Can private landlords refuse to let to Housing Benefit claimants?

by Readers Question

13:36 PM, 14th October 2020
About 2 weeks ago

Can private landlords refuse to let to Housing Benefit claimants?

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Can private landlords refuse to let to Housing Benefit claimants?

Those who believe that Government is not aware of the issues facing landlords in the PRS  may be surprised by the detailed analysis in the Briefing Paper published on 13th October by the House of Commons library.

The summary is quoted below but I recommend reading the whole report, which can be downloaded if you click here 

“Discriminating against Housing Benefit claimants?

It is not unusual for private landlords and letting agents to advertise properties to let stating that they will not accept applications from people who rely on Housing Benefit (HB) to pay their rent. Despite the Department of Social Security not having existed since 2001, the phrase used in adverts is usually “No DSS”. This has raised the question of whether such restrictions amount to unlawful discrimination. Although unlikely to amount to direct discrimination, as income and employment status are not protected characteristics under the Equality Act 2010, it has long been argued that it could amount to indirect discrimination in some cases.

Findings of unlawful discrimination 2020

In what was described as a ‘landmark’ case, District Judge Victoria Elizabeth Mark sitting in York County Court, considered the case of a disabled single parent who had an application for private rented housing refused by a letting agent based on her receipt of Housing Benefit. In a judgment dated 2 July 2020, which was widely reported in the media on 14 July 2020, she held that the letting agent was in breach of the Equality Act 2010. The judgment declared that:

The Defendant’s former policy of rejecting tenancy applications because the applicant is in receipt of Housing Benefit was unlawfully indirectly discriminatory on the grounds of sex and disability contrary to sections 19 and 29 of the Equality Act 2010.

Reacting to the judgment, Chris Norris, policy director for the National Residential Landlords Association (NRLA) reportedly said:

No landlord should discriminate against tenants because they are in receipt of benefits. Every tenant’s circumstance is different, and so they should be treated on a case by case basis based on their ability to sustain a tenancy.

This was followed by a case considered in Birmingham County Court in which judgment was handed down on 8 September 2020. Circuit Judge and Acting Designated Civil Judge for Birmingham (now High Court Judge), Mary Stacey, held that the letting agency, Paul Carr, had operated a blanket ‘No DSS’ policy which amounted to unlawful indirect discrimination against disabled people.

Why are landlords reluctant to let to Housing Benefit claimants?

Historically, landlords were reluctant to let to HB claimants because of delays in processing HB applications, but since April 2008 a key factor influencing landlords has been the introduction of the Local Housing Allowance and the requirement that this, except in certain specified circumstances, is paid to claimants rather than landlords. Restrictions on the level of LHA paid to claimants were introduced by the Coalition Government in April 2011 – these changes led various housing bodies, including representative bodies of private landlords, to argue that HB claimants were being priced out of the market.

Further restrictions were introduced; for example, LHA rates were frozen with effect from April 2016 for four years. This added to landlords’ concerns about the gap between LHA and market rent levels. Evidence of disparities between actual rent levels and LHA rates payable submitted to the Communities and Local Government Select Committee’s inquiry into homelessness (2016) led the Committee to recommend that “Local Housing Allowances levels should also be reviewed so that they more closely reflect market rents.”

At the start of the fourth year of the benefit freeze (2019/20), analysis conducted by Shelter noted that the LHA rates for a two-bedroom home did not cover the full rent charged in 97% of Broad Rental Market Areas in England.

Other factors cited as reasons for landlords’ reluctance to let to HB claimants include:

  • uncertainly around the roll-out and implications of Universal Credit;
  • the payment of Housing Benefit in arrears;
  • restrictions in mortgage agreements and insurance requirements;
  • perceptions of benefit claimants as more likely to demonstrate anti-social behaviour; and
  • tax changes resulting in landlords focusing on “less risky” tenants.

The extent of the issue?

There is no definitive information on the extent to which landlords have refused to let to benefit claimants. Reported survey evidence has suggested an increase in the practice in recent years.

Given the increase in Universal Credit claims arising from the coronavirus (Covid-19) outbreak, in June 2020 Shelter raised the potential implications of “No DSS” blanket bans for tenants:

Given the huge rise in the numbers of people receiving housing benefit and what we know about rates of discrimination, we’re concerned that there will be a significant increase in the numbers of people experiencing housing benefit discrimination in the coming months.

As people in existing tenancies tell their landlords they’ve applied for Universal Credit, and those who need to move home begin the search for somewhere to live, renters who are now relying on housing benefit to keep their head above water will be coming up against discrimination.

