According to a recent survey carried out across UK landlords, those who accepted tenants in receipt of housing benefit were struggling to collect regular rent payments and nearly 90% of those surveyed reported serious issues with late or non-existent rent payments in the last year.
Why is this happening?
The government recently changed the housing benefit rules to give tenants more freedom over how they receive their benefits payments. Housing benefit used to be paid directly to landlords, but tenants are now entitled to have their money paid directly into their own accounts, which puts the onus on them to pass the money on in the form of rent. Clearly this is not happening in the majority of cases and landlords are struggling to deal with late payments or tenants who simply do not want to pay their rent at all.
And to make matters worse, the local authority will not pay housing benefit payments directly to a landlord until the tenant is at least eight weeks into arrears—which is not much use if the rental payment is intended to cover a mortgage!
How can you prevent this from happening to you?
If you choose to accept tenants in receipt of housing benefit (and around half of those surveyed said they preferred not to rent their properties to tenants on benefits), it is worth insisting on a larger deposit up front to reduce the risk of rent arrears. Alternatively, ensure the tenant has a guarantor in place in case they decide not to pay the rent at some point in the future.
