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More Struggling UK Home Owners Are Becoming Live In Landlords

Increase In Live-In Landlord Numbers

More home owners are becoming live-in landlords by putting their spare rooms to use and bringing in additional rental income.
The number of UK home-owners that are choosing to rent out a spare room in their own homes has increased by 19% during the last six months according to 2 of the UK’s leading house sharing websites.

The house sharing website Easyroommate claim that in February this year, the number of live-in landlords, (home-owners trying to let out spare rooms), has increased to 34% of the total number of users currently searching for housemates.

The website also reports a 5% increase of live-in landlords between January and February this year

A similar picture is also painted by Spareroom.com who reported a peak in lodger registration numbers in early January, resulting in almost 6,000 UK residential property owners renting out spare rooms by the end of the month.

Average flat share rental asking prices across the UK have also remained consistently at £368 for the last three months, following a marked increase in rents towards the end of 2011

January was a record month for new lodger numbers, up 15% on the previous record month last August. New lodger numbers in January were also up 83% on December 2011 and 22% higher than January 2010.

EasyRoomMate Director Jonathan Moore said: “With the vast number of home owners looking to boost their incomes during the recession, a growing number are waking up to the income trapped in their spare rooms. This is also compounded by the vast majority of people reluctant to downsize due to the loss of equity in their homes.”

With many home owners with grown up families and large properties struggling to keep on top of their mortgage payments, utility bills and accumulating personal debts, renting out a spare room on a short or long term basis has proved an easy way to earn extra income and keep mortgage payments covered.

However live in landlords are urged not to cut corners when accepting new tenants living in their homes. Legal 4 Landlords advise all landlords to at least thoroughly tenant reference all prospective applicants, so that they know more about the person moving into their homes.

SpareRoom puts the average UK room rent at £398 per month, with London bucking the trend with rents ranging between £542 and £677 (GBP) per month.

Spareroom Director Matt Hutchinson, said: “It’s not surprising that the lodger population is expanding so rapidly as home owners look for ways to boost their incomes. With the Government’s Rent a Room scheme allowing people to earn the first £4,250 (GBP) per year without declaring any tax on the income, it is still one of the easiest ways for struggling home owners to earn some extra cash. For some people, the monthly income from a lodger will be the difference between losing their home and keeping it. In parts of the country such as London, where demand for rented accommodation is soaring, live-in landlords are helping to ease the pressure on the rental market by providing an additional supply of rooms to meet increasing tenant demand.”

59% of Private Rental Sector (PRS) landlords refuse to accept applications from tenants claiming benefits, including me!

Landlords claim that tenants who do not receive any form of welfare support are far more reliable when it comes to paying the rent on time and generally looking after the property.

In a survey of more than 1,000 UK landlords by website SpareRoom.co.uk showed that over half of the landlords surveyed had a  “No DSS” clause on their adverts. I too have the same clause and whilst I do not want to discriminate against people I do feel it is necessary to protect my rental income and my properties.

Landlords taking part in the survey were asked why they would not rent out their property to housing benefit tenants:

  • 30% said non-benefit tenants were more reliable,
  • 47% said they did not want the hassle of dealing with payment problems.

SpareRoom.co.uk called for changes to the way Local Housing Allowance (LHA) was paid, joining calls from the Residential Landlords Association (RLA) and homeless charities “Shelter” and “Crisis” to return to direct payments to landlords, which could increase the number of PRS properties being let to tenants claiming state benefits.

Matt Hutchinson, director of SpareRoom.co.uk, said: “The coalition government’s planned welfare cuts to housing benefits, coupled with the lack of affordable housing in the UK, could have a devastating impact on families and individuals relying on the state for help with living costs. But it seems that landlords, who have had bad experiences with housing benefit tenants, are reluctant to help ease the pressure caused by a rental property shortfall, favouring private tenants instead. The move to change the way Local Housing Allowance was paid in 2008 was designed to give those on housing benefits greater responsibility for their finances, but what this poll shows is that the change has had overwhelmingly negative repercussions for British landlords. It’s clear from this survey that a shake-up of the current system of paying housing benefit to the tenant is desperately needed, and reverting back to the old structure, where landlords receive rental payments directly from the council would be a step in the right direction.’

According to the survey, 87% of landlords have had problems with housing benefit tenants not paying rent on time and 11% claimed to have had tenants who had stopped paying rent altogether. I unfortunately fall into both these percentages having bad experiences with benefit tenants and very little help or advice from my local authority.

In the survey, UK landlords said that problems associated with DSS tenants included late rent payments, damage to the property and problems arising from suspension of benefits.

74% of landlords said they would not take a tenant on housing benefit even with a working Homeowner acting as their guarantor and I must agree with them.

Once bitten and all that, but one thing is for sure from my point of view – NEVER AGAIN!!!

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