Local Housing Allowance paid direct to Landlords a must

The law was brought in to empower tenants and make them feel part of the buy to let market place and there are many good tenants that are honest and pay the allowance over to the landlords and would have no problem with the rent being paid directly, however, there are still a large number that are not so conscientious.  I wrote to Tony McNulty MP at the Department for Work and Pensions at the end of 2008, expressing my concerns at the way the system currently works and it took him nearly 3 months just to acknowledge my letter and then his response was to insist that safeguards were in place to ensure it worked properly.  I beg to differ.

An Ealing landlord emailed to say her tenant had started to claim housing benefit but had lied about how much she was receiving and when she was being paid so, after a few months of not receiving her rent, she rang Ealing Housing Benefit direct to find out what was happening.  Due to the Data Protection Act, they were unable to pass on any information but, as she was owed the equivalent of 8 weeks rent, she was able to apply to the council to be paid directly which she duly did.  However, the tenant used her 30 days to object and, soon after the rent was paid over by the council, she left the flat without notice, leaving 16 bin bags of rubbish behind, a fridge and cupboards full of food and, all this, just before Christmas.  To add insult to injury, she invoiced the landlord £5,000 and insisted that her deposit be used as rent, despite the fact that she caused so much damage and the landlord is still in the process of renovating the property.

As the landlord in question quite rightly pointed out to Ealing Council, her tenant had embezzled £2,600 of tax payers’ money and the tax payer loses out on many counts.  Their reaction?  They just laughed and said it happens all the time.  A tenant in receipt of housing benefit does not pass it on, waits for the landlord to apply to the council directly, waits 30 days for their objection to be heard and, as soon as the money is paid directly, they leave without notice.  The council recognises that their system is being abused and yet it is not regarded as benefit fraud, but as a civil case between the landlord and tenant. 

This tenant was taken to court and the case won, however, she has refused to pay in full, threatening to declare herself bankrupt.  Like many, as an educated single woman of 45 who is quite capable of securing a steady job, she is abusing a system that was designed to help the not so well off.

Funnily enough, my next story is also from Ealing.  My landlord found the tenant through the Ealing incentive scheme who paid him £3,500 to take the tenant on.  The tenant had to pay one month’s rent to move in – no deposit was taken.  One month into the tenancy and no more rent was forthcoming, even though he knew it was being paid for by the local housing allowance scheme.  The payment of rent was suspended to the tenant who wrote giving her one months notice to reply.  If she ignores the letter, however, the landlord does not get any more rent.  The arrears to date total £5,360 and Landlord Action are sending out the rent arrears notice today. 

A North West London landlord was asked to house a single mum arriving from Nigeria and was told it would be her plus one child, although it was later established that there were four children in the property.  The tenant started off well and passed over the rent for a couple of months  – then it stopped, building up arrears of around £3,000 which is where it stood when we were contacted by the landlord to evict her as he wanted her out to get a more reliable tenant.  She was successfully evicted and, in this case, the money was eventually paid back although it did take a very long time and, unsurprisingly, it put the landlord off letting to housing benefit tenants again.  The tenant in question?  Well she went on to be re-housed by her local council!

The majority of cases we deal with are pretty standard in that housing benefit tenants are moved into a property, pay up for a couple of months, and then stop paying.  The old hands are very clever in that as soon as the problem is brought to the attention of their local council, they vacate the property before it gets to court.  This ensures that their name has not been logged anywhere and they are free to move on and be re-housed.  It appears that the money is regularly used for drink or drugs, with police raids being common place on the properties.  One landlord who was not being paid his rent was aware that his tenant had purchased a large plasma TV screen and a new laptop, despite owing him £1,000 in rent arrears.

Have your say on this contribution using the comment section below.

9 thoughts on “Local Housing Allowance paid direct to Landlords a must

  1. Ben Hall

    As a Buy to Let Landlord I automatically refuse any applications from people who are on benefits.

    Before this legislation I was quite happy to take on the unemployed knowing that the rent would be paid from an official source.

    Now..well, sorry…I’ve seen too many of my colleagues bitten by tenants who have spent the rent money.

    I’m a pensioner. My buy-to-lets are crucial to my living income. I can’t afford to take risks on tenants because the liberal chattering classes wants to make the unemployed feel good.

    Wheel in the Tories. Take away this legislation, and my flats are open to all comers

  2. Mick Roberts

    http://www.publications.parliament.uk/pa/cm200910/cmselect/cmworpen/memo/local/ucm0602.htm
    That link is a report I’ve just done for the Govt, has a lot of points in as I own a load of Housing Benefit properties & have seen nothing, but arrears, arrears, since they’ve been paying tenants the equivalent of a credit card debt, when a credit card company wouldn’t give ’em a credit card, the Govt just don’t listen, but as time goes on, & the more of us moan, I think they are now starting to take notice. THICK THICK THICK-Why don’t they listen to the people on ground level (us Landlords) that knows what’s going off?

  3. SurreyLets - Sally Asling

    New to site – apologies if I break any nettiquate

    IMO the rules that meant tenantss on LHA got their rent paid to themselves has been preventative to the cause. I meet lots of genuine lovely people who have LHA top up or paid totally, however without a g’tor, I cant help them. Its too risky as Landlords cant get rental insurance

    I have many Landlords that with take LHS tenants but they want the rent paid directly to them

    All the rule change did was make it harder for the people they were trying to help.

