Category Archives: Future of HMOs

Hats Off To Housing Benefit, But Brace Yourself For The Cameron Effect!

After years of stalking the local Housing Benefits Manager at landlord meetings, he graciously succumbed and it was a privilege to be invited to talk to his agents at their team meeting.  I realised that taking 20 agents off the trading floor for an hour on a weekday is not done without good cause so I had to make sure I produced something worth listening to.

The talk centred around communication between housing benefit, tenants and landlords.  Most landlords who accept the LHA claimants were cut out of the claiming process loop back in April 2008 when Central Government decided to bring in set LHA rates (good) and pay them direct to tenants (bad).

As I posted here about past dealings with Housing Benefit, the old process worked for everyone.  Since April 2008 it’s been my mission to help the local HB department understand and feel my distress at being cast out of the communication loop, leaving me wandering lost and lonely in the sea of benefit claimants and their lies about not being paid “by Housin’” for weeks on end.  I vowed that, if the council didn’t want to help me, then I didn’t want to house LHA claimants – so there.

Unfortunately, this strategy didn’t work for long as I really like LHA tenants; they’re stayers, make the HMO a home by washing the tea towels regularly, report any suspicious goings on and are happy to wait in for the plumber.  Indeed, to quote Ben Reeve-Lewis: 95.6% of landlords indicated that they would likely rent their properties to tenants on HB if rents were paid directly to landlords (source: Landlord Accreditation Scheme Survey).

The meeting aimed to examine the communication methods between the 3 parties (landlords, tenants, HB) and to share experiences from our respective frontlines.  I’d noticed improvements to the speed of claim processing and service levels which has been helped by the setting of LHA rates.  E.g. In the past one tenant would be awarded £70.53pw, another £73.04 and another £62.50 but with apparently similar circumstances!  The LHA rate for a room in a shared house is set at £67pw and I can then help the tenant to budget for the top up of around £13-£18pw.

One of the other points that I wasn’t sure if the council were aware is that of illiteracy.  I’ve only recently discovered one of my tenants is completely illiterate (hence never receiving a text from him) and another 3 semi-literate; which basically means, they open the letter, scan for numbers to indicate dates and money then chuck the rest in their bedside table top drawer in case the words are important.  Indeed, according to the Daily Mail 1 in 5 adults struggle to read (March 2012).

We examined the letter layouts, methods of contact, etc. and the agents have found that phoning the tenants to request more information or clarity is far quicker than writing to them – a service I think even the tenants are pleasantly surprised at!

The team told me about the local Credit Union service which visits the front office once a week.  One of the tenants paid £50 for a £100, 2 week payday loan and I was livid – if he’d come to me I would’ve only charged him £25 interest, but think that would make me a loan shark.  I’ve sent them all a letter, included the CU leaflet and it appears a lot of them hadn’t taken any notice of it either but at least it’s an alternative to Payday Loans.

I came out realising Housing Benefit are just people trying to do a job.  Considering the depth of knowledge, experience and ability to deal with the general public which is required of them, I don’t think it’s a particularly well paid job.  On top of this they’re facing cuts to their department if Mr Cameron & Co insist on introducing  Universal Credit which will have the added factors of

a) making people feel isolated and confused if they aren’t  able to have a face to face conversation with an agent personally dealing with their case

b) disincline landlords to take LHA at all as they’ll be no safety net if the rent’s not paid

c) embarrassing LHA claimants if they can’t read or don’t have access to a computer

d) the Under 25s will be busy looking for parents to live with, because  we know how easy THEY are to lose, and if they can’t find any, will spend their days desperately trying to avoid street sleeping.

Brilliant, Mr C, you and your government alone will soon be able to bring to life George Orwell’s musings and create a world based on Animal Farm and 1984.  You could even adopt his motto: All Animals Are Equal But Some Are More Equal Than Others.  If Universal Credit is designed to tackle Benefit Scroungers, how are you getting on with limiting the public money spent on your in-house Expenses Benefit Scroungers?

