The £500 weekly benefit cap is causing some LHA landlords financial hardship as tenants are failing to give them the top up money, to pay the difference between the LHA allowance and the monthly rent.
This is a particularly true for the South East where rents are higher than the rest of the UK and landlords are facing a shortfall in rental income, according to Aki Ellahi, director of an online property portal for tenants, landlords and letting agents called Dssmove.
But he explained that this should not put off landlords taking on housing benefit tenants. ‘My advice to private landlords who are thinking on taking LHA tenants for the first time is to carry out pre-qualifying checks before they take on the tenant. These are essential if landlords are going to protect their rental income,’ said Ellahi.
‘These checks should include seeing evidence of a potential tenant’s benefit income, seeing what LHA allowance they have been given, and checking to see if they qualify for the full LHA allowance. The landlord should also make the tenant aware that they will have to pay the difference between the LHA allowance and the monthly rent,’ he pointed out.
He also explained that landlords and letting agents must carry out these basic checks to ensure the tenancy has every chance of success. Landlords should always look at a professional tenant’s wages to ascertain whether a rent is affordable or not and this same check should also be carried out for LHA tenants.
He believes that landlords with existing tenants that have experienced a benefit cut have two options available to them. Firstly, to try and negotiate some top up payments to cover the difference between the LHA allowance and the actual monthly rent or to evict the tenant and face a void period with no rental income.
‘Many landlords have for some time, enjoyed the highest benefit rate for their properties which was well above the private market rate. The benefit cap is putting an end to this. It is time for landlords to review their rental charges for LHA tenants and bring them more in line with the private rental market,’ said Ellahi.
Meanwhile, it is estimated that around 20 million home owners in the UK have at least one spare room that isn't being used every night, meaning they could be missing out a combined £85 billion in rental income.
Based on the maximum annual tax free earning of £4,250 per bedroom rented out, each home owner could raise just over £350 per month by taking in a lodger or housemate, according to research from financial solutions provider All About Money.
Home owners with more than one spare room could earn even more although any rental earnings above £4,250 per year...
Most Popular Slideshows
- Victoria's Secret Fashion Show 2013: Models' Ramp Walk Aired on Tuesday [PHOTOS]
- Victoria's Secret Fashion Show 2013: Bold, Sexy and Sensuous Lingerie Fashion [PHOTOS]
- Victoria's Secret Fashion Show 2013: Drooling Guys, Conscious Girls, Naughty Jokes on Twitter [SEE PHOTOS]
- Victoria's Secret Fashion Show 2013: Best Pictures From The Sexiest Show Ever [ SEE PHOTOS/VIDEOS]