Some of the deals on offer under the Private Sector Lease Schemes (PSLS) are worth a look at, writes David Lawrenson.

With the PSLS you give your property to the local authority or a housing association for a period of two to five years and they pay you a guaranteed rent, as well as, in most cases, doing all the routine maintenance like basic plumbing jobs and gas repairs.

And there are no agency fees to pay.

The downsides are they don't operate in all areas, the rent they pay is at least 15% below the market rate and you have no control over who they put in the property. Some mortgage companies and a few freeholders are not keen and may actually disallow this kind of let.

Another downside is that you have to deal with the council or housing association.

Why is this so bad, you might ask?

Well, they have strict (and sometimes odd) rules about the type of property that can go in the scheme - strictly no wrecks!

Plus, you usually have to be patient and do a fair bit of chasing up to get the scheme off the ground. (For some reason council and housing association employees are not great at returning phone calls - at least not in my area!)

Rent in Advance Schemes / Deposit Guarantee Schemes

Recently, one of the brighter sparks in my local authority mentioned another scheme that they run called the "Rent In Advance Scheme"

In other local authority areas these may well go under the name "Deposit In Advance Scheme" or indeed another name altogether. So ask and persevere to find out what it's called locally. A good place to start enquiries is the Private Housing department of the Housing Section.

How Does It Work?

Basically it is a medium term (normally a 2 year) contract you enter into with the local authority in which they pay the tenants' deposit direct to you, the landlord when the tenant moves in.

They also fast track the tenants' housing benefit application through so you get the money paid to you more quickly than would be the case with the usual Housing Benefit / Local Housing Allowance, where applications can get bogged down in the system.

How they do this apparently is by using a Housing Benefit Officer who works on the inside to fast track the cases through.

Another plus is that the housing benefit is paid direct to you - though there are drawbacks to this, as we shall see in a moment.

Having the housing benefit paid direct to you the landlord is, of course different to what happens in the Local Housing Allowance Scheme - the new scheme now being trialled in a number of boroughs.

Under the Local Housing Allowance scheme the government, in its wisdom (and possible lunacy) has decided that in most cases the "benefit money" will now be paid to tenants NOT landlords, apart from where there are serious arrears.

The Rent in Advance schemes are becoming popular in local authorities.

And no wonder - landlords like to get the rent money direct before tenants spend it on other things!

In fact, this is all rather amusing politically, because on the one hand the government is rolling out the Local Housing Allowance scheme where the money goes to the tenants, whilst at local level the Rent in Advance scheme has the money going to the landlord direct!

Drawbacks to the Rent In Advance Scheme

There are some drawbacks to the "Rent In Advance" scheme.

One of these is the small matter that the rent / housing benefits are not actually paid in advance at all.

The money is still paid in arrears, albeit "fast tracked" at the initial application stage.

What is actually paid in advance is just the deposit, which explains why some more logical councils refer to the schemes as the "Deposit Guarantee" scheme or "Deposit in Advance" schemes.

Another drawback is that typically the amount of deposit they pay is also limited to one month only, whereas many landlords prefer to charge anywhere between 5 and 7 weeks rent as a deposit to cover potential damages and lost rent.

Another downside is that the council cannot guarantee you a tenant. What actually happens is that people on the council's house waiting list come to view but it's up to them whether they take the property.

This compares badly with say the PSLS which guarantees you get paid - whether the property is tenanted or not.

And the biggest drawback of all is that once you have signed up, the tenant could, say, get a job, stop being on benefit or have their benefit cut - and you will then be stuck looking to the tenant to pay the rent.

In other words, the direct rent payment from the council could stop at any time.

Obviously, this is not good and means that really this scheme is just like any tenancy agreement you could enter into, with the added downside that your tenant is likely to be poorer and may have more trouble paying the rent than a tenant you could have found in the open (private) market.

As your agreement is with the tenant, you will have to chase the tenant for unpaid rent and damages above the measly one month deposit.

Just as with any tenancy agreement, you will also have to attend to all the maintenance issues - compare with the PSLS where a lot of routine maintenance is done for you!

So, really, all this scheme boils down to is a way for the council to help people on their homes waiting list by paying their deposit to a landlord.

OK, so you get the housing benefit paid direct initially, but only as long as the tenants circumstances don't change

And that seems to be about it really!

One to avoid, I think.