Conclusion:

If you’re going to manage an HMO, make your life easier by getting to know the local Council’s Housing Benefit and Environmental Health Teams; we share the same “customers” and common goals – creating long term tenancies in decent, safe houses.

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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!

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Why I Can’t Afford LHA Claimants Any More

Five years ago, the prime room rental market was students and people in receipt of Housing Benefit.  Put an ad in the paper and 9 out of 10 respondents were those on housing benefit – probably a key reason that so many fellow landlords stuck their nose up at me saying I was “mad” and “do you want to make life more difficult for yourself?”.

Housing Benefit vs LHA

I liked Housing Benefit claimants: they tend to stay longer, were satisfied with their environment and, as they were home much of the day, kept an eye on the comings and goings of the house.  Once you understood how the system worked, the claim process was relatively straightforward: upon production of landlord evidence of a room offer the tenant would approach our local Housing and Legal Aid Centre and a cheque for four weeks advance rent was made payable to the landlord.  The tenant would then fill in their part of the claim form and the landlord would fill in the other parts including their bank details for the benefit to be paid into.  We’d sit back, wait and within 4-6 weeks the rent was paid direct into the landlord’s account regularly.  If there were any queries, I’d call the Housing Benefit team (I knew each agent by their first name), find out at what stage the claim was at or if they were waiting for any more information so I could chase the tenant.

Under the LHA system, the process is no longer so transparent.  The tenant can make the claim, the landlord fills in what’s included in the rent and, even though the tenant signs permission for the landlord to discuss the claim, that is the last I’ll see or hear until the tenant hands over the money.  I’ve tried to chase a claim only to discover that the call centre had moved to Slough (nowhere near us) and, despite being allowed to discuss it, the staff couldn’t give me any information “under Data Protection” and “You’ll have to ask the tenant yourself”.  I want to scream down the phone “I bl***y well would if I thought I’d be getting a straight answer and was prepared to camp outside their room all night until they got home!”.

Why LHA Doesn’t Help Tenants

My tenants don’t mean to not hand over the LHA payment, but when their bank account is in the red, they have no mobile credit, possibly haven’t eaten for a while, eeking out their tobacco pouch so their roll up resembles more Rizla and saffron strands than a good smoke, I empathise with their temptation to hand over £150 rather than the £200 paid by the Council.  In their heads (especially if they’ve recently been working), 50 quid is easy to reimburse within the next couple of weeks.  Then the reality sets in that there’s no financial room to manoeuvre: skimming £20/£30/£40 off the LHA payment to cover the shortfall of Job Seekers Allowance means they end up £300-£400 in arrears before you know it and start to get stressed.   At that point, they do what most of us do when we get stressed – drink more, smoke more, blow whatever cash is available because, let’s face it, it can’t get much worse.  Their girlfriend/boyfriend, friends and parents are probably financially exhausted, they’re drowning in debt, despondent from hitting a job wall – so what if they fall out with their landlady on top?  Life is so chaotic we’ll string her along with a few well honed excuses that used to work on our mothers and teachers.

Greg is £500 in arrears and I don’t want to see him homeless but this is what’s happened to him.  When the process starts I meet with the tenant and explain that this is what will happen and, in order to avoid it, we have to work together.  I’ll happily reduce the rent to reflect the LHA payment provided that the LHA is handed over as regular as clockwork.  “Yeah, yeah, yeah, I promise.  It won’t happen to me and I’ll be working again soon.”  I’ve experienced this time and time again.  The most common excuse is “Housing have messed up my claim AGAIN” – and I can’t check out its validity.

Back to Basics – The Real Reason for Housing Benefit

The market’s changed.  For every ad I place the majority of calls will be from working professionals who have chosen an all-inclusive rate so they have enough salary left over to have a life.  I no longer need to fill the rooms with the slightly odd, vaguely desperate or those that fall out of society’s moral code of conduct.

Back in the late 1940s the Social Security System was so named because:

SOCIAL                 def pertaining to human society

SECURITY             def freedom from danger, risk, etc; safety

There are still at least 1 out of 10 callers wanting a room who won’t pass the referencing process, can’t get the deposit together or will struggle to conform to a landlord’s ideal tenant.

