Changes to local housing allowances that landlords need to know about
Due to the recent changes to housing benefits and local housing allowance, some private renters are going to find it increasingly difficult to stay in their current properties. Similarly, private landlords are now reluctant to take on tenants who rely on housing benefits as they lack confidence in receiving regular rent payments.
This year the age limit for people entitled to a housing allowance that was the same rate as a person renting a single room in a shared house, got pushed up from under 25 to under 35. This will result in more people needing to live in cheaper and/or smaller residences. However there are some exceptions such as single parents, people living with dependants or couples in self contained accommodation.
House shares
So for many individuals who are finding they can no longer live in their current residence by themselves, a potential option is living in a shared house. House shares can be beneficial for both landlords and tenants. Tenants have a reduced cost of living while landlords can make the most out of properties with an abundance of bedrooms, with the potential to receive high rental yields. Make a note however that this type of living arrangement will require specialist HMO landlord insurance that protect multiple occupies that live within the same household.
House shares are conventionally popular with students and young professionals, however with these recent benefit changes a wider market of tenants will be looking for this alternative living situation. The main negative for landlords who own a house share is the unexpected departure of a tenant.
If a rolling contract is provided, a tenant may be unsure if they are willing to renew their tenancy agreement until a few days before. If it is difficult to find a new tenant, months of potential rent payment can be lost. However this will not be the case if a notice period is required; but you cannot always trust tenants to adhere to the rules.
Selecting the right tenant
If you already have tenants staying in your property, expect that they will want some input into who lives with them, which is understandable. For a landlord the main questions they want answered are, if the prospective tenant has the ability to pay rent and bills on time and if they can be trusted to keep the house and their room in good condition.
Current tenants expect the same as well as the ability to get on well with everyone in the house. Clashing personalities in one house is a disaster waiting to happen.
The interview process is an ideal way of finding a suitable tenant but you don’t want to open your home to everyone interested. Therefore it is important to have a good filtering system in place. Write a description of the property, the people currently living there and the ideal tenant you have in mind. This allows people to judge for themselves if they are comfortable potentially living there. Pictures of the property in the advert are a great addition too. Having specific requirements makes the hard work of finding a good house share tenant so much easier.