The results of a recent survey show that due to misconceptions over Government Welfare Reforms increasing numbers of private rental sector landlords are now refusing to even consider applicants claiming Local Housing Allowance (LHA), when searching for new tenants.
The Spareroom.com survey showed that out of 1000 UK landlords surveyed:
- 87% had problems with non-payment of LHA by tenants at some time
- 47% refused to even consider LHA tenants because of the potential payment problems.
This shows a real lack of understanding from UK landlords as many LHA claimants are often far more reliable than employed tenants, and all the media hype surrounding the Government’s welfare reform package has a lot to do with it.
Mike Clarke from Castledene Property Management, who are letting agents specialising in LHA tenants, explains: “UK landlords have often felt that tenants claiming benefits were far too much trouble and effort, as granting a tenancy (AST) meant endless forms and supporting documents had to be submitted before a claim could be processed. Landlords operate under the assumption that there will be delays in payments and if tenants were paid directly, there is also the risk that the landlord would not see any money for the rent. They only see the negatives and often ignore some of the positive aspects.”
- LHA tenants generally remain in a rental property long term as they view the property as a home rather than just a place to live.
- LHA tenants also care for the rental property as if it was their own.
- The rental income from LHA tenants can still be significantly higher than from employed tenants.
- Contrary to popular belief, Landlords can still get direct payments from local authorities.
Legal 4 Landlords recommend that UK landlords should always conduct thorough tenant referencing and always take out Rent Guarantee insurance for their tenants as a back-up in case there are problems with rent payments or delayed LHA claims in the future.