However, FCC Paragon, the tenant referencing arm of Paragon Advance, is finding a growing number of LHA (Local Housing Allowance) tenants falling into arrears but through no fault of their own.
With a cap on housing benefit due to come into effect from April 2011, and a growing fear that the situation will worsen as a result, FCC Paragon offer advice to landlords on how best to take action.
With high demand and low supply of rental properties coming to the market, Kerry-Anne Dowdell, Credit Management Manager for FCC Paragons warranty products including Debt Recovery, Company Referencing and Paragon Evict, believes councils are not doing enough to assist private landlords and LHA tenants.
She comments:
Due to how local housing allowance is paid, many LHA tenants can find themselves two to four weeks in rent arrears. Whilst landlords blame tenants, quite often tenants have submitted the relevant paperwork but it is the council who are holding up the process due to protocol.
"The problem we are encountering, is that local councils encourage tenants to stay put until a bailiff or possession date comes through, which creates growing tension between tenant and landlord, and as a result we are having to intervene much more in order to resolve issues for our clients.
Our advice to landlords is to contact your local council as soon as your tenant is in arrears so that the investigation process can get underway.
"However, councils will not talk to a landlord about a claim unless the claimant has given written permission to do so, so if a tenant believes the council are holding up the process, landlords need to seek permission from the tenant so that they can then intervene.
"Most tenants do not want to be in this situation, but are left with little choice as they have suddenly found themselves in a position where they have to rely on funded support which is beyond their control
"Landlords are advised to take out adequate rent warranty and legal expenses cover to avoid a potentially stressful and costly situation.
We have found that building a relationship with both tenant and landlord to offer timely mediation can often be enough to resolve an issue most efficiently and our services have been well received by both landlords and tenants alike.
We have had a number of letters from clients thanking us for our help but actually the key is working together to communicate and tackle the financial problems. We have even received a letter from a debtor who said; I cant say its been a pleasure doing business with you, as the extraction of money is always painful.
"However, I would like to thank you (FCC Paragon) for making an inherently painful process as painless as possible.
