As most of you that follow me know, I’ve been involved in social housing for a very long time.
It’s where I started.
I also had a letting agency running social housing for my properties and other landlords.
Now, social housing is a fabulous strategy and those of you who’ve been following me know the benefits from it, but there are also some downsides and some things that you need to know about when you’re going into social housing, but that’s what I’m aiming to address here.
I want to give you a real story of a situation that’s happened with me with one of my properties, just so that you know what can go wrong, what can go right, what you need to put in place to stop those kind of things from happening.
Which hopefully you will find useful.
I’m not going to mention areas or councils or anything like that because I don’t think that’s fair, but I will tell you it’s in the south and it’s just an experience that I’ve had with a particular council.
The scenario is, I had or have an apartment/flat that’s two bedrooms in the south.
I was approached by the council to allow social housing tenants.
In this particular case, it was asylum seekers.
And there was a different organisation dealing with asylum seekers, so we dealt direct with them.
I spoke with them and had a chat with them.
They wanted to take the property on from me immediately, and they were prepared to pay the rent right from the word go and cover all the utility bills and council tax right from that agreement point until they put someone in the property, until they find a tenant for that property.
And it was really the asylum seeker scenario. These were people that were probably being displaced from some kind of war zone or something like that, and they were being housed in the UK, possibly in hotels or other accommodation temporarily until they could find a place to live.
I was very keen to help with that.
In this particular instance, it was people coming from Afghanistan who had been displaced because of the war and they’d been sympathetic to the military over there.
This sounds great, right (for a landlord not the tenants of course their life had been turned upside down)?
They were going to pay the rent even though it was empty.
They were going to pay all the bills, gas, electricity, water, council tax while it was empty until a tenant was located.
When a tenant was located, they wanted to go onto a straightforward AST tenancy agreement directly with me or the agency, for which the tenant or tenants would be on universal credit and that universal credit would be paid directly to me.
So there would be no challenges there of me trying to get the rent from them.
That all sounded fabulous.
They wanted the property furnished.
In this particular case, I did furnish it for them and they paid me for the furniture.
So I just went out and got some furniture. There is also a scenario where there are organisations around the country where the person moving in can have a credit and they go to these organisations and they select sofas, chairs, tables, beds, wardrobes, all those kinds of things, and then they get them delivered to them.
But in this case, I had furnished it for them and they just paid me for that.
They paid me in full, there was no quibbling about the furniture or price.
So, on the whole, in the scheme of it, looking at that, it sounds perfect, doesn’t it?
It sounds fabulous.
For two or three months there was no tenant in there, but I was getting paid a rent.
Now, one of the things you need to think about when that’s happening is your insurance says that when the property is empty, it has to be visited at a certain frequency.
For example, it might be once a week, it might be once a month, whatever that insurance policy says.
So during that empty period, I did explain to them, I still have a key, I’m going to have to go in and check everything’s okay, there’s no burst pipes, the heating’s still working okay, there’s no problems, there’s nobody tried to break in, etc ,etc.
That was fine, and I did that on a weekly basis, or my colleague who works with me, she went in to just check this every week.
For maybe two or three months that’s what happened. Rent popped in every month and the bills were all being taken care of.
Then they found a tenant and they wanted me to come down to meet the tenant and bring the tenancy agreement that would be used.
Now, in this particular case, I have my own letting agency so I said, “Okay, we’ll do it through my letting agency.”
I went down to meet the tenant, which was a young man, his wife, and child.
They were from Afghanistan.
They also had, a support worker who also spoke their language so that we could communicate.
I’d already pre-sent the tenancy agreement to the council who translated it into the Afghanistan’s language so that they could read through it themselves and have that.
We went down, met them, seemed like a lovely couple. I was very pleased to be helping somebody who has been put in this situation.
We signed the tenancy agreement, and my understanding was that the support worker was going to be there all the way through to help along the lines of whatever they needed. And certainly for the first month or so, the support worker was.
Then things started to happen.
So for example, the universal credit stopped being paid directly to me.
I had the first month universal credit, no problem at all. In fact the first month of the tenants rent the council paid it and then the UC was due to take over.
However the universal credit stopped. So month two of the tenancy, no rent!!
So I phoned up the support worker at the council and they started to say things like, “Oh, but the tenancy agreement is directly with the tenant. So you need to take it up with the tenant, but I will have a chat with them for you.”
And she was very helpful, she did phone the tenant.
The tenant then started to say things like, “I believe the council are paying my rent. I don’t have to pay you rent. The universal credit is mine.”
And she explained that wasn’t the case to them.
I explained that wasn’t the case to him.