    I think its utterly unfair and rather outspoken of the previous poster to suggest money goes on drus – how steriotypically morally and socially irrational that is. Its a misrepresentation on millions of families who genuinally do need help for a sometimes short while. I am amazed a so called pro LL would write this. I AGREE that there are more arrears and I agree most Landlords wont accept LHA and I can see that paying somone already cash strapped is not wise, however we cant make generalizations like this, its not fair or right.

  4. Major Landlord

    I am a professional landlord. I think I would rather believe the facts as recounted by Landlord Action, based on thousands of cases nationwide, than the politically-correct views of a local lettings agent whose experience of LHA-funded tenancies going wrong is of necessity rather narrower.

    They are not saying (and neither am I) that ALL such tenancies are with people who spend their LHA on drugs, they are pointing out their experience of the consequences of the crazy decision to give money to some people whose priority is feeding their habit rather than paying their debts. Let’s face it, the reason why many LHA claimants need to claim benefit is because they are (for all kinds of reasons) not good with money. It’s like curing an alcoholic by giving him the key to the drinks cabinet, to see if he can resist the temptation.

    Yes, there are lots of really nice people claiming benefit and paying their rent on time. Some of them are my tenants. And I still take claimants, but now strictly on MY terms: larger deposit, and guarantor. That rules out many applicants. It’s not their fault or mine, it’s the fault of the government.

    I have had TWO tenants trash my two of my houses. Total cost of repairing damage was £20,000. Both were benefit claimants. Both withheld rent. Both had to be evicted. Both were on drugs, it emerged. One dealt drugs from my property, the other grew them there as well.

    With respect, I think lettings agents should keep quiet about this subject: both of these tenants were introduced by agents, and both agents were nowhere to be seen when I had to go legal. Agents never pick up the tab, we landlords do. I now do most of my lettings myself. Strangely, I never have problems with the tenants I choose.

  5. tony

    I would suggest all landlords tired of using letting agents to try out ww.rentdirectuk.co.uk, a website dedicated to bringing propsective tenants and landlords together.

  6. Victoria

    Due to the ‘credit crunch’ unemployment has gone up, therefore, benefit claimants has gone up, there is no getting away from that.

    I have a small number of ‘council properties’ and have encountered only a handful of problems with LHA to tenants, however, my managing agent has made measures to cushion the blow somewhat. Too much temptation is put in the hands of tenants and some know all the scams, keep 8 weeks rent, then move onto the next unsuspecting landlord.

    As for trashing of property, a professional could so this (which I discovered myself), that is what house insurance is for and covered me for loss of rent.

    The government, needs to stop this making people financially responsible in the current climate, and stop homelessness increasing by paying HB to landlord and securing a home.

  7. Victoria

    LHA needs to be sorted, when I approached the council regarding safeguard measures for landlords, they basically said they were non existent! Even if a tenant is claiming HB and it is being paid direct to the landlord, it is up to them if they asked the council to cancel the claim and there is not a lot you can do as lovely local solicitors are making it hell on earth to evict the tenants even if they owe a fortune!!

    The tenant is ‘allowed’ to spend 8 weeks rent, to a landlord this is approx £1000 in the north east, but this is ok, because landlords are made of money!! (not) One of our tenants went missing for a fortnight, to come back like a bronzed goddess with false nails and a metre long hair, the only thing missing was the sombrero, when are the councik gonna wake up to this??

  8. Karen

    I am having a really bad year with bad tenants
    I had a tenant who has just left who was on DSS -paid me late every month and constantly asked for improvements to be made to the house – mainly which were things he had destroyed or could have easily improved himself. I offered to buy him a brand new cooker which he said was not big enough for his saucepans ! I then issued notice to quite- he then stopped paying his DSS payments to me and kept him for himself. I knew he wouldnt pay more rent so rang DSS and they suspended his payments saying they would pay me directly when the dispute was resolved= ie when he had moved out –
    He did not move out after the section 21 notice and we had to go to court – waited 9 weeks for a hearing and he went on the day of the hearing. I had updated the DSS over the months and at no time did they tell me that the tenant had withdrawn his claim – !!
    Until he left and I rang to ask when I would get paid. I have had no rent since January and he has trashed my property.
    I do not know where he has gone to but he must be claiming elsewhere – which is a disgrace since he owes me over £2000 in rent plus over £1000 for damages. The DSS should have informed me he had stopped his claim and then i would have taken him to court for non payment. Now I dont know where he lives, though I guess he has no money to re pay what he owes me. I also think he told his friend who lives nearby in another of my houses to do the same thing – ie stop claiming. If you are moving on and arent paying your own rent anyway why not just make another landlord miserable.
    This is blaitant government bias and an encouragement for non contributors to be vindictive and yet protected by the system. I found out this man did the same thing to his previous landlord – he has left piles of letters from police, council tax non payments, tv utilities bills unpaid , arrears in credit cards etc, the normal thing –
    Let’s be honest this group of people cost the country fortuntes of money and enjoy the protection of the state

    When will this end ??

  9. ilda machado

    i understand the landlords concern about the legislation. of course if you rent a property, you will want your rent paid properly and on time. but also is a sheme the properties that some landlords have to dss/lha tenants. i am a lha tenant because i have 4 children. i am working full and permanent time at heathrow airport, i always paid my rent properly and care for the house that i am living in. and in the end of all of this i am considered as anothers tenants. do you know? is not fair. but the big problem is if i need move out for any reason i will get struggle to find a nice property to move in. why? because i am a lha tenant.

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