My business head tells me to go with this new professional market demand and fill the houses with law abiding, rent paying via standing order tenants who read and abide by the AST and wash their sheets weekly.  My life will be calmer yet poorer through the lack of tenants educating me on the true meaning of survival and refusal to conform to society’s expectations.

Please, bring back direct payments to landlords so our business heads no longer discriminate against the unemployed.

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What Makes An HMO Successful?

Regular readers may have noted that I haven’t posted for a couple of weeks which has been due to a some unexpected personal issues. Life as a landlord has taught me how to bat problems back into the field or catch them and deal with them!

The tenants, thankfully, have been silent during this period. No after dark, panic stricken calls, no elaborate stories of mislaid rent and no locking themselves out of rooms! Perhaps the five year long battle of getting tenants from different backgrounds to live together harmoniously has finally paid off. I’d like to think that my Super Nanny approach to rules of behaviour has been the overriding factor but have actually put the new found harmony down to low turnover of rooms, acceptability of each tenant’s quirks and the fact that I haven’t got round to putting anyone’s rent up.

There’s been lots of investor interest in HMOs due to their high yield and you’ll find no end of property pundits bragging about how much money they make doing this kind of rental. But now I’ve pulled myself back to reality and started to think about what makes a successful HMO house and, on the usual rent run this morning, asked the tenants their opinion. Here are all of our findings:

1. Leave each other alone and mind your own business

2. Respect for privacy and quiet

3. Adhere to the Rules of the House

4. Ability to sort own problems out and not take them out on house mates

5. Keep anti-social behaviour away from the house

6. When in the kitchen, make a cuppa for each other.

Real progress was made a couple of weeks ago: Simon got into a drunken argument with a friend whilst in a pub. The friend went back to the house and, rather than ring the front door bell to fetch his jacket which he’d left behind, terrified everyone by throwing a plant pot through the kitchen window. Normally the tenants would have phoned me within 30 seconds of the incident, panicking, but instead they regrouped, called the police, made a temporary repair and managed not to bother me until the next morning. They’ve finally learned to live together and I was even more delighted when Betti from Hungary told me she’d turned down a job in another town as she was so happy “in her home”! On top of that, Simon is profusely apologetic about the incident and is paying me back in instalments as the CSA (Child Support Allowance) have finally caught up with him and are now taking payments for his various children directly from his salary.

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HMOs – Seems Everyone’s At It!

Not so long ago, as an HMO Landlady I was looked upon as the poor relation in landlord terms.  I would attend meetings and be one of the only HMO landlords NOT housing students and my peers would sniff disdainfully or snigger as I defended my market.  How the world is a-changing…  (well, my world – I think the actual world has enough on its plate).

This week I was asked to advise a landlord who was hoping to rent to students but has changed market due to an oversupply of accommodation and our town’s university cheekily about to charge the same annual fees as Oxford and Cambridge – talk about delusions of adequacy.  I was flattered that he’d asked me to help give him some tips and advise the layout – no one’s normally interested when I wax lyrical about HMOs.  He told me he was going to place the ad online only to attract working people and to presumably deter anyone not suitable from seeing the ad in print as they wrap the newspaper around their bottle of vodka.  He’s going to do just fine as he’d already decided on a comprehensive referencing technique and drawn up room contracts – it took me 2 years to get to that stage!

Then, I was asked by a letting agent to look at a six bedroomed house that he’d been asked to tenant.  OK house, OK rooms but with a prevailing smell of damp, unfinished bathrooms, but all the fire regs were in place and the landlord wanted £400pm PLUS bills.  Now, bearing in mind my most expensive room is £100pw incl all bills for a huge room, that’s steep.  He also revealed that the landlord was trying to raise £2.5 million to buy more HMOs.

