Benefit Tenants Are Good For Landlords

Wednesday, February 19, 2014
Benefit Tenants Are Good News For Landlords With Rent Protection Insurance

Benefit Tenants Are Good News For Landlords With Rent Protection Insurance

Rent Protection Insurance Useful For UK PRS Landlords

Following the news story that broke in January about Fergus Wilson giving notice to over 1000 benefit tenants in his rental property portfolio in Kent, because he was fed up with tenants living in permanent rent arrears, more landlords are following his lead.

Thousands of UK private rented sector landlords were already wary of letting property to tenants claiming housing benefit or local housing allowance and Mr Wilsons public declaration made even more landlords think twice about allowing tenants claiming any form of benefit to live in their rental properties.

However landlords don’t need to avoid housing tenants claiming benefits as there are a number of specialist products and services available that can help to ensure rental payments remain constant.

Rent Protection by Legal4Landlords offers UK landlords the opportunity to ensure regular rental payments will continue even if the tenant has a sudden change in circumstances.A recent report published by Spareroom.co.uk revealed that only 18% of UK private rental sector landlords currently housed tenants claiming LHA or housing benefit in one or more of their properties. A similar survey carried out two years ago showed that this figure was 30%.

The poll of 1500 landlords, revealed the shocking statistic that more landlords are turning away housing benefit claimants than ever before with 57% of UK PRS landlords refusing to accept any tenant claiming benefits.

Of those landlords who do currently rent properties to tenants receiving benefits, more than half said they would refuse to take any more social security tenants on, after the roll-out of universal credit – the single monthly benefit payment that will replace separate weekly allowances for housing and other living expenses which is being phased in stages across the UK until 2017.

Housing benefit claimants can make good tenants and landlords eager to keep up with buy-to-let mortgage payments should not totally dismiss them without doing proper research into the availability of specially developed insurance products designed to alleviate rental arrears.

Properties that tend to attract Housing Benefit tenants often provide a higher yield and therefore an enhanced possibility that the rent will be greater than the buy-to-let mortgage repayment. For landlords this is essential to any business plan and short-sighted of landlords to impose a blanket ban on tenants in receipt of benefits.

Tenants receiving housing benefit can be some of the best tenants on the market because they tend to stay in a rental property for a longer period of time, resulting in fewer voids and changeovers for landlords. Working tenants can be less stable as they tend move on more quickly and they prefer the flexibility that comes with renting.

Landlords concerned about letting out their rental properties to tenants in receipt of housing benefit or local housing allowance is to conduct thorough tenant referencing checks on all applicants and insist that they have a guarantor in place to cover the rent payments should they fall into arrears.

Rent Protection Insurance – How it works:-

The Legal 4 Landlords Rent Protection and Legal Expense Insurance will protect landlords from defaulting tenants by ensuring the rental payments are paid direct to the landlord in full.

Once a claim is received the Legal4Landlords claims department will review the claim within 7 days, and arrange for the equivalent monthly rental value to be paid to the landlord as soon as possible.

Legal4Landlords will then assess the rent arrears situation and determine whether legal action to evict the tenant is also possible. Once the tenant has failed to pay 2 monthly rental payments Legal4Landlords will usually begin legal action to evict the tenant.

Once the tenant has been evicted and the landlord has been granted a vacant possession, Legal4Landlords will continue to pay 50% of the rental income for a further 2 months. If the tenancy ends before the insurance policy ends, then the landlord can transfer the rent protection insurance policy to cover the new tenants (provided that they pass a full tenant reference completed by Legal 4 Landlords).

Landlords Urged Not To Dismiss Benefit Tenants

Landlords Urged Not To Dismiss Benefit Tenants

This was written by Mike Clarke. Posted on at 11:35 am. Filed under Insurance, Referencing. Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. Follow comments here with the RSS feed. Both comments and trackbacks are currently closed.