Some housing and pressure groups have started a campaign to end what they call “DSS Discrimination”, says David Lawrenson of www.LettingFocus.com.
They say landlords and letting agents should not be allowed to state in adverts that they do not wish to take people on as tenants, if those tenants are dependent on housing benefit to pay the rent. (The old DSS tag refers to the old days and is shorthand for the “Department for Social Security”, now effectively renamed the Department for Work and Pensions or DWP).
Landlords and letting agents have, of course, been saying “No DSS”, (or No Housing Benefit) for a long, long time – but increasingly so since the government stupidly capped the level of total benefit people could receive and also since they decoupled housing benefit from median market rents.
Many, (though not all), landlords and letting agents have pointed out that the level of housing benefit is often now too far away from market rents to make it feasible for such tenants to afford market rents. This is especially true of places like London and other major cities.
In addition to the actual level of housing benefit being too low, landlords also say the constant tinkering with how the housing benefits are administered – especially the bonkers hokey-cokey of whether or not it could be paid direct to the landlord – is a problem. Additionally, there have been delays and problems with payments under the new over-arching Universal Credit payment system – just more reasons why landlords put up the “No Housing Benefit” signs.
Landlord also don’t like the fact that housing benefit is paid in arrears, whereas rents are due in advance – at the start of the “tenancy-month”.
DSS Discrimination – The Bond Solutions
And while help is very occasionally available from local government and charities for tenancy deposits (using bonds) and also through “rent in advance” assistance schemes, landlords often complain that schemes are, in practice, often very hard to claim against, with payments-out from bond schemes being slow and the processes, cumbersome.
Landlords are effectively saying, “We are not social housing and we don’t have a duty to provide housing to everyone”.
In addition, despite our work at LettingFocus in the past, some mortgage lenders’ terms and conditions in their buy to let loans, still expressly disallow lets to people on housing benefit. This is still the case with Accord, the buy to let arm of the UK’s second largest building society, the Yorkshire. Landlords with loans with such mortgage lenders effectively have their hands tied. If they accept housing benefit tenants, they are breaking the terms of their mortgage loans.
And some insurance companies either refuse cover or demand higher premiums or excesses or both.
Back in the day, I know many landlords who had a very good experience of letting to tenants on benefits. Indeed, I recall James Davis, Chief Executive of online letting agent, UPAD, speaking at one of my events around 12 years ago, telling landlords to remove their prejudices against tenants who were on housing benefit.
DSS Discrimination Has Got Worse
Davis said, he had let his properties to housing benefit tenants for years – and by choosing the right people, he had very few problems. He pointed out a valid truth that one of the greatest benefits was that tenants on benefits tended to stay a long time – so no costs of having to re-let very few years with the attendant voids that often come with that.
But that was then.
Things changed when the government decided to cut the housing benefit payments from local median rents to the 30th percentile of local median rents and cap the total benefits a family could get. Later on, payments of benefit direct-to-landlords was severely curtailed, significantly increasing the risk that the tenants would spend the money on something other than rents.
Faced with these changes, James, like many landlords, faced a huge drop in income and could no longer make it work for him in his London properties. With great regret, he had to give many long standing tenants notice to leave.
And so, that is where we are today.
In some areas today, outside the English capital and for the right types of property in less expensive areas, the housing benefit levels means that letting to benefit tenants can still just about be made to work. But these areas are getting fewer.
DSS Discrimination – Private Landlords are Not SOCIAL Landlords
Sure, landlords can be made to stop writing “No DSS” on adverts.
But they cannot be forced to actually let to people who their assessment procedures, (and often their rent guarantee insurers), say will be unable to afford to pay the rent.
They cannot be forced to act to mop up the mess created by the government years ago when it sold off the bulk of its council housing stock – stock that has still never been rebuilt in any numbers since.
Stopping landlords putting “No DSS” on adverts will not somehow magically make the tenants able to find and prove they have enough income sufficient to pay the market rents. They either have it or they don’t!
After being clobbered with endless new regulations and tax rises, landlords are a pretty fed up bunch who simply cannot and will not house any person who cannot afford to pay rent.
Sure, it makes sense to highlight that there are lots of good tenants on housing benefit – and to remove the prejudices that some landlords have. But a big campaign could be a distraction from more important issues.
I recall Crisis, the housing charity, whom I rather like, doing some really useful work in the past, showing that tenants on benefits were often good for landlords – and setting up and linking in with local authority and charity “private rented sector access schemes”. They do ever-useful practical work to try to make housing work.
Their good work could and should be promoted more by Shelter, if they could only get off their high horses.
Footnote: Here in Bexley, the council is right now offering up to £8,000 to landlords if they take a family off the housing register. Nearly all will be on benefits. That is the real price of housing failure – and it’s being paid by our taxes.
Bexley are not unusual. Shelter’s campaign to “End DSS Discrimination” will not change that market failure one iota. They ought to be focussed on trying to get more affordable housing built and for better benefit levels.
Final Word: Effectively saying “no” to housing benefit is also rife in social housing. In social housing they are less explicit, though – referring to “affordability checks” instead. However, the effect is the same, meaning many folks dependent on housing benefit often find they are shut out of social housing too. See the hypocrisy here at another excellent Joe Halewood blog: https://speyejoe2.wordpress.com/2018/08/23/dear-polly/
Services for Private Landlords
We help landlords and property investors by showing them how to make money in the private rented sector using ways which are fair to tenants and which involve minimal risk. Our advice is completely independent. We take don’t commission payments or fees from anyone, ever.
Services to Businesses and the Public Sector
We advise a range of organisations too to help them develop and improve their services and products for private landlords. David Lawrenson, founder of LettingFocus, also writes for property portals, speaks at property events and is regularly quoted by the media.
HOME PAGE OF THIS BLOG: Blog
THE HOME PAGE OF THE MAIN SITE: http://www.LettingFocus.com
For general information on our CONSULTING SERVICES: Consultancy and Seminars
For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS: Property Advice
CLIENT TESTIMONIALS – from both organisations and private landlords: Testimonials
IN THE MEDIA: Recent Press Coverage
“SUCCESSFUL PROPERTY LETTING”:
Our book is the highest selling personal finance and property book in the UK. Click here to Find Out More and Buy it. And if you are from an organisation and would like to bulk buy, please ask us for special rates.
“BUY TO LET LANDLORDS GUIDE TO FINDING GREAT TENANTS”:
Also, get this great new guide here, which covers everything you’ll ever need to know to avoid either you or your letting agent getting anyone other than the perfect tenant. Click Here to Buy It.
BOOK FOR TENANTS:
Kids going off and renting for the first time? My Book for Tenants is also Available
TO JOIN OUR FREE NEWSLETTER MAILER which goes to over 3,990 people (as at Jan 2019) just send an email to [email protected]
We do not send spam or sell our mailing list to advertisers, though we occasionally mail landlords about good products from third parties. Please put us on your “white list” to ensure you receive our emails.
OFFERS ON PRODUCTS FOR LANDLORDS and TO ADVERTISE YOUR PRODUCTS to LANDLORDS: Landlords Resources
PERUSE LAST TEN BLOGS BY GETTING THE RSS FEED: Click Here
NEXT ANNUAL SEMINAR EVENT FOR LANDLORDS: Landlord and Property Letting Seminar
TWITTER PAGE My thoughts on property, personal finance, plus a lot of other random things: Twitter
Copyright of Blog: David Lawrenson 2019. Please link to us here or quote us. We actively pursue copyright infringements.