Can private landlords refuse to let to Housing Benefit claimants?

Can private landlords refuse to let to Housing Benefit claimants?

13:36 PM, 14th October 2020, About 3 years ago 74

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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

Lyndon Whitehouse

8:16 AM, 17th October 2020, About 3 years ago

Not everyone claiming benefits is a pariah- some of our best tenants are claiming benefits and many, due to their circumstances, have done for many years. They are long term tenants.
What landlords really mean is ‘no drug dealing, drug addicted, drunken, antisocial, selfish, ignorant, violent, disrespectful and financially challenged’ people’

Jonathan Clarke

9:19 AM, 17th October 2020, About 3 years ago

Reply to the comment left by Lyndon Whitehouse at 17/10/2020 - 08:16
Those personality characteristics can of course apply to DSS or Working tenants. I had a tenant on 120K pa who turned out to be all of those things ( except the violent and financially challenged aspects )

Many of mine are on part LHA and also got low paid but worthwhile jobs eg carer . That confuses some critics who like to too readily pigeon hole and stereotype others

Mick Roberts

9:33 AM, 17th October 2020, About 3 years ago

It's really easy, this refusal of Benefit tenants. Sort the UC system out. Sort that out, loads more will take, Govt won't worry any more about those that won't take. It wasn't a major concern before UC. Now UC here and LOADS more Landlords not taking Benefit tenants, Govt shout up. That's not rocket science to see what's happened. UC has caused more Landlords to not take Benefit tenants any more.
As someone said, LHA was bad enough. But us HB specialists worked round it. With UC, we arguing with the most stupidest people on the planet.
My problem now is (among dozens others), which I'm sending the below to the MP:
I’ve had this happen to two of my tenants now & know 3 people it’s happened to.
This is probably bigger than the Business Covid Fraud loans.
I think we running at 2-3% fraud.
Fraudsters, are setting up a fictitious claim in the name of a genuine claimant ie. My tenant from Nottingham. The first my tenant or I hears about it is when her money stops or the rent stops.
Tenants rings up DWP Universal Credit UC, she says my money stopped, UC says Yes you’ve moved to Plymouth. She says I haven’t, I’ve been in Nottingham all my life, been in this house 15 years.
UC says No, you’ve just moved Plymouth & claiming rent from there. We now establish Fraudster has set up claim.
My tenant rings up UC again, explains about Fraudster. UC says can’t help u, the Fraudster has to ring. You couldn’t make this up.
My tenant could just not solve it. Her Council HB office could not solve it. They say it’s happening to several of their tenants & they cannot talk to anyone with competence at DWP.
I got Neil Couling, Director of UC involved, as I put this case on Twitter, so he kindly asked to see details of case, even he said it’s complicated & not straightforward. I said her/my tenant genuine claim is not complicated, u just press the button & put hers back in payment & then u do whatever u need to do with the Fraudster. Worst thing was, DWP was still paying her some of her benefits.
This still took 2-3 weeks to sort out AFTER Neil Couling had got involved.
This could all be stopped if we did what we used to do.
The old HB system would send letter to the old Landlord (genuine claim) that the tenant has left. Landlord would say No she hasn’t left, Bingo. New Fraud claim stopped.
The old HB would also ask for rent proof off the new ‘fictitious’ Landlord that the house & rent exists. Bingo, Fraud stopped. But all this Fraud carries on.
All DWP UC are obsessed with not talking to the reputable Landlord & insisting this claimant must be responsible & genuine. Excluding the very important Landlord who provides Shelter, from this process is resulting in the most massive homeless nationwide one can imagine.
The Council HB offices are aware of this, as they’ve been affected lots of times.
UC DWP know it’s happening.
DWP & UC Fraud & overpayments is running around £1.75 billion pound. Apparently far higher than the old system.
Complete Lunacy as Kate says. No joined up thinking.
And as Jonathan Clarke says-They won't engage with us & admin systems have gone back 25 years.

Pramila

9:53 AM, 17th October 2020, About 3 years ago

Reply to the comment left by Tessa Shepperson at 14/10/2020 - 16:42
There are so many issues and no protection for landlords. I would suggest that if the government or local council would become a guarantor for for people on Benefits then there should be less problems.
Also UC credit should pay rent in advance. I have rented a property on benefits and nothing is sorted yet it's about over 6wks.

