Mary Latham, professional landlord with over 40 years experience has taken time out of her busy schedule to exclusively write about her own experiences as a landlord. In particular, Mary focuses on a relevant question in today’s rental market…‘What do I do if my tenant ends up on benefits?’
Keep an eye out over the next few weeks for this three part series of personal experiences which should benefit not only landlords but tenants who find themselves in not too dissimilar situations. Over to Mary…
Many landlords tell me “I wouldn’t take a tenant on benefits” and my reply “How do you avoid them?” Let me explain.
Until a few years ago I had never had a tenant who relied on benefits to pay their rent, most of my properties are let to either students or those who have good jobs. For years I had helped landlords with issues relating to tenants on benefits and I had also heard from many landlords that some tenants on benefits make great long term tenants. It was not until some of my own tenants had a change in their circumstances that I had firsthand experience.
Case 1: Tenant on benefits as a result of losing his job
A young couple with a child moved into one of my flats, their credit references were good and his earnings were easily high enough to cover the rent. For over a year the rent was paid in full and on time and they were happy tenants and were enjoying the new baby who had just been born. One month the rent was late and after a week I called to ask if there was a problem.
I was told that there was no problem and that the rent would be paid the next day. The next day part of the rent was paid. I called again and this time a tearful young woman told me that her partner had lost his job and she needed to talk to me. I went to see her and what transpired was that she had thought that they had savings which would cover the rent until he found a new job.
When she heard from the bank that there were insufficient funds to cover the standing order for the rent she went to see them. She found out that their savings account was empty and they had no money in their current account either. She confronted her partner and he eventually admitted that he had an on-line gambling habit and he had gone through their savings hoping for the “big win”.
Their relationship broke down and eventually he moved out. She approached the Housing Benefit department and made a claim. She would be paid enough to cover the rent but only from the date of the claim and by this time she was 6 weeks in arrears and had no way of getting the money to pay me.
Cutting a very long story short the partner came back and the rent arrears rose to 10 weeks. By this time I had served a Section Notice on them. One day she called me to say that she had been offered a property in a cheaper area and that the Housing Benefit would cover her new rent but they had no money to pay what she owed me and if I evicted her she would lose the other property. She wanted to move out at once but she had no money to pay for a removal company or van hire. I agreed to write off the rent arrears and to pay for the removal van and they moved on. This was the best option for all of us, since they had no money and no assets.
The lessons from this case
- Tenants’ must claim as soon as they are eligible otherwise they will never catch up on the rent that they owe
- I needed to know the details of the claims procedure and the forms needed
- I needed a “direct payment” clause in my tenancy agreement in future
- I needed a blank direct payment claim form on file
- I needed to serve a Section 21 on all my future tenants during the first fixed term and then allow the tenancy, as I always do, to become statutory periodic tenancies so that the Section 21 Notice remains valid and has no expiry date.
Mary Latham (@landlordtweets)
Mary’s experience is common and no matter how strong your intentions to find tenants in work, nothing can prepare you for what may transpire to your tenants’ situation during the tenancy.
Most importantly, resolutions to situations like this can only be resolved through landlord and tenant communication. Ignoring the situation may result in a scarred credit history with County Court Judgements which may have future implications on the tenants’ credibility when renting again.
Tune in next week for another of Mary’s landlord experiences in part 2 of 3 articles focusing on her own landlord and tenant relationships.