For anyone applying for property through letting and management agents, registration, credit checks, tenant referencing and admin fees can cost the average tenant about £120, with no guarantees of securing the property, only to pay it again when applying for property through another agent. The high deposits demanded as security on accommodation can also set the average household back a further £1000 on average.
Earlier this year, figures released by DWP revealed 1,521,980 tenants in the private rented sector were claiming housing benefit, over a 40% increase on 2008 figures. As demand for available housing stock reach unprecedented levels, rents are rising to all time highs.
The recent LSL property buy to let index reveals rents have again peaked, smashing their way through the £700 barrier and for London tenants rents are now an average £1006 per month. As a result of surging tenant-demand, tenants applicable for housing benefit are being snubbed in favour of working and higher earning tenants.
Lorna Rose, director of TenantID believes fairness should be restored to the private rented sector. “Many tenants on housing benefit are good payers, but are penalised. There is no evidence to suggest that claimants of housing benefit are less likely to pay the rent than tenants who work or on higher incomes.
“Government caps to housing benefit introduced this year on new tenancies has discouraged landlords from accepting tenants on benefits. The TenantID database, which holds information on tenants, such as their rental payment history will give them a fighting chance with landlords. A good payment history will allow them some opportunity when competing with wealthier tenants if they have been good payers.”
The TenantID scheme, launched in March this year has been given a welcome reception from the private rented sector. The free scheme, allows landlords to register tenants, allowing other landlords access to tenant history, reducing the risk of letting properties to bad tenants and deterring tenants from with-holding rent, property damage and breaching tenancy agreements.
A survey last month published by the National Landlords Association revealed 58% of private landlords are withdrawing property from tenants on benefits. Pre-election, the conservative party confirmed that should they form the next government, they would re-instate the option for housing benefit to be made direct to landlords rather than the tenant. As a result of the government’s change of heart once elected, landlords are now refusing property to tenants in receipt of benefit amid concern that rent payments will not be passed on to them.
Adding additional fuel to the issue, the new reduced rates of housing benefit set by the DWP has further limited the chances of tenants claiming housing benefit being offered property by private landlords. It is estimated that the caps will cost a landlord an average £600 per year per property, in London considerably more. Considering mass interest shown in available housing in the sector, landlords are able to cherry-pick tenants, with a choice of 5 tenants to each available property.
In order to develop and educate landlords and management agents about housing benefit legislation, the Landlord Information Network (LIN) has been recently established to give professional help. Claire Turner, director of the network said: “Having carried out extensive research with private landlords and letting agents many still believe that “tenants on benefits are not an attractive prospect for a landlord”, in fact many landlords still include ‘No DSS’ in properties to let advertisements, which, effectively, discriminates against 1.5m tenants trying to rent properties in the private rented sector. Many landlords still prefer tenants who work – Why? “Because, according to the landlord, they can pay the rent.
“However contrary to this view, following 26 years experience working with tenants on benefits and their landlords, as long as the landlord has a good understanding of the Housing Benefit Regulations and associated loopholes, letting to tenants on benefits often provides healthy rental rates and good long-term returns for landlords, with tenants who are more likely to achieve secure, long-term and sustainable tenancies.”
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