Local Housing Authority (LHA) landlords in the south-east have found themselves falling on hard times recently, according to one expert. Aki Ellahi, director of Dssmove, told Property Wire that since the housing benefit cap was introduced, rental incomes have dropped by as much as 50 per cent nationwide. However, with rents higher in the south-east, the shortfall in rental income has been much greater.
Since the GBP 500 weekly cap was introduced some LHA landlords have failed to receive the top up money from clients to pay the difference between the LHA allowance and the monthly rent. This may discourage further property investment, not to mention dissuade landlords from taking on LHA tenants.
However, Mr Ellahi claims that as long as private landlords conduct pre-qualification checks, they have no reason to avoid LHA tenants. "These checks should include seeing evidence of a potential tenant’s benefit income, seeing what LHA allowance they have been given, and checking to see if they qualify for the full LHA allowance," he explained to the news portal. "The landlord should also make the tenant aware that they will have to pay the difference between the LHA allowance and the monthly rent."
These practices should be embedded in standard procedure, with landlords always assessing a potential tenant's income to assess whether they are able to afford the rent or not. Of course, this isn't easy for landlords with existing LHA tenants that have seen their benefits cut. In this instance, Mr Ellahi claims there are two options available: To negotiate a top up payment or evict the tenant.
The latter risks a period when there is no rental income coming in at all but with demand for property high in the south-east - where the effects will be the greatest - finding new tenants may be easy for high quality rentals. However, private rents are rising, meaning the gap between what benefits cover and the asking price will grow. HomeLet's July 2013 Rental Index showed the overall cost of renting a home in the UK has increased by 1.8 per cent on average, taking the total to GBP 826 per month.
- Monday 09 September 2013