Room Rates Down and Bossy Women Exposed

Last week two lovely ladies from the Council (whom I’ve nicknamed the HMO Inspectors) came to visit for my renewal licence.  They were very complimentary and we had a chat about the challenge of housing LHA tenants.

This prompted some research: I know we’re in a recession and I was on the understanding that LHA rates were set reflecting current market levels.  Why then, has the weekly shared accommodation rate gone from £73.64 in March 2010 down to £71.50 in 2011 then down again to £67.00 in 2012 despite the fact that, looking in our local paper you can’t get a room for under £90pw and some ads were even asking £130pw up from an average of £75pw three years ago!?!  Visit http://www.lha-direct.voa.gov.uk to check out the rates nationwide.

To those who keep a close eye on the rental market, this won’t be news but to anyone else, consider this:

  • Waiting list for council homes is typically 5 -25 years
  • There are no legal requirements to house my typical tenant – over 21 years old, single, in possession of most of their mental and physical faculties.
  • Any market rent over and above the LHA rate must be paid for by the tenant from their other benefits e.g. Jobseekers which is set around £65pw
  • This leaves £42pw disposable income which, depending on your point of view, is either just enough to stay out of trouble or an incentive to work illegally

The ladies seemed surprised when I told them that, despite informing Housing on 7th June  of one tenant being 8 weeks in arrears and requesting direct payment – well over 2 months later I still haven’t had any contact or money from the Benefit department so I shall now reluctantly serve a Section 21 notice before I have to apply for charitable status.

Now, I’m a patient kind of girl and hate to see people being taken advantage of, but is it really any wonder why, according to Landlord Today, that over 59% of ads stipulate no Housing Benefit?

Octavia Hill – My New Heroine

Leading on, I was led by Ben Reeve-Lewis to an article in the Guardian about Octavia Hill, the social reformer who collected her rents in person.   You can read the article here but one of the reply comments said “Octavia adopted a very strong, controlling influence over the lives of her tenants…”

I can see how my methods could be viewed as similarly dictatorial but it remains, as in her day, that we are not all created equal and some tenants want help, advice or just someone to chat to.  I’m careful to be appreciative, even grateful, of any rent received and, if a tenant doesn’t want me to interfere, I’ll happily accept a standing order weekly or monthly which is easier than being given permission to sift through their pants drawer to find the cash because they can’t be bothered to get out of bed.

The benefit of personal contact in ANY market can never be underestimated.  Take Andrew: he’s fed up with his job (street selling) and has got himself an interview as a chef.  With scant reading and writing skills his career options are limited but he phoned me today to let me know the good news.  We chatted about what he was going to say, which questions he might be asked and I reminded him of his positive attributes which he needed to get over to the interviewer so she’d forget about his Community Service Order.  With no family to encourage him and friends who would take the p**s out of him committing to a full time job, I hope that keeping me up to date is mutually beneficial.

Gwynneth Paltrow – Makes Me Want To Try Heroin

Talking of interviews – Times Style interviewed Gwynneth Paltrow on how she juggles the demands of being a working mummy.  Oh to have to worry about dividing quality time between the kids and the yoga instructor, travelling between homes in London and Los Angeles  as well as keeping  a gorgeous rock star husband sexually satisfied.  Somehow I can’t quite see the Sunday media wanting an exposé on how my kids enjoy spending their summer holidays on room viewings, rent collection or tenant chasing whilst I balance life in the fast lane trying to talk to ANYONE from Housing Benefit with day trips to Legoland!

7 Comments

Filed under being a landlord, Future of HMOs

7 responses to “Room Rates Down and Bossy Women Exposed

  1. owen

    Stop being so soft ! Serve a section 8 notice as soon as the tenant has 8 weeks of arrears (which for monthly tenancies is the day they miss a second monthly payment, not the end of two months). This should push the tenant onto the emergancy list for HB to deal with because they are at risk of homelessness.

    • Ooo, you’re so harsh! Of course you’re right and I’m not sure our council have come round to the idea of pre-booking park benches. Notice prepared and being served this evening!

  2. According to the Valuation Office Agency, who are responsible for collecting data on private rents and setting the LHA rates, they “work with thousands of professional landlords and letting agents to compile a list of rents representative of the private rented sector. Rent Officer valuations are currently based on information from around half a million private rents agreed within the previous twelve months.” They don’t say anything on their website (http://www.voa.gov.uk/corporate/RentOfficers/index.html) about how they calculate room rates, specifically.

    SpareRoom publishes a monthly room rental index (www.spareroom.co.uk/rentalindex) which we believe to be representative of average private sector room rates in the UK and have offered the VOA access to this information to help them set rates for rooms (no response yet!).

    Where are your properties, HMOLandlady, and how do your rates compare with the averages published in the SpareRoom rental index?

    • Hi Spare Room

      Your report is very interesting and shows that the average room rate is more than the VOAs but that could be because theirs don’t include inclusive bills I believe.

      Thank you for posting and I’ll keep an eye on your index. My rooms are on the south coast and I’m discovering that, by keeping the rates low, I have virtually no tenant turnover these days but have just taken on the management of another landlord’s 10 rooms.

  3. It depends how much they differ by – it’s true that our index shows rents inclusive of bills, as this is how most people prefer to see rental amounts.

    Good luck with your extra 10 rooms – and let us know if you need help to advertise them!

  4. Hi, I just discovered your blog and you are pretty amusing. Loving it! Must read more as you seem to be quite involved with your tenants. I just started HMO-ing and am trying to figure out what my relationship with my customers should be. I am a friendly person so I get quite involved but I wonder…

    • Hi Rosemary. First of all, thank you for your kind words and for reading! The best advice I learnt from a lady who ran 80 HMOs (personally not an ambition of mine!) was to remain professional and polite at all times. Carry a notebook to write down what’s said and consider your responses based on fact not emotion.

      I used to get very involved in everyone’s problems, but for my own sake have had to back off otherwise I would’ve turfed the kids out of their beds and accidentally fostered a bunch of middle aged blokes looking for a 24 hour support network, food and unlimited supply of alcohol!

      People who rent a room are doing it for various reasons – it’s value for money or it’s all they can afford. Some tenants are more dependant than others and these are the ones which you mustn’t allow to drain you. Your job is to maintain the house, do the paperwork and their job is to pay the rent on time and treat each other with respect.

      Good luck and feel free to contact me if you have any questions!

      Serena

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