Benefits Street- on Channel 4 – Would I take benefit tenants as a landlord?
The new program which aired last week on Channel 4 has hit the internet and the media with a storm. If you have not heard about this program where have you been? It is about a street in Birmingham where the vast majority of households are on housing benefits
Click the below link to watch the program on channel 4oD if you have missed it. It lasts approximately 45 minutes so set some time aside and enjoy!
So back to my first question now you have watched this program- would I take on benefit tenants as a landlord?
YES, YES and YES.
This documentary has portrayed people on housing benefit in a bad light. People can be good or bad, it is not there financial situation that determines this.
If you do the right checks on your new tenant(s) it does not matter if they are on housing benefits or not. If your starting point is right, you will have a greattenant who will look after your property .
So why did I say YES, YES and YES?
- A lot of the time benefit tenants allow me to maximise the rents in the North East. Often tenants on benefits with a contribution allow us to maximise the rent above what the market rent is. E.g. in Gateshead a 2 bedroom flat in Bensham rents from £395.00-£450.00 depending on its condition. Housing Benefit rates for a 2 bedroom in Gateshead is £442.52 pcm. Therefore if you accept a tenant on housing benefits you can maximise the rent to near £450.00 and add a contribution from the tenant if necessary.
- In the North East, my experience of good benefit tenants is they treat the property like their own. Generally their expectation is not house ownership but to rent. These type of tenants often put a lot of money into the property as they see it as a long term home. A good example of this was recently when a tenant put in a brand new kitchen in- let’s just say the landlord is extremely happy.
- I find tenants on benefits like to stay in the same area. Tenants on benefits often want to stay in the same area as their family. If a tenant has their mum living next door or sister or brother it is obviously going to make them more settled and not likely to move. You therefore have tenants who want to stay longer, in my opinion.
- Less rent arrears- we apply for all of the housing benefits to be paid direct to us. We make sure the tenant fills out all of the required documents before they move into one of our managed properties and we monitor any changes in circumstances that may affect benefits and jump on these issues straight away if there is one.
- Expectations- benefit tenants expectations of a property in my opinion on the whole are lower than someone who is working (controversial) because they have no other choice. The standard of your property does not generally have to be as high, for someone on benefits. While we would all like to offer show homes to our tenants we do need to live in the real world and pockets are not bottomless. If the carpet is 5 years old and looking tired, accepting a benefits tenant over a professional could be the difference between replacing the carpet.
Some of my best tenants are on housing benefits! I enjoy working with people on housing benefits and again if you do your vetting criteria right from the start you will get good people- it does not matter if they are on benefits.
Can I back this all up?
In 2013 we had less than £1k of rent arrears across 157 properties that the company owns. Approximately 60% of our tenants are on housing benefits.
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2014- Make Passion the Fashion and let’s get your pension pots working!