CEO OF ONLINE LETTINGS AGENT UPAD.CO.UK
Q.I have three properties which I let to tenants on Local Housing Allowance. How do I find out if the new rates of housing benefit will cover their rent? If they don’t, what do I do?
A.The new rates announced by the chancellor in the Budget won’t come into force before April 2011, so you don’t need to panic immediately. In April, new maximum payments will be implemented: these range from £250 a week for a one bedroom property up to £400 a week for a property with four or more bedrooms. The five-bedroom rate has been scrapped.
In October 2011, there’s a further change: local housing allowance (LHA) will be based on the 30th percentile rather than the 50th as now. That is, it’ll be based on the lowest third of rents, not the average. As rents are likely to change in the interim, it’s not currently possible to state exactly what these amounts will be.
But in practical terms, what should you do immediately? If your rents are over the capped rate, then you’ll need to make a decision whether you can drop them to fit in with the new LHA rates, or whether your tenants could afford to pay the extra from their own pockets: if not, then you will unfortunately be looking to ask them to move on before April. More detailed information is available at www.voa.gov.uk.
Q.My tenant owes me nearly £3,000 in unpaid rent. I’ve served a Section 8 notice on her to quit, but she’s now paid me £500 (she says that’s all she’s got). Can I still continue with the eviction proceedings? Should I return her payment?
A.A Section 8 notice to quit can be served by a landlord wanting to regain possession of a property at any time during the fixed term of the tenancy, provided the tenant has breached the terms of the tenancy agreement – in your case, by failure to pay the rent.
Any landlord wanting to evict a tenant needs to first obtain an order for possession from a court and you can’t apply to the court without first serving a Section 8 notice. It’s different to a Section 21 notice that can only be used for regaining possession at the end of a tenancy agreement, but both are important here.
You can’t refuse to accept the money if offered, so don’t return the payment. If she still owes you more than two months’ rent (or eight weeks if she pays on a weekly basis) at the time of the court hearing, then the notice will still stand. When you serve a Section 8 notice, you should also serve a Section 21 notice to quit too, so even if she pays down her debt to less than two months rent, you can still ask her to leave.
If you have evict her, you’ll have the option of pursuing her for the unpaid rent but think hard about this. It may be that you’re better off writing it off rather than spending money and time chasing it up – and I’m speaking from personal experience here. I had a tenant who left two months early, owing £4,000 in rent and with £1,000 in damage to the flat. It took me 12 months to get a court hearing; she didn’t turn up so I was awarded the money owed, but now I have a court hearing coming up to get hold of that through her bank. If she doesn’t have the money I still won’t get it anyway, and it’s already cost me £1,500 in legal fees. I’m fighting it on a point of principle, but these things do take a lot of time.
James Davis is CEO of online lettings agent www.upad.co.uk. You can also follow Upad on Twitter: @avoidthevoids.