Should I Accept DSS Tenants?
Whether landlords accept DSS tenants used to be pretty clear-cut. You either did or you didn't. We recently wrote about the pros and cons of letting to tenants on housing benefit but most landlords are usually very clear about which side of the divide they are on.
Those who reject DSS tenants point to the unreliable benefits system and possible damage to their property. Those who readily accept tenants on housing benefit enjoy the guaranteed occupancy and predictable cash flow.
But now the waters have become rather muddy. A recent court case could mean any landlord who refuses to accept a DSS tenant could be flouting sex discrimination laws. And possibly leave themselves open to a fine of thousands of pounds.
A landmark ruling?
A letting agent who refused to consider a single mum for a tenancy because she was receiving housing benefit had to pay compensation of £2,000. The agent refused her application without considering her personal circumstances. The lady, Rosie Keogh, then brought a discrimination case against the agent's blanket ban on DSS tenants. She won the case on the grounds the ban on DSS tenants indirectly discriminated against single women.
In this case, it appears the letting agent did their landlord client no favours whatsoever. The lady in question had been a tenant at the same property for eleven years and had never missed a rental payment. The agent refused to even consider her as a possible tenant. Ms Keogh fought her case in the county court and won.
But away from the details of the case, the verdict may have wider implications for all landlords. First off, all though it is important to realise this doesn't set a legal precedent. The ruling only applies to this particular case. It won't necessarily apply to others. But it could do. This is what landlords need to consider when thinking about whether to accept DSS tenants.
If one very determined tenant can prove discrimination it's possible others can. Landlords who refuse to consider tenants on housing benefit need to weigh up the possible consequences.
The stats behind the story
A 2017 survey of over 1,000 private landlords by Shelter showed only a minority would let to tenants on housing benefit. Of 1,137 landlords 43% flatly refused to consider DSS tenants while a further 18% preferred not to let to them. This left only 38% of private landlords willing to consider tenants on housing benefit. This naturally limits the options available to those tenants.
It's this imbalance which organisations like Shelter want to see the back of. Polly Neate, chief executive of Shelter, said: "We are urging all landlords and letting agents to get rid of 'no DSS' policies, and treat people fairly on a case-by-case basis."
A government spokesman said: "It's wrong to treat someone differently because they are claiming a benefit. The majority of claimants are comfortable managing their money but we are increasing support to help people who need it to stay on top of their payments."
There are always two sides to every story
But there are very good reasons why many landlords don't accept DSS tenants. And they often don't have any choice in the matter.
Some buy to let mortgages prohibit the landlord letting to DSS tenants. This ties the hands of the landlord. It is difficult enough finding an affordable mortgage without having to find one which accepts DSS.
The same restrictions apply to landlord insurance. Many policies stipulate no DSS tenants. With no insurance and no mortgage, it is unlikely the landlord will be in business for long enough to accept any tenant let alone those on housing benefit.
An imperfect system
It is the benefits system itself which can cause problems for the people it is supposed to help. For many landlords, the system is not fit for purpose. There are often lengthy delays before the tenant receives their housing benefit. These delays can be catastrophic for a landlord. Cash flow dries up but the mortgage still needs to be paid.
Another issue is that once the claim has processed the cash awarded to the tenant may not be enough to cover the full rent. If they are unable to cover the shortfall the landlord is again looking at a financial loss.
The payment system doesn't do the landlord any favours either. The tenant receives the benefit payments. In the majority of cases, this doesn't present an issue but there will always be instances where the tenant keeps the rent payments. The landlord is again out of pocket and then has all the stress and added expense of trying to recoup the missing payments and probably evicting the tenant.
What happens next?
Once the dust has settled it is unlikely Ms Keogh's case will have a massive impact. It is not the law that private landlords must offer their properties to tenants on housing benefits. And it is unlikely to be so for quite some time if ever. But landlords do need to be careful not to openly discriminate.
As we've discussed few do this. It is the rental infrastructure which often forces a landlord to refuse DSS tenants. Mortgage and insurance policies can dictate a landlord's position rather than any sense of discrimination. Until those issues are addressed there is unlikely to be any change. Some landlords are simply unable to accept DSS tenants.
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