Is It Illegal for a Landlord to Say No to DSS tenants?

Written By PropertyLoop
February 17, 2021

With almost 23 million people in the UK claiming universal credit in 2020 alongside demand for rental opportunities skyrocketing in recent months, landlords are set to face a renewed wave of DSS tenants as both owners and renters look to financially recover from the fallout of the COVID pandemic we ask if landlords can say no to DSS tenants.  

Do landlords take tenants on Universal Credit? PropertyLoop

What Is a DSS Tenant? 

Simply put a DSS tenant is an occupant of a rental property that is in receipt of housing benefits. These benefits area a form of monetary support provided by the UK government in an effort to assist those facing financial difficulties in meeting their obligation to consistently pay rent. Although DSS refers to the outdated Department of Social Security, referred to as the Department of Work and Pensions for the last two decades.

Can a Landlord Refuse a Tenant on Benefits? 

Historically some landlords have proven reluctant to let out their property to DSS tenants, going as far as issuing a blanket ban across their rental portfolios. Whilst this ban was commonly attributed to doubts that the tenants would be able to consistently meet their legal obligation to pay rent, and was not considered to be a discriminatory practice as the decision was not based on any “protected characteristics” such as age, sexual orientation or ethnicity. However, after a landmark court ruling in 2020 this is no longer the case, with any ban on DSS tenants being seen as indirectly discriminatory towards single mothers and the lesser abled, and therefore cannot lawfully be upheld.  

Landlord Insurance With Tenants on Benefits 

For the most part the insurance policies a landlord chooses to take out will not be influenced by those that occupy the rental property. However, whilst this certainly rings true for buildings and contents insurance policies for landlords, it will not be the case for some of the more specialist covers. Landlords that host DSS tenants may find it difficult to claim for any rent guarantee or tenant default insurance, this is because insurance providers will typically demand that then occupants of the property passed all affordability checks before moving in; potentially leaving landlords with DSS tenants’ fewer options to recover significant rent arrears.  

Can a landlord refuse a tenant on benefits? PropertyLoop

My DSS Tenant Is Not Paying Rent 

It goes without saying that property owners will employ additional measures to protect their rental income. If the occupant of a property falls behind with their rent then the landlord will be able to claim the expected amounts directly from the tenant’s universal credit payments. This process is referred to as a “managed payment” and can only be executed once the occupants of the property accumulate at least two months’ worth of rent arrears.  

Is Housing Benefit Paid to Me or Landlord? 

For the most part, DSS tenants will pay their share of rent to the landlord in a similar fashion to that of any other tenancy. The occupants of the rental property can choose to either receive their universal credit payment directly, or have the relevant amount for rent be sent directly to the landlord on their behalf. Not only does this ensure that eh tenant is unable to fall further into debt, accumulating significant rent arrears, this also protects the landlord’s rental income preventing them from being exposed to monthly interest payments on their buy to let mortgage, management charges, repair costs and the many other expenses that come with letting a property.  

Commonly referred to as a direct rent payment, alternative payment arrangement or, managed payment, this form of direct rent payment from a tenant’s universal credit will be periodically reviewed, affording the occupant the chance to take control of their rental payments and manage their payments to the landlord independently.  

Can You Rent to DSS Tenants With a Guarantor? 

It is no secret that over the years tenants that have been in receipt of financial support through DSS have found it somewhat harder to find a rental property. In circumstance where an aspiring tenant does not pass all aspects of referencing, or falls short on the series of affordability checks carried out before they move into the property, the landlord may request that they first obtain a guarantor. Although request by the property owner for the occupants to source a guarantor may be synonymous with those that choose to let to full-time students, landlords are able to request their future tenants find a guarantor if they are seeking additional assurances that their obligation to constantly pay the agreed-upon rent will be met. However, simply because the future occupants of the property are receiving universal credit payments does not mean that the owner is in any way legally obligated to request they obtain a guarantor before moving into the property, and is instead determined on a case by case basis by the landlord.  

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