless the banks and building societies are at mortgage lending.
My friend Andy in Lancashire told me that “Despite being approved for a further £500,000 from the Woolwich in March for refinancing/new purchases, it seems I am not solvent enough for a 4,000k limit on a new capital one Cash Back credit card.”
I have had similar experiences too and I am also finding that the processing of mortgage applications by the lenders is still painfully slow. In my case, after having been approved for a mortgage from a subsidiary of one of our biggest banks I am still waiting after 4 working days to receive the application form. So, no change there then!
The same correspondent also says he accepts tenants on benefits and has noted that the rates for the new Local Housing Allowance were published yesterday by his local council for his area and they are pretty much 15-20% extra to tenants here when compared to the current HB system. The only downside is of course, that the money is usually going to be paid direct to tenants, so we lose the guarantee that we had when it was paid direct. So, we will have to see how this all works out.
If you need more advice on investment property or buy to let investments in general please ask me.
I’m David Lawrenson from property investment mentors http://www.lettingfocus.com/
I’m the author of the buy to let book “Successful Property Letting - How to Make Money in Buy to Let” the UK’s top selling property title.
Buy the new edition here: http://www.amazon.co.uk/Successful-Property-Letting-Right-Plus/dp/0716030195/ref=sr_1_1?ie=UTF8&s=books&qid=1203933977&sr=1-1
It is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on buying below market value. I’m an expert on the UK property market and a well known property investment blogger and I contribute to newspapers and a host of property websites, write a property investment blog, a number of columns in the press and run a landlords advice service.
I also work as a consultant helping banks, building societies, housing associations and web portals with their buy to let and property products and services.You can read more of my property investment blog and details of my networking, advice, buy to let networking programme at my website http://www.lettingfocus.com/My next London property investors networking meeting is coming soon. Click here for details: Property Investment Advice
I am also speaking at the Property Investor show in Birmingham in April http://www.propertyinvestor.co.uk/birmingham/
What’s unique about lettingfocus.com is that we offer independent property mentoring because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from any of these sources.If a property investment is lousy – We’ll tell you straight and we will tell you all about buy to let and property investment - the good and the bad and we won’t make silly promises that you’ll become a millionaire overnight.Copyright: David Lawrenson 2008. This blog is updated once a week. Permission must be sought before using the material in the blog.

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Local Housing Allowance - How Does It Work? What Landlords Need to Know

As Local Housing Allowance (LHA) is being rolled out across the UK, it is important for landlords who let to tenants on benefits, to understand how it works.
LHA is a government reform to supposedly make the housing benefit system work better and it’s being rolled out across the UK.
It is a flat rate benefit for private tenants that’s based on what the tenant and their family needs in terms of size of accommodation and it is calculated according to the number of people in the family and location.
Under the system, the tenant can choose a home with a higher rent and make up the shortfall or pay a lower rent and keep the difference. According to the government, giving the tenant this choice encourages and engenders financial responsibility. However, many landlords are sceptical this will work in practice especially with the more vulnerable tenants.

What will a Tenant Get on LHA?
It’s possible for a landlord to find out what tenants will receive because this depends on size of property (which is linked to size of family) and because average rent values for different sized properties in the local “Broad Rental Market Area” or BRMA are worked out by the Rent Service. You can easily find out the rent for any area by simply calling the Housing Department of your local authority.
Unfortunately, the Allowance is normally paid to the tenant (unlike the old Housing Benefit which could in most cases be paid straight to the landlord.)

Can LHA Be Paid Direct?
Only if the tenants is classed as vulnerable can the landlord be paid direct – examples might be people with learning difficulties, lack of English, debt, alcohol, drug or gambling problems.
Other bodies such as social services and doctors may also suggest to the local authority that the tenant is vulnerable and landlords with possibly vulnerable tenants should encourage the tenant to get letter in support of such a classification – the benefit being that the landlord will then be paid direct!
The local authority does not normally advise the landlord when a payment has been made so it’s good practice to check directly with the authority’s Housing Benefit section if a cheque or other payment was expected but has not been received.
If arrears amount to over 8 weeks the Local Housing Allowance can be paid direct to the landlord and landlords should report to the local authority any arrears of rent as soon as they emerge.

Change in Tenants Circumstances
Landlords must inform the local authority if there has been a change in the tenants’ circumstances and it is an offence not to do so. This was the case also under the old Housing Benefit system but seems to be being enforced more strictly now.
However, under Local Housing Allowance there is now no right to the local authority to claw back LHA paid to the tenant if it later turns out that the tenant has been acting fraudulently in receiving the Allowance.
Landlords should tell the local authority if the rent has gone up or down, if the tenant moves out (even if the tenancy has not ended), if the number of people in the property has changed or any other changes that may affect the tenants’ entitlement.
Finally, it’s always worth landlords getting the tenant to give the local authority permission to discuss the claim with the landlord, so you are kept in the information loop and can progress claims.

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