Why tenants in receipt of benefits are not as risky as you might think
When I meet a landlord for the first time, one of the first things I ask them is whether they would consider accepting a tenant who is in receipt of benefits. The reason for this is simple - in my experience the majority of landlords will not even consider accepting these sort of tenants, yet this is often where the best returns can be achieved.
If this is the case why do so many landlords discount these tenants without a second thought? I would say, primarily, it boils down to a landlord’s attitude to risk.
Before allowing a tenant into any property I owned I’d certainly want to be able to answer the following questions:
a) Can my tenant afford the rent?
b) Do I think that they would look after my property?
c) What recourse will I have if things go wrong?
The first two questions can easily be answered irrespective of whether your prospective tenant is full-time employed or in receipt of benefits. After all you can verify income no matter what the source and you can take references from previous landlords.
So, it is the uncertainty of being able to answer the last question which normally makes landlords say no to such tenants.
Let’s discuss what you can do to mitigate the risk. As a landlord you can protect yourself to a certain extent by taking a deposit. Up to a point this protects you against financial loss resulting from damage to the property by your tenant.
To a certain degree a deposit also protects you against unpaid rent although the amount is limited to the amount of the deposit so it is no good if your tenant ends up months in arrears.
Realistically, though, unless you can protect yourself against the costs of evicting a tenant you are still open to suffering huge financial loss.
There are now thankfully different options and services available which allow landlords to accept these types of tenants whilst minimising the risks. For more information please get in touch.
*Daniel Sperber is Lettings Director and Owner of IQ PROPERTY.
**Legal note: Please remember that there are some legitimate reasons why you may still not be able to accept such tenants into your property. Some mortgage lenders expressly prohibit this as do the terms of the head lease in a leasehold property. Please check with your lender or solicitor if you are in any doubt.
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Comments
Well, everybody wants the best for their money and that's perfectly normal. I think the reason most landlords have a problem with tenants in receipt of benefits is the fact these tenants look unreliable. Now, I know it's easy to say it and things in life don't always go as planned. Sometimes you can go to a great job one day and lose it the next. You can never know. I think landlords are afraid the government is not going to support tenants in receipt of benefits for a long time. That's the reason for all the landlords' mistrust. Still, even if you have a steady job you can never be sure you won't lose it. As I said, life in the present day and age is unpredictable. This is my personal experience and what I've heard from other people. I work as a man and van in London. The company I work for is called Best Move http://www.bestmove.co.uk/ I always talk with clients if I have a chance to. Losing your job and not being able to find a new one soon enough can drive any landlord to the edge of breaking up the contract. London is a great example of this.