What are the top tips for letting to social tenants?

Letting to social tenants can be tempting as payment of rent is almost guaranteed, but the system can be irritating and there are potential downsides. these top tips may help.

1. Confirm what the payment arrangements are upfront. Ask the tenant whether their benefit will cover all of the rent or if they will have to make up a shortfall? How will the rent be paid, and what date will it reach your account? They may have to contact the Housing Benefit office to find out.
2. Ask if they can afford the shortfall. Many DWP* tenants have some of their rent paid, but not all. For example, they may get £300 a month, and have to pay £150 a month out of their own pocket to pay you the full £450. Get confirmation in writing and ensure you see the evidence that they can afford this.
3. Check their rental history. Ask for previous addresses and references from past landlords, and check the references. Ask previous landlords whether they had any problem with the tenants, whether they paid the rent on time and whether they treated the property well.
4. Check the electoral roll. This will confirm that the tenant has given you an accurate previous address. This will indicate whether they have tried to avoid being liable for council tax and also helps to confirm whether a reference from a previous landlord is current and genuine, if you can’t get hold of them to speak to directly.
5. Ask for their passport. Ask to see the tenant’s passport and visa, if applicable. This will confirm their identity, but also whether they can legally remain in the country for the entire period of the tenancy.
6. Keep close track of the payments. The DWP pays Housing Benefit every 30 days, rather than monthly, which is an added complication given that landlords tend to charge weekly or monthly. Make sure you keep a close eye on the payments coming in and any shortfall payments which have to be made.
7. Have payments made direct to you. In the past, the DWP used to pay landlords directly. But the law has changed and now the tenant gets the money first. To avoid risking rental arrears, you can come to an agreement with the tenant whereby they ask the DWP to pay the Housing Benefit directly to you.
8. Inform the local council for council tax purposes. It is your duty to declare the tenant to your local council office – the DWP will not do this. If you fail to declare them you risk being billed for the council tax. Once the council is aware of their tenancy they are liable for the council tax, unless you volunteer to pay it
9. Dispense with a letting agent. Letting agents can be worth their weight in gold in the private rental market, but they do charge fees. They will typically ask for 10% to 12% as a finder’s fee to market the property, vet tenants and collect the rent and 15% to 17% if you want them to manage the property. But any landlord can ring up the Housing Benefit Office and get a DWP tenant completely free of charge, so there is no point wasting your money on an agent.
10. Get permission to enquire. One of the forms a DWP tenant has to fill out includes a box to tick giving the landlord permission to enquire about the tenant’s Housing Benefit status. Make sure the tenant ticks this so you can follow up any future problems without involving the tenant.

*DWP stands for the Department of Work and Pensions, formerly known as the Department for Social Services or DSS.