A BBC Inside Out programme this evening will highlight buy-to-let pitfalls.
The show will feature a landlord whose portfolio of housing benefit tenants is causing him to scale back his investments following the need to instruct evictions firm Landlord Action to handle two of the cases shown in the programme.
Brian Nixon, a builder from south-east London, has a portfolio of properties largely rented to tenants receiving housing benefit.
One of his tenants is in £6,000 arrears because she failed to fill out the necessary housing benefit forms, but never informed the landlord.
Despite numerous warnings of eviction, the bailiff – who had 14 other cases that day – is shown as having to wait around while the tenant collected what belongings she requires, leaving the rest to be dealt with by the landlord.
In addition to the rent arrears, viewers will be left shocked at the state of the property on departure of the tenant who, after being evicted, went straight to the council to be rehoused. The aggrieved landlord uses some colourful language to vent his frustration.
Paul Shamplina, founder of Landlord Action, who is present at the evictions and can be seen on tonight’s programme, said: “I have said it many times before, a system where landlords do not receive housing benefit directly from the council is simply not working.
“Years ago, renting to social housing tenants gave landlords a steady guaranteed flow of income, in return for supporting this sector by propping up the limited accommodation the council could offer. Everyone benefited.
“Now, we are seeing fewer landlords wanting to rent to housing benefit tenants because of cuts being made, the uncertainty with regards to Universal Credit and non-direct payment, particularly in the south-east where landlords could achieve far higher rent if they let to the private sector.”
He said Brian Nixon is now selling properties from his portfolio, meaning there are three fewer properties in the private rented sector being used for housing benefit tenants.
* Inside Out can be seen this evening at 7.30pm on BBC1 London, Sky channel 954 or Freeview channel 721.
I can't help wonder if this is more industry ignorance from the BBC or corporate propaganda aiming to keep private investors out of a lucrative, virtually unchallenged industry sector. Those smart enough to understand the implications and advantages (social and financial) of Universal Credit will understand it is the solution to resolving the issues surrounding Assisted tenancies. It seems that is too big a political pill for some to swallow and it is a massive threat to a luxuriously comfortable and Fort Knox protected civil service system. It is the unfathomable system of administration in between Tenants and Landlords that is at fault. Corporate investors are eying up this sector simply because the yields are so much more attractive than the PRS and so it seems commercially obvious to keep ( through fear) private investors out of a sector with stories like this. As a starting point a 100,000 tenancy shift to social housing (1.4%) is worth close to £1 Billion in rent, £100 million in commission to Agents. It really does make sense for enlightened entrepreneurs to understand the opportunity that exists in this sector and take problem propaganda programs like the one the BBC no doubt have produced with a Cheshire mine full of Salt. £1billion rent collected with arrears levels below 1% yielding 9% or £1 Billion rent with 3.75% arrears yielding 5%, I know which makes sense to me.
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No doubt Shelter will put a crazy spin on the story despite the feckless tenant who is claiming benefits for a roof over their head cannot even be bothered to fill in paperwork. And they wonder why landlords prefer using letting agents which might charge a small fee to vet them correctly.
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For those that are not aware, councils have the right to reclaim housing benefit payments from the person/company that initially received the payment. Reclaims do occur where overpayments are due to admin error or fraudulent claims. Why o why would an agent or landlord want to receive these benefit payments direct from the council is beyond me; they could well have to repay as much as all rental payments received.
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