As our End DSS Discrimination campaign picks up speed, we’ve had comments and questions from many landlords who believe they can’t rent to people receiving benefits. Here are the four most common reasons we’ve heard – and why they’re not the barriers they might think.
Over the summer, Shelter clients Stephen and Jane* both won landmark court rulings that declared housing benefit discrimination unlawful, marking a huge breakthrough for our End DSS Discrimination campaign.
When we shared news of the court rulings, #NoDSS trended on Twitter for the entire day, and we got lots of questions and comments, including from landlords about how they’re supposed to let to tenants who receive benefits.
Today, we’re going to address some of the ones we hear most often.
‘The terms of my mortgage mean I can’t let my property to tenants who get housing benefit’
This is something we hear all the time. While this might have been the case five or 10 years ago, we know from our research and work with the mortgage industry that this simply isn’t true anymore.
Mortgage lenders do not prevent landlords from renting their properties to tenants who receive benefits.
To begin with, we know that nearly half of landlords (48%) have no outstanding mortgages on any of the homes they let out. And for those landlords that do have mortgages, brokers Mortgages for Business told us they believe over 99% of the buy-to-let mortgage market is free of ‘No DSS’ restrictions free. This means it’d be very unlikely for a landlord to have a restrictive mortgage clause.
Even if a landlord took out their mortgage before their lender ditched their ‘No DSS’ policy, their mortgage policy would now be free of these restrictions, though if they’re unsure, they should check with their lender.
‘My landlord insurance doesn’t cover me if I let to anyone receiving housing benefit’
This is another common concern that landlords share with us. While some landlord insurance products do still have ‘No DSS’ clauses in them, we know from our work with the insurance industry that there are also plenty of insurance products available which do provide cover to landlords letting to tenants receiving housing benefit – and the best news is, they’re available at little or no extra cost.
The British Insurance Broker’s Association (BIBA) runs a free insurance-finding service. It can help find any landlord a suitable insurance product which covers letting to tenants receiving benefits.
It’s a good idea to get an insurance product that covers tenants in receipt of benefits anyway because anyone who starts a tenancy in employment may later find themselves in receipt of benefits. Ill health, redundancy, bereavements, and new additions can happen to anyone. Just this year, nearly 2 million more households have found themselves claiming benefits.
Because so many insurance policies are available which don’t have ‘No DSS’ clauses in them, having a ‘No DSS’ insurance product is not a legitimate barrier to letting to people receiving benefits.
If a landlord has a DSS-restrictive insurance policy then we’d advise that they simply change their insurance product, as they are affordable or free.
‘I’m concerned I won’t receive my rent payments – I’d only let to a tenant getting housing benefit if they have a guarantor who owns a home in the UK’
At Shelter, we regularly hear from tenants who’ve experienced DSS discrimination despite having an excellent track record of paying rent on time and being more than capable of managing their finances.
In fact, a 2019 YouGov survey of renters receiving housing benefit showed that 95% of respondents were not behind on their rent. And another YouGov survey in the same year showed more than 1,000 private landlords who rent to tenants on housing benefit were equally as likely to be in profit as those who don’t.
There are lots of ways to check a tenant’s reliability when it comes to paying rent. Guarantors are one way, but may only be accessible for some. Plenty of great tenants don’t have family or friends who can act as a guarantor but can demonstrate their reliability in other ways.
This could include credit checks, work references, or requesting a reference from a previous landlord showing whether the tenant reliably paid the rent.
If landlords still have concerns, they can always look into rent-guarantee insurance, which is an affordable way to get peace of mind.
A guarantor is not always an ideal solution anyway – a landlord doesn’t want to get into a situation where rent is not paid and are left chasing a guarantor to pay it. It’s much better to do a case-by-case assessment at the beginning and use that to gain the assurance you need.
‘Not getting housing benefit paid directly to the landlord makes it difficult’
While direct payments of housing benefit to landlords aren’t the default anymore under Universal Credit, landlords can still apply for direct payments.
That said, we recognise that there are frustrations with the way in which Universal Credit works, both for tenants and landlords, and we do think that the process of applying for direct payments should be made easier – though it does always need to be the tenant’s choice.
It’s also worth remembering the research we mentioned earlier, (showing 95% of tenants receiving housing benefit were not behind on their rent, and private landlords who rent to tenants receiving housing benefit are just as likely to be in profit as those who don’t) was carried out since direct payments of housing benefit to landlords ended.
This shows that even without default direct payments, landlords are still receiving their rent on time from tenants getting housing benefit.
There’s no reason to not rent to tenants on housing benefit. Make sure you’re up to speed with private renting guidance on our website.
- The name of our client has been changed at her request; Jane is a pseudonym.