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“No DSS” used to be an addition to adverts for rental properties that many people thought went out with the twinset. However, the reality is that many tenants are rejected today for no other reason than they are on benefits. This isn’t always a decision that the landlord themselves gets to make. Often the terms of their own contracts or legal documents may also prevent them from renting to benefit tenants. Now, the Commons Work and Pensions Committee has told the government that it must address the “blacklist” that is being created by mortgage lenders, insurers and landlords who refuse to rent to tenants on benefits.
The issue of mortgage lenders preventing landlords from renting to tenants on benefits has become increasingly pressing. In October this year it emerged that NatWest refuses to allow many of its buy-to-let landlord borrowers to rent to tenants on housing benefit. In one particular case, NatWest wanted a landlord to evict the tenant on benefits before they would agree to any additional borrowing. This is a policy that NatWest applies to any landlord with fewer than 10 properties. It said to one landlord “the options available to you are to seek an alternative tenant or move your mortgage to another lender.”
There are currently around 4.2 million housing benefit claimants in this country and “no DSS” requirements enforced by banks risk widespread discrimination against those individuals. Essentially, they will be on a black list while on benefits and will only have access to certain types of properties. NatWest is now reviewing its buy-to-let policies on the issue after significant public and political pressure and it’s hoped other banks will follow suit.
Issues also arise for landlords when it comes to insurance. In particular, very few insurers are willing to provide rental guarantee insurance for landlords who are renting to tenants on benefits. Where an insurance company is willing to provide cover for DSS tenants, they will often charge landlords a premium in order to do so. As many landlords are looking to pay as little as possible for costs like insurance, this creates an impossible situation in which it’s detrimental to landlords to take tenants on benefits on.
Tenants on benefits face discrimination at almost every turn today. A study by Shelter and the National Housing Federation found that one in 10 agents in England won’t let a property to a tenant on benefits. The research uncovered evidence that at least five of the leading letting agents in the country were actively discriminating against tenants on benefits. The decision not to rent to this type of tenant was being made even where required financial criteria had been met. Agent Haart was found to be the worst offender – a spokesperson for the agency said
“it is not our policy to refuse housing benefit tenants – anyone who passes referencing checks is able to rent properties listed with our branches…This research has brought to light that some of our branches are misinformed and we are working to ensure that this policy is being followed across our network.”Haart estate agency
Of course there are landlords who are not prohibited by mortgage or insurance from taking tenants on benefits who still refuse to do so. In 2017, Shelter surveyed more than 1,100 landlords and found that 43% had an outright ban on letting to tenants on benefits. An additional 18% said that they would prefer not to rent to tenants receiving benefits.
This approach has created whole areas of towns and cities across the UK where tenants on benefits are simply not able to live – often the more affluent districts. And there is evidence that it has gotten worse over the past couple of years, as welfare cuts and issues with Universal Credit have made it more challenging for anyone on benefits to ensure rent payments are made on time. This has only made landlords more wary of renting to tenants on benefits. While many different demographics are affected, this kind of discrimination disproportionately affects women. 95% of single parent housing benefit claimants are women and 60% of adult housing benefit claimants are female.
The overall impact of the “no DSS” approach taken by mortgage lenders, agents, insurers and landlords is to discriminate against people on benefits. As many of these tenants are already struggling in difficult circumstances it can make day-to-day living considerably worse. However, the key lies not just in changing attitudes in the rental and financial sector but also ensuring that the benefits system doesn’t give landlords any reason to refuse to rent to those receiving benefits.
Alex Hartley is a keen advocate of improving personal finance skills. She's worked at Solution Loans since 2014 and written hundreds of articles about how people can manage their money better. Her interest in personal finance goes way back to...Read about Alex Hartley
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