Our regular guest blogger Ben Reeve-Lewis gets out his soapbox, and even peers into his crystal ball …
Housing benefit and LHA – what are they thinking?
I notice today that after climbing down over prison sentences for knife crime the government is also getting,……well not exactly cold, but definitely chilly feet about housing benefit plans. Or are they just seeing sense and listening to people in the know?
Housing Benefit / LHA – the lowdown
In case you’re not aware, in order to cut £1.765 Million from the housing benefit budget the government, amongst other measures, are raising the age limit for receipt of Single Room Rate (SRR) from 25 to 35. The SRR is a regulation that says if you are under 25 and on housing benefit you will only get the amount of rent required to occupy a bedsit. If you want your own self contained 1 bedroom flat you will have to make up the difference in rent yourself
Obviously if you are on basic Job Seeker’s Allowance (JSA) @ £65 a week where are you going to get that extra cash?
Now I don’t means to diss (By which I mean London slang speak for ‘Disrespect’……not the town in Norfolk) landlord’s of bedsits but HMOs (House in Multiple Occupation) are generally regarded as poor quality accommodation with more than their fair share of social problems. For many the only way out of that is when they get old enough to get out from under the rent cap.
Under the new rules, due to come into force in April 2011, a person on benefits is stuck in that type of accommodation until almost middle age.
Panic stations at Local Authorities
When the government announced these plans a few weeks ago many London authorities went into a panic and block booked bed and breakfast accommodation down to the south coast and north to Luton to deal with the anticipated deluge of homelessness cases coming from hundreds of thousands of people who would be priced out of their accommodation. One MP likened the effect to be on par with the Highland Clearances of the 18th Century.
The government seems to have actually listened to cries of protest and have slightly amended the plan. Now, people on benefits already wont be hit by the new proposals until January 2012. however, any new claimants from April 2011 will be affected.
Not being cynical, but …
The idea behind this is to allow existing benefit claimants time to downsize from their self contained flat to a room in a shared house. Now I hate to sound cynical but do you really think that many of the countless thousands of benefit claimants who are going to be affected by this will rush, pro-actively, to move from their flat to a bedsit? I know In wouldn’t!
Don’t you think that it is likely that by January 2012 most of them will still be in their self-contained homes? This just means that the effects of the new model ‘Highland Clearance’ are just going to be delayed for a further 9 months.
What about the landlords?
And how will this hit landlords? Obviously landlords of HMOs will benefit from the increased numbers of tenants looking for available rooms but what about the landlords who will have tenants who can no longer afford the rent because of the cuts?
As is so often the case with all government plans, the savings that are trumpeted in one area just pushes the real cost somewhere else. Extending the SRR may save millions in HB but it is the landlords of benefit claimants who will have to pick up a large part of the tab in rent arrears that they cant recover and costly evictions, perhaps going Dutch with Homelessness units who will have to split the bill and spend out on rehousing some of them.
They have another plan too, which is to temporarily lift the LHA restriction, for landlords who are willing to reduce the rent levels to keep people in their homes. Once again, the landlord is footing the bill for housing benefit cuts. (LHA is the ludicrous and nationally unpopular system whereby direct payments of housing benefit to landlords is prohibited, even if the tenant actually wants it).
I wanted to write this because all of the protests about SRR are in support of the tenants, who I also support, but nobody talks about the landlord side of things here.
Part of government thinking in raising the SRR age limit is to get people off of benefits and into work but the jobs have to be out there for them to have and the recession’s eclipse is wide and dark.
Nobody is saying that cuts in public spending aren’t necessary but Mr Shapps You have to think more than one step ahead before you come up with a plan like this.
What about better HMOs??
Alternatively is it possible to raise the general standards of HMOs in order that they aren’t seen as poverty accommodation? Licensing has been much in the news but I am thinking beyond standard physical conditions and more into the lifestyle quality of them
Until the 1960s there was a long and acceptable tradition of gentlemen’s lodgings, that weren’t considered low quality options. I am not saying that we should wind the clock back and live like Alec Guinness and Stanley Holloway in the Lavender Hill Mob, but surely we can have HMOs that are an inviting and humane environment.
I know an HMO landlord who has internet installed, the accommodation is all clean, well decorated and there is even a sense of community amongst the tenants. Too many of the ones I visit are like something out of Charles Dickens.
Ben Reeve-Lewis
About Ben Reeve-Lewis: Ben has worked in housing in one form or another since 1987. He has variously been a Homelessness caseworker, Head of Homelessness for a local authority, a TRO and Housing law trainer. He now divides his time between doing contract Tenancy Relations work and as a Freelance housing law training consultant for the CIH, Shelter, Sitra and many more. Read more about Ben here.