The next call came from someone wanting to give out my number to a family member who wants to get into HMOs for their yield.  In the five years I’ve been operating HMOs not ONE landlord has ever thought it was a good idea to let property this way and advised me to jump ship in favour of students.  (Not my market of choice due to their lack of domestic skills – even my own children manage to clear up after themselves).  They didn’t understand that, buying at the height of the property boom in 2007 meant I HAD to do HMOs otherwise the buildings couldn’t pay.

The Effect

So, for five years I’ve been paddling away, becoming accustomed to the sneers, riding the storms with the help of my landlord association saying “Well, what did you expect?” and having many moments of wanting to winch myself to safety to hold down a normal job.  Judging by the number of ads in the paper this week, lots of landlords are riding the Room Letting wave – but will they stick with it?

I put an ad in the paper this week and only received two calls: one from a bloke who, asked where he’s living now, said “On the street” and it took every ounce of will to tell him I couldn’t help and hang up.  For the next half hour I was going to call him back but my head took over to remind me how many time I’ve been proverbally shafted by the homeless over the years.

The next respondee was Ashley: he told me his ex-girlfriend was having an affair and managed to get him sectioned based on false evidence of depression and self harm with a supporting testimonial from his mum.  He has now been released and is being housed in a B&B at a cost to Housing Benefit of £140pw plus a top up of £40pw and an £18pw service charge.  Perhaps I could throw in a bowl of cornflakes and a cuppa every morning and charge £198pw!  To summise: plausible story, the first I’ve ever heard involving sectioning and, as I’ve said before I’m a sucker for a sob story.  Unfortunately, he failed my referencing test – he couldn’t look me in the eye without jumping from one leg to another.

So, once the reality of HMO landlording has worn down even the sharks, the bottom feeders such as myself will still be going strong…………….!!

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I Have A Dream………..To Turn Unwanted Tenants Into Wanted Tenants

This post is about a far from practical dream I’ve held since becoming an HMO landlady.  This dream has been unearthed from the depths of my brain after picking up a leaflet asking for volunteers to man a temporary winter night shelter for the homeless, a debate with one of the kindest, most Christian ladies I know as to it’s viability and the following article which landed in my email box http://www.insidehousing.co.uk/ihstory.aspx?storycode=6517904  With much trepidation that readers may laugh out loud and recommend me for a public stoning here goes:

Over the last 5 years I’ve given ASTs to around 10 homeless people recommended through the Salvation Army.  Not the normal route of advertising you’ll agree, but I naively believed that rescuing a poor soul from the cold, mean streets, providing warmth/hot water and hoping that the influence of positive, working tenants may just pay off.  Only one of those homeless people is with me today, the others cocked up the tenancy quicker than I could hand over the keys through bad behaviour, drug, alcohol or girlfriend abuse and the usual non payment of rent.  Each was given a chance, several warnings and finally, for the sake of the other excellent tenants in the house, eviction.  I’m no expert on homelessness and this is just my limited experience.

The Dream…

So, not to be beaten, I’ve come up with another idea:  Should funds come my way, I’m going to buy a big house for between 6 and 10 residents who are either homeless, ex-offenders or anyone else who can’t get a tenancy due to a bad reference.  They’ll practice being a good tenant by learning to share communal areas respectfully, mastering cooking skills and how to wash up, tending a garden to provide for the kitchen, learn how to use a washing machine between the hours of 8am and 10pm, how to hand over their LHA (local housing allowance) bang on time and how to budget the rest of their money.  On top of this they will be expected to undertake a set amount of hours voluntary work so they have something to get out of bed, washed and dressed for.  If they can prove themselves capable of becoming a decent tenant, they can then apply for a room in one of my shared houses and, when they’re ready to move on, will have a glowing tenant reference, a work ethic and essential life skills.

In my dream, it’ll all be happy and cosy and we’ll laugh round the piano singing old songs – but I know that if I make this a reality it’ll be a 40% success rate because, from my experience, having responsibility for one’s own life can sometimes be just too much.

This post is not to elicit abuse or promote a debate, however if you have a spare half a million quid or words of support for the idea – I’m all ears!

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