The likely spike in evictions in the months that follow the lifting of the evictions ban has the potential to exacerbate this further. When the ban is lifted, there will be an upsurge in the number of renters who need to look for a new home. A significant proportion of private renters who may be evicted will likely be receiving housing benefit, especially considering the huge rise in people applying for Universal Credit during the coronavirus outbreak, and so will be met by ‘No DSS’ policies.

In the wake of the finding of indirect discrimination in July 2020, it seems likely that instances of blanket ‘No DSS’ adverts will disappear. However, affordability checks based on a tenant’s individual circumstances will still be possible.

The issue had attracted an increased level of attention in recent years. On 21 February 2019 the Work and Pensions Select Committee launched an inquiry into No DSS: discrimination against benefit claimants in the housing sector – the inquiry had not concluded before the dissolution of Parliament for the 2019 General Election. On 1 March 2019 the then Minister, Heather Wheeler, said the Government was calling for “the end of housing advertisements which specify ‘No DSS’ tenants.” ”

David


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Comments

Tessa Shepperson

16:36 PM, 14th October 2020
About 2 weeks ago

If this topic interests you, you may want to watch our webinar here where I spoke to the barrister in this case: https://youtu.be/-6Xzbp-1UwE

(You will find our other legal cases webinars also on our Landlord Law YouTube Channel: https://www.youtube.com/channel/UCD3IXog-0n3nO96ddvkgMEA )

Alan Rogers

16:38 PM, 14th October 2020
About 2 weeks ago

At the moment a private landlord still has the right to choose which people they want in their property and cannot be forced to take people on benefit.

Tessa Shepperson

16:42 PM, 14th October 2020
About 2 weeks ago

The case isn't about forcing landlords to accept tenants on benefits. It's about treating all applicants equally and not writing them off, simply because they are on benefits.

With so many people losing their jobs right now, someone on benefit with a proven track record of regular payments might be a better bet than someone in employment ...

Seething Landlord

17:32 PM, 14th October 2020
About 2 weeks ago

Reply to the comment left by Alan Rogers at 14/10/2020 - 16:38
No, but we are pretty close to being liable for compensation if we reject an applicant simply because he is on benefits.

Tessa Shepperson

17:54 PM, 14th October 2020
About 2 weeks ago

Reply to the comment left by Seething Landlord at 14/10/2020 - 17:32
Well, don't reject them because they are on benefits.

Reject them because of some other reason - because you don't think the property is suitable for them, because you think another applicant is more suitable, because you feel you would get on better with another applicant as a tenant, etc, etc, and record that reason in your records.

If your reason for choosing the other tenant is reasonable then you should be OK.

But give the benefit applicant a chance because you may find that actually, you prefer them. Particularly if they have been on benefit for 10 years without ever missing a payment and have a property-owning relative who can act as guarantor.

Seething Landlord

18:35 PM, 14th October 2020
About 2 weeks ago

Reply to the comment left by Tessa Shepperson at 14/10/2020 - 17:54
Exactly.

Simon Williams

10:49 AM, 15th October 2020
About 2 weeks ago

As is clear from Tessa Shepperson's advice, landlords who need to do so, really should not have a problem declining a tenant on benefits if landlords act smartly and apply tailored reasoning. Usually it is simply that someone else is better suited, not that the benefits applicant is totally unsuitable.
This whole issue is just an example of the chickens coming home to roost. If, as a government, you create a deeply hostile environment in which landlords have to operate, landlords will react by being more risk-averse. Inevitably that will impact negatively on the type of tenants who are the least well off - and no amount of anti-discrimination law is going to prevent that.

Smartermind

10:59 AM, 15th October 2020
About 2 weeks ago

Reply to the comment left by Seething Landlord at 14/10/2020 - 17:32
He? You've already discriminated against half the population with that comment!

Monty Bodkin

11:20 AM, 15th October 2020
About 2 weeks ago

"they have been on benefit for 10 years without ever missing a payment"

How have they coped with rent increases during that period?

Rents have increased around 15% over the last 10 years, benefits haven't (until Covid). They are highly unlikely to keep pace going forward.

"No dss" is a proportionate means of achieving a legitimate aim. Just no one has the huge amount of resources to bother arguing it.

Tessa Shepperson

11:23 AM, 15th October 2020
About 2 weeks ago

So far as I recall you only have to pay the money back if it is paid direct to you. Not if it is paid via the tenant. This is why jam jar accounts at credit unions are such a good idea.

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