When it comes to renting, private landlords have the luxury of being able to pick and choose their tenants. Due to this, many decide against letting low income people stay in their properties.
However, what if you are struggling to find a tenant? What good is a property if it is sat vacant and not making you any money? In this case, you might ponder the possibility of opening up to a larger market by renting to those on benefits.
Is this the right decision to make? Well, it’s a complicated question to answer. This article will explore various different points, and it’s up to you to decide if landlords should rent to tenants on low income.
As with any potential tenant, you need to do your research. This isn’t simply a couple of references or browsing their social media profiles, either. You need to delve deeper and analyse their credit rating and if they have any debts. If they are in the red and have a poor credit score, this lowers the chances of them being reliable with their rent payments.
Another issue is that a tenant might be lying about the amount of benefits they receive. In this case, you can utilise free benefits calculator as a way of cross-referencing their figures. Check out the guide from Money Saving Expert to see just how it works.
If there are any large discrepancies between their numbers and the ones you generate with their information, it’s likely they’re not being truthful about their income.
The issue of the initial deposit
For those on a low income, there’s often one significant problem they face when renting: raising enough money to pay the tenancy deposit.
They might receive assistance from their local council in that regard, in the form of a bond, guarantee scheme, or rent deposit. If that’s not an option, there’s still hope for them yet in the form of a cash loan.
Cash loans are available for those with a poor credit rating, and they are a great way for getting a sizeable amount of cash – deposit-sized ones in fact – in an instant.
You can even make use of them too if you find that they aren’t able to pay their rent on time later down the line. Keep yourself secure financially by taking the loan out, and then once they have paid the rent, you can pay back the loan. However, this is a worst-case scenario.
The possibility of benefit changes
A low income tenant might be receiving a certain amount of benefits already, and they will be lined up for additional housing benefit. The amount of money will depend on various factors such as their income, age, if they have children and/or a partner, a disability, and so on.
With that said, the situation can quickly change. Previous evidence highlights how the government recently made housing benefit cuts, for instance. If this happens, your tenant might find they can no longer cover the full rent. This can then cause obvious problems on your end.
Ultimately, there is no right or wrong answer to the question of the article. In certain cases, a low income individual on benefits will be the perfect tenant. On the other hand, they could end up being nightmare tenants where they fail to make payments on time.
When picking a tenant, always do research and trust your instincts.