My colleague explained.
So there’s about three occasions where we had the conversations over the first week or two that the rent was overdue and he was liable for it.
The rent still never came in.
Again, I went back to the council.
And with the council, in this particular situation, is where you start to realise they were not particularly helpful.
They just kept saying, “Oh, well, I’ll talk to him, but the universal credit and the agreement is between you and the tenant.”
I kept reiterating that I only took this on under the understanding that you were going to support and you were going to help, and you made that agreement.
First mistake and something you should learn from is, that the verbal contract that I had, that they were going to support him, they were going to deal with everything to do with the rent, the bills, the council tax, the support the family needed, and the landlord needed was not in writing.
That was a verbal agreement.
So I had nothing in writing confirming what they said they were going to do.
what they actually did was very different.
So there’s your first point. If you’re going to do this, you must get an email, something in writing from the council, clearly stating what their responsibilities are going to be.
I didn’t have that.
I took them on face value because I thought they were going to be genuinely decent people.
So two months has gone by, the rent hasn’t been paid. So we’re at the situation where we have to issue an eviction notice, which is your right on an AST, and that’s what happened.
We issued an eviction notice.
The tenant all the way through this kept saying, “It’s not me. You have to speak to the council. The council need to pay the rent.” And I kept saying, you must pay the rent from your universal Credi, not the council.
It was like a going around in circles.
Another point for you is, you must act quickly.
You can’t leave this going on for months and months and months.
As soon as you’re able to act within the law, which is at two months, you must act.
That is exactly what I did. Bang, in when the notice that they must be out of the property within two months.
On a non-payment of rent, that can be two weeks. So if they’re two months rent in arrears, you could give them notice to leave within two weeks, which is what I did.
Of course, this caused a lot of upset, a lot of confusion.
Eventually the tenant did leave and was moving out, I think within a month of being given the notice. They then said that they wanted their deposit back.
Of course, the scenario is the deposit is only paid back once they’ve left and once we’ve inspected the property to make sure everything’s okay.
He was trying to hold my colleague to ransom as they wouldn’t give the keys back until she agreed to pay the deposit back to him.
And again, we explained over and over again, no, you don’t get the deposit back until we’ve inspected the property and you’ve moved all of the
What also happened was he took all the furniture that was provided for him.
So he moved somewhere else. He took all the furniture that was provided for him as well and left things he didn’t really want.
There was stuff to get rid of, and there was a little bit of cleaning to be done.
They didn’t damage the property.
They just didn’t really move the things out they should have, and they didn’t clean up after when they left.
So there was a little bit of cost to be involved.
We negotiated, and we talked quite clearly with him, my colleague, and she explained to him that if he was going to another rental property, which he was planning to do … (He was moving straight into a friend’s house at the start and storing the furniture in a van) … that he wouldn’t get a decent reference from us, and he wouldn’t be able to rent another property if he didn’t give the keys back and also pay up the rent.
Funnily enough, that made him pay. So he paid both months in arrears rent, which he obviously had in his account from his universal credit, gave the keys back. We went and inspected, told him that we would have to claim a little bit of the deposit to move the furniture out and to clean, and on we go.
There was a positive ending to the whole scenario, which could have gone horribly wrong and could have been dragged on for months and months and months if I hadn’t acted quickly, and if I hadn’t had a really good member of staff to explain the situation, and more than anything else, keep her cool head during the time.
The council worker, who was a young girl, support worker, was getting very, very agitated with him. And she was shouting at him and telling him he can’t have his deposit back. “It’s not his money”. The council paid the deposit, all these kinds of things, which was not helping.
There was a positive end.
We got all the rent back, we got enough money to do any little works that needed to be done, and we moved forward.
Now renting the property out again very quickly to a regular local person, not a asylum seeker, because we can get more rent this way. So hopefully that’s a bit of a learning for you.
Now, I don’t want you to feel that asylum seekers or working with the council is a bad thing. What I want you to take from this is that you must be prepared, and you must have all of your written agreements in place. So whatever you have, and you talk to the council, whatever you say with them, have it in writing.
Have it confirmed what they’re going to do, what their responsibility is, what they’re not going to do, and then you can make a decision if you want to work with them or not.
This was a positive result for me because of the way I dealt with it and the way we dealt with the exit of the tenant in the end.
So there’s just a little insight into little things that could go wrong, can be set up properly from the beginning to avoid. So hopefully that’s helpful.
If you need any other help, let me know. If you want to have a chat, just get in touch. We’ll have a 10-minute call and see if I can help you with whatever it is you’re doing.
Neil Stewart, Clever Property Investing.