Speaking from experience, I can’t think of anything worse than living in shared accomodation after the age of 25. It’s good in your early 20s when you like the all-night parties, but when the reality of being an adult sets in, living in an HMO is an absolute nightmare. I never thought I’d be the kind of person who puts post-its on milk but I was nearly tipped over the edge!
I am concerned about the effect of the new rules on the mental health of tenants. Living in a shared house is really no way to live for anyone over the age of 25
Haha. I know what you mean Alice. I spent 5 years living in a shared house and loved every minute of the first 4 and a 1/2. The lst 6 months I thought I would die there if I didn’t get out. And that was a shared community of like minded (i.e. Equally p***ed friends). It must be awful when everyone is a stranger to each other, and you don’t get to choose who you live with, very grim.
Someone out there must run or know of a good HMO that is clean and friendly and well run.
One of the common practices I see in London is for landlords to just leave an electricity key and gas card in the building and let the tenants fight over whose turn it is to put money on it or who uses more electricity than someone else. This creates so much discord and ads to the awfullness.
The other major complaint we get is where there is drug dealing going on and unsavoury characters who don’t live there, keep hanging around and burgling rooms
Oh yes, I’ve heard that one too. In fact, every week I hear horror stories from HMOs – mostly involving gas/electricity disputes, noise, eating each other’s food etc etc. They are really difficult situations to try and sort out. It will only get worse!
i found your comments really interesting. Renting a room when you’re young is a great way to save money. I’ve been a landlady of 4 HMOs for 4 years now and spend alot of time and effort creating happy houses with happy tenants. Sharing a house with strangers isn’t easy so I try to match the tenant with the house. Despite my best efforts to reference check, provide clean and safe accommodation tenants feel it OK to put other residents at risk through drug dealing, smoking in rooms, getting pissed and leaving the oven on! What really needs to happen is for specialist help and advice for HMO landlords, clamp down properly on the bad landlords and for tenants to understand their responsibilities. I love my job but it’s not without it’s trials and tribulations. I operate within the law which is more than can be said for some of my (past) tenants! By the way, 50% of my tenants are LHA claimants but I have more rental arrears from those who are in work. Perhaps it’s because those in receipt of LHA feel they have no other choice and value their accommodation.
Thanks so much for that post HMOL. Its great to hear from HMO landlords and you raise several points that arent often openly talked about.
I am interested to hear you say that in your experience working tenants have given you more arrears than LHA claimants. That flies in the face of common opinion. Much emphasis is placed on tenant referencing and I have always thought this a to be a very curious thing to rely on. Referencing tells you little about the actual person. How many people do you know who have a crap credit score because of some minor problem from a few years back who are otherwise completely solvent these days?
Conversely how many tenants have you had with decent scores who turned out to be a financial liability?
Working where I do I see the absolute worst HMOs and it always seems to me that the landlords and the tenants are the same, so I do am heartened to hear you make the efforts that you do. I know another HMO landlord who runs lettings the same way.
I suppose the question is, how do you get HMO tenants to take responsibility for their lives?
Back in November the DWP published a report based on a survey of landlords responses to the local housing allowance http://campaigns.dwp.gov.uk/asd/asd5/rports2009-2010/rrep689.pdf
It was reported that landlords were increasingly happy with LHA claimants because they tend to stay longer but unhappy with payments being made to tenants. it is reported there that some HMO tenants stay 8 weeks – just long enough to receive payments to themselves before they go over to direct payments, and then move and start again, without ever having to pay any rent.
In my experience this is because HMO tenants often dont value where they live. The HMO landlords in my area operate the same way, in that they don’t bother with rules or licensing and expect their tenancies to be fluid and temporary because there is an endless supply of tenants. That is why they are the worst type of accommodation.
I am about to embark on a project (to get me out of being a TRO) that involves raising the standards of HMOs and would welcome a more in depth chat with you about the problems encountered. I don’t know if my e mail comes up with the post but Tessa has my details.
I completely agree that HMO landlords need help and support. There are grants available and special utility meters for HMO tenants that I can tell you about
Finally, someone who doesn’t think I’m at the lowest end of the Landlord pecking order! When I attend Landlord meetings I often find I am alone in defending the HMO market. You’re right, credit checking doesn’t show the full story so I also rely on gut instinct. If a potential tenant can look me in the eye, answer my personal and nosey questions, and isn’t terrified when I explain the consequences of bad behaviour/not paying rent then usually we get along just fine. As I have 3 young children I am often at pains to point out that if anyone behaves worse than my 4 year old or feeds me more elaborate lies than my ex-husband, they have no place in one of my houses.
I can believe your survey and, from experience, LHA claimants either value their accommodation over and above all else or use the system to get cash and move on. The latter always lose in the end.
I’ve asked Tessa for your email and passed mine on to her. HMO landlording is a grey area and I would love to raise it’s profile and get rid of the Rigsby style reputation. It’s a rewarding investment and, if managed professionally, less risk than other types of letting.
