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Benefit changes may lead landlords to quit
25th April 2008
Hundreds of Colchester landlords may refuse to let their houses to people receiving housing benefit because of changes in the way Government money is handed over.
From this month (April 7), new tenants who are entitled to have their rent paid through what was previously called Housing Benefit will have the cash paid directly to them through their own bank accounts.
The aim is for tenants to hand over the money to the landlords each month as part of the Government’s agenda of increasing choice and personal responsibility and helping to develop skills to make the transition into work.
Some tenants who will qualify for the newly-styled Local Housing Allowance (LHA) stand to receive monthly payments for hundreds of pounds to cover the rent.
But Colchester landlords fear this cash may never be handed over as it may prove too much of a temptation for some tenants who may not be accustomed to taking responsibility for handling large amounts of money.
“Colchester landlords’ main concern about these new arrangements is that they may not see their money,” explains Richard Jones, manager of Letting Solutions in Colchester.
“They may not want to take the risk of losing money and they may decide that it is easier to withdraw from letting to new LHA tenants – and move over to private sector tenants exclusively.
This change in the way the money is being paid could bring about a reduction in the overall numbers of properties to let in Colchester just when the demand for homes to rent is increasing as a result of the on-going credit crunch and difficulties in obtaining mortgages,” warns Richard.
The new LHA arrangement is managed through Colchester Council’s housing benefit teams on behalf of the Government.
Under the new rules, if the rent is not paid, the landlord can take the tenant to court and evict them, which mean families may lose their homes. However, in most cases, local authorities may still have to find them accommodation, especially if children are involved.
Richard Jones explains that if landlords do not receive his money for two months they can apply to have the money paid directly to them - but any rental cash lost in those eight weeks will not be retrospectively paid.
Lettings Solutions is meeting the challenge by working exclusively with a major housing association – which is exempt from these new arrangements – so that landlords can be offered a long term lease and guaranteed realistic levels of income for a period of up to five years.
Lettings Solutions – which offers a range of service levels from finding tenants, through to rent collection and fully managed service - offers a range of packages designed to minimises voids in tenancies and promote guaranteed tenancies.
Says Richard: “We are run by a landlord for landlords and we understand the issues involved with the introduction of this new Local Housing Allowance.
Our aim is to remove the risks of non-payment which Colchester landlords fear may be a result of these changes.
We are confident we can achieve the highest sustainable level of rent for landlords with a minimum of expensive voids.
Because we are in a position to offer guaranteed tenancies, we hope landlords will not fall away from the Colchester market.”
For more information, and to contact Lettings Solutions, call 01206 244750 or email info@lettings-solutions.com
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