Old Mrs Landlord

10:29 AM, 17th October 2020, About 3 years ago

Reply to the comment left by Kate Mellor at 16/10/2020 - 09:53Kate, Can you give a reference for the statistics quoted in your second paragraph? I would be interested to read those statistics and I can't help wondering why they are not more widely publicised and, for instance, quoted in answer to Shelter's assertions that tenants in receipt of benefits represent no greater a risk than any others.

Mick Roberts

11:28 AM, 17th October 2020, About 3 years ago

Reply to the comment left by Old Mrs Landlord at 17/10/2020 - 10:29I'll publicise it.
Law of averages, with my working & HB tenants.
HB tenants bring far more risk, damage, trouble, time taken, not great with money etc. Mine admit it too. One says When I say this kitchen was brand new XXX 7 years ago. She says What do u expect Mick, I've got 8 kids. I have to laugh. This was in front of some Council workers from the homeless.
I have some great houses with HB tenants, some like palaces, but law of averages, my lot don't half mess me about ha ha. I love 'em though, now the really bad ones have been evicted cause of Licensing. The remaining ones pay eventually & if I get a text to say Can't pay this month, that's a bonus, they letting me know.

Old Mrs Landlord

12:13 PM, 17th October 2020, About 3 years ago

Reply to the comment left by Mick Roberts at 17/10/2020 - 11:28
Thanks Mick, our experience is not as bad but certainly along similar lines. We have nothing bigger than two-bed, so no tenants with eight kids! However I was really looking for evidence from independent published studies rather than anecdotal experiencial evidence from landlords, which is abundant. It may seem obvious that people who, for whatever reason - lack of educational qualifications, physical or mental impairment, addictions of one kind or another etc. - can't get or hold down a job which provides a living wage will be at home all day long causing more wear and tear on a property and frequently lack the self-discipline or motivation to care for things which have been provided for them directly (landlord) and indirectly (taxpayers) by the labour of others, but that is not statistical evidence as mentioned by Kate Mellor. (I am of course aware that there are also some high-earning tenants who care nothing for their landlords' property.)

Landlord Phil

13:48 PM, 17th October 2020, About 3 years ago

I've posted on this subject before. My problem, through bitter experience, is that I simply don't trust the benefits system. The rules on how they pay can change without notification, consultation or without reparation. Also tenants situations change. Recently a tenant couple split up. I'd taken them on with jobs pre virus, but like many, they lost their employment. The newly single tenant was told he could only have half of his rent paid as it was a 2 bed property. How is that either fair or sensible?

Put simply, unless the UC system is prepared to become the legal guarantor, I won't take on a benefits tenant. They are welcome to enquire, but without my requirements being met, they will be refused. And what's the chances of UC becoming legal guarantor? I don't think you need me to say it's not going to happen.

I tried an exercise when I last let a flat. I normally expect to see around 15 viewing requests between Friday & Monday. After 48 hours I closed viewings having seen 36 requests. This happened because i didn't tell Openrent to say no dss. Yes you can still put that on their ads. Of the 36, I showed 12 around the place. 9 of the 12 were on benefits. There is no way on this earth that UC would have paid the full amount, it was priced at the top of the market.

Really, this whole issue is ridiculous. My message is simple. I don't discriminate against UC tenants, that would signify I don't trust them. I do however refuse to trust their paymasters unless they enter into a legal agreement to guarantee the rent that is unchangeable in the same way that the tenant cannot change the AST terms.

Until someone in power listens to us, people like me simply aren't going to take on the risk. My proposal is simple to put into action. Listen up government. If you want to solve some problems, take the step that's needed.

Mick Roberts

16:49 PM, 17th October 2020, About 3 years ago

That's the thing, these independent studies. Not once has some Councillor who makes the decision for Licensing come & asked me how they could improve it. And how it's affecting tenants.
Same with UC DWP. DWP has sent some top people in to see me, but they can't get anything actioned.
My Job centre managers are frustrated they telling the people above them, but no one listens. So we get no independent studies. I am the study.

Monty Bodkin

17:49 PM, 17th October 2020, About 3 years ago

Reply to the comment left by Old Mrs Landlord at 17/10/2020 - 10:29
"Can you give a reference for the statistics quoted in your second paragraph?"

Over half of PRS UC tenants are in rent arrears (compared to less than 10% of working tenants);

https://research.rla.org.uk/wp-content/uploads/2019-Q1-State-of-the-PRS-Report-FINAL.pdf

It's a bit hidden but if you do some digging into landlord possession statistics and make some realistic assumptions, benefit tenants are 3X more likely to be evicted;

https://www.gov.uk/government/statistics/mortgage-and-landlord-possession-statistics-july-to-september-2019

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