I wish you’d been a landlord when I was in HMOs! All my landlords just wanted the rent and put all sorts of people together that were clearly not going to get on! This just resulted in lots of voids so not financially viable in the long run.
Keep up the good work!
Thank you, Alice. That is truly heartening to hear. My skills are occasionally wasted on some idiots. For example I have been dealing with a gentleman who has escaped paying his rent and is now £600 in arrears. I have been very nice to him as he’s a friend of the other tenants so gave him the benefit of the doubt. However, even they have abandoned his cause and told me to “do whatever it takes to get rid”. We have had numerous meetings, various texts all promising me rent but now the gloves are off. I shall gain possession through Section 21, persue rental arrears and take the required amount of deposit to put the extremely filthy and damaged room back together. You have to “kiss” an awful lot of frogs in this business before Prince/Princess Tenant finds you and you can go forward into the sunset together. My tenants are rewarded with chocolates at Christmas and Eggs at Easter. Also, as rent day falls on New Years Day, I’ve allowed them a lie in and am collecting on New Years Eve instead!
Bring it on girl.
Love your 4 year old/lying ex argument…..I think there is something in there for everyone haha
Not sure about the Rigsby metaphor though…….many HMO landlords I meet make Rigsby look like Mahatma Ghandi. I’m thinking more Harold Shipman…….
Seriously though I can understand people’s reservations about the HMO market based on common experience. The challenge is in changing both landlords and tenants attitudes to them. Where does the change start?
Probably at the landlord end to be honest. I see lots of organisations (train their staff) where the staff are willing and capable but the management couldnt be trusted to run a bath and it trickles down from there. If a landlord created an HMO that was warm, welcoming and homely would the tenants respect that? Dunno but its an interesting challenge.
I think its about values. I have been a trainer for years and I learnt some time ago that offering free courses to get your name out there doesnt work….because its free people dont value it and despite booking en masse nobody actually turns up on the day.
you cant put HMO rents up to a ‘Valuable’ level but how else can value be added that would make a tenant appreciate where they were?
I have the unfortunate affliction of being in eternal optimist and cant help feeling that people largely meet like with like………….mind you, thats why I live on a scrap of waste ground with all my belongings in 2 carrier bags, shouting at the traffic hahaha.
Yeah contact me
You know its those little things like easter eggs that can make a difference. Seriously. A landlord needs to have a presence. Where HMOs come off the rails is where the landlord seems to just chuck people in, throw in a gas card and electricity key trhrough the door and disappear to collect their rent, only appearing occasionally to berate someone.
This causes arguments between tenants, power struggles and qliques as the tenant group morphs into its own system.
My theory is that tenants will often fail in their obligations because the landlord is a distant, almost non existent figure. You would be amazed at the amount of tenants I see who come in for assitance and when I ask them for their landlords name they dont even know it, or they simply know him as Dave or Ashraf.
I suppose that’s the main diference between HMOs and sole tenancies in that you woulod expect a landlord to visit and be as much of a presence in a sole tenancy but for an HMO it is essential for poprerty management.
In your earlier post you said that you get more rent arrears from tenants in employment, why do you think that is? Most people, including me, would expect the opposite.
I completely agree with your ‘Easter egg’ comment. Landlords can often seem like the invisible tyrant that is always there to take your money but impossible to contact when there are any issues.
Respect works both ways, a popular Landlord we know always sends his tenants a basic Christmas Hamper and follows it up with a call to find out if everything is ok. Not only does this reassure the tenants that the Landlord is actually a real person who is there to help, it also results in properties being better maintained due to a sense of friendship and loyalty to the Landlord. It really is a case of ‘a little goes a long way.’
Absolutely. I read an article in landlord and buy to let magazine a while back where a landlord said that problems with his tenants dwindled away when he started providing moving in packs, with tea bags, bin liners etc.all those things that we often forget or cant find on moving day plus a bottle of wine and some flowers.
It does, as you say, reassure the tenant that the landlord is a real person who is there to help.
I have a bee in my bonnet about this and feel very strongly that landlords and tenants should know a bit about each other’s lives. I often have landlords talk to me about tenant’s problems and say “I’m not a social worker”, which is true in the strict sense but I do think that you cant escape being involved in each other’s lives a bit. Because of the ongoing service landlords and tenants are in a relationship of sorts. Its not like buying something and never seeing the salesman again. Your tenants fortunes affect your own.
I remember a while back being shown around a property I was looking to rent, by the agent (Foxtons) and asked him about the landlord and he just looked at me blankly, as if it the very idea that he might know something was absurd.
9 times out of 10 I can resolve a dispute betwen landlords and tenants by getting them around the table. Usualy when the tenant understands that their rent payments are affecting the landlords mortgage and therefore his family things get better.
Being a faceless landlord means you are more likely to get ripped off.