LHA tenants get a bad press - often unfairly so. Here are the advantages, and disadvantages, to renting to this type of tenant.
Key points:
1. According to research, LHA tenants stay in properties for twice as long compared with non-LHA ones.
2. You can apply to the council to get housing benefit paid directly to your account if you have a good reason (like a failed credit check).
3. It can be harder to evict an LHA tenant.
The type of property you need for this type of rental is a two to three-bed flat or house, big enough for a couple and between one and three kids.
Post-housing benefit capping, this type of rental makes sense in areas of London where the typical rent isn’t too high - so it’s unlikely to make you money if you're renting to LHA tenants in the prime areas of the capital.
The benefit: your tenants are likely to stay put longer, and they are more likely to view the property as their home rather than a short-term stop. This means less hassle, and tenants who are more likely to treat the property well.
The downsides: there may be increased hassle - your tenants may not speak English very well and there is more forms the local council require you to fill in. It can be harder to evict tenants when a local council is involved.
Should your tenant fail the credit scoring, or they don’t have a bank account, you can apply to the council to have the rent paid directly into the bank account of the landlord.
One approach to due diligence is to organise a conference call with the tenant and the local council, checking that all the tenants’ claims are up to date and no payments have been missed.
You can buy rent guarantee insurance tailored for LHA tenants. Traditional rent guarantee insurance doesn’t cover tenants who fail their credit checks, but this specialist insurance will do (at a higher price).
"James Davis, our founder, CEO, and long-term landlord to LHA tenants comments. “It’s a high maintenance type of rental, but, in my view, it’s ultimately worthwhile."
I WOULD ADVISE ANYONE NOT TO GO DOWN THIS ROUTE FROM BITTER EXPERIENCE.
I do agree with above comment, we have had now two experiances with LHA tennants, first one trashed our home, unbelievale really, second time we took LHA tennats on, we only agreed to let the intially use LHA until they got back into work, as they was reloacating and had to source out new jobs for themselfs, this turned out to be LIES, none of them was in wotk after 6 moths was up, and when we asked for the property ground maintence fees to be paid, they got all shirty about paying it, saying the council are willing to pay it for them???? so we aksed in writing to update their circumstances to us regarding their employment, because we thought at 6 months they must be all in work, we was ignored, so this set even further warning bells out to us, so we sec21 them, we was so fed up being landlords, so decided to sell up, fed up with trying to be nice and good to people only to be stabbed in back later for it, on the general rule, I would say dont let to LHA, but! there is some great LHA tennats out there, and trouble is you dont know which ones they are, we thought this family was ok, until after they moved in. before and after they moved out, all we got was abuse in texts and emails, so glad they are gone now.