Day 13 – What about rent and housing benefit/LHA?

Rent
Todays topic is in many ways the most important, as for most people the main reason they are renting out a room is for the rent.

The first thing to consider is how much you are going to charge for your room. This will depend upon many things, among them:

• the location of your property – whether it is in a ‘posh’ or run down area, whether it is a convenient location for transport and amenities such as shops, and also whether there is much similar accommodation available nearby (the ‘scarcity value’)
• the size and attractiveness of the room you are renting
• whether you are able to offer facilities such as an en suite bathroom, broadband or off street parking
• any other services you provide, such as meals and cleaning

Have a look around and see what rent other lodger landlords are charging in your area. If you know anyone who takes in lodgers, have a word with them and see what rent they charge. If you let to students, the student accommodation office will probably help.

You also need to consider how you are going to be paid, and how frequently. Many lodger landlords get paid their rent in cash on a weekly basis. Others get paid monthly, perhaps by standing order. Decide which you prefer. Note:

• If you are going to be paid by standing order, you should get the standing order form signed by your lodger at the same time he signs the lodger agreement (Day 15).
• If you are going to be paid in cash, particularly if this is to be weekly, you should give your lodger a printed rent book. These can be bought from most large stationers, or online.

Housing benefit/Local housing allowanace
There are many people on housing benefit who will be looking for lodgings, for example young people, people recently separated or divorced, or people who need support of some kind. Therefore if you decide to accept lodgers on benefit, you should not have any problems finding them. But should you accept lodgers on benefit?

One of the problems about Housing Benefit, is that the benefit office are likely to pay less rent than you could get from a private paying lodger. If you are seriously considering a lodger on benefit therefore, you should check to see what you are likely to get.

Note that benefit is now paid under the Local Housing Allowance (LHA) system, and set rates will be given for your area.   See the >> LHA Direct web-site for this.  See here >> for more informaiton about LHA generally.

Another problem with benefit, is the time it takes for an application to be processed. This may result in a delay in your lodger receiving his benefit (which will mean in turn that you will have to wait). Note that your lodger will need to give the Housing Benefit office a written agreement, and they will probably refuse to process the application until this has been received (see Day 15 for agreements).

I would also mention here that the Housing Benefit office cannot change the terms of your agreement with your lodger. So for example if your lodger has agreed to pay you £80 rent per week, and you have accepted him as a lodger on this basis, but the benefit office will only make payments of £60 per week, this does not mean that your lodger’s rent is no longer £80 per week. He is still legally liable for the full amount, and there will be a shortfall which he will need to make up out of his own money. If he does not do this, he will be in arrears of rent. This may, for example, be a reason for you to ask him to leave.

However in most cases there is little point in asking a lodger to pay more than the benefit/LHA being paid to him, so effectively your rent will be limited to the Local Housing Allowance rate for your area.

Finally, the current rules provide for LHA to be paid direct to the lodger, and it is not normally possible (as it was under the old system) for the person receiving the benefit to ask for it to be paid direct to his landlord.  The only time this can be done is if the lodger is in rent arrears of eight weeks or more (when the landlord should contact the benefit office and ask for direct payment), or if the lodger can be classed as ‘vulnerable’.  Although some Benefit Offices will agree to make payment direct if the arrears are under 8 weeks – have a word with them, as attitudes vary.

(Note that there are indications that the rules may be changed to allow direct payment of LHA to landlords, but at the time of writing direct payment is not normally  permitted.)

Letter of Authority: it is a good idea to get your lodger to provide you with a letter of authority to the Housing Benefit office, so you can speak to them about your lodgers application. If you do not do this, they will refuse to tell you anything under the Data Protection Act.

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What is your experience of the things in this section?  What do you take into account when setting your rent for lodgers? Do you take in lodgers on benefit? What problems have you experienced with the benefits office or the Local Housing Allowance scheme?