DSS Tenants – another issue

by Mark Trenfield

22:38 PM, 18th July 2012
About 8 years ago

DSS Tenants – another issue

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DSS Tenants – another issue

DSS Tenants - another issueThe good thing about being a landlord is that I not only generate a fantastic monthly income from my property investments but I also have the power to make a positive impact on the lives of some vulnerable people “DSS Tenants” living in my community by providing them with a home (when other landlords might not).

Single parent families (who have recently divorced) and ex-services personnel (who must give up their military quarters within 90 days of leaving the Armed Forces) have proven themselves to be excellent tenants for me over the years.

However – all of these tenants are claiming DSS benefits!

Most landlords and letting agents actively discriminate against “DSS tenants” because they are in receipt of state benefits and they are perceived to be bad. Yet the landlords largest cost is the loss of rental income during void periods and there are literally thousands of DSS tenants queuing at the local Council that need housing.

So is it financially wise or foolhardy to deliberately keep an investment property empty (waiting for a working tenant) rather than accepting a benefit claiming tenant?

Discriminating against someone because they claim a state benefit is not illegal but it is ironic as most landlords and lettings agents are claiming state benefits themselves (e.g. child benefit, child tax credits, working tax credits etc) as well as using state facilities such as schools and the NHS.

In difficult economic times we should reflect that we are only a negative life episode or two away from needing state help ourselves; maybe a failed relationship; a few missed mortgage payments; a lost job; the death of a loved one.

“No DSS” is a phrase that accompanies most rental property advertisements although it is technically incorrect as the DSS never really existed and is a malapropism quoted by landlords!

The DHSS (Department for Health and Social Security) did exist but this was renamed to the DWP (Department for Work and Pensions) about seven years ago – so if you don’t want benefit claiming tenants then the correct wording is “No DWP” not “No DSS/DHSS”.

I’m not advocating that every DSS tenant is good (as they are clearly not) but I also think it is wrong to assume that every DSS tenant is bad. Landlords will always tell you about their bad DSS tenant – but keep quiet when they have found a good one!

Surely, if we could find a way of selecting the good DSS tenants, whilst avoiding the bad ones, then we would be able to eradicate our void periods forever and maximize our overall investment income. I’ll write a future blog on some of the strategies that I have used to try and achieve this.

Personally, I judge my DSS applicants on a case by case basis.

I seem to have specialised in helping single parent families who were previously buying their own home before their relationship broke down and were forced to sell as they separated. The local primary school secretary (who rented from me when her relationship broke down) often recommends me to divorcing mothers as they share their marital strife with her at the school gate!

I also try to help ex-services families as they become unemployed (when they leave the Armed Forces) as they are well known for the immaculate way they take care of their military quarters as they are “marched in” and “marched out” after each tour of duty.

I know that we can’t help every DSS tenant – and many don’t deserve our help – but if we are selective then we can radically improve our return on investment as well as helping some local families in your community.



Comments

10:39 AM, 19th July 2012
About 8 years ago

I don't really think LL have a problem with LHA claimants, it is the system by which they receive LHA that causes LL not to want to take LHA claimants on.
And also the useless county court system should they have to be evicted.
I have been victim of the system on several occasions which has resulted in the LHA tenants waqlking away scot free with thousnads of pounds og LHA that should have been paid to me.
Plus all the damages, thefts etc they caused.
To encourage LL to take on LHA claiamnts this is what needs to be done.
1/ Ensure that LHA is always paid to the LL even if it goes via a tenant's bank account(UC will address this problem if a CU is used when UC is introduced)
2/ Remove the possibility of 'clawback' if as result of a tenant not paying LHA and there being 8 weeks of arrears the LL obtains direct payment and then 6 months later the council claim from the LL all the LHA paid due to a false claim by the tenant.
3/ The arrest of any tenant who has caused criminal damage and theft from a rental property and not to treat such criminal offences as civil offences and for deductions to be made for the costs of those damages and thefts to be paid to the LL via deductions from benefit or wages or other resources the tenant has.
4/ The payment of LHA directly to a LL as soon as a tenant has failed to pay the LHA but for the LL to receive all the LHA due even if they have paid it to the tenant already
Then they should recover that LHA from the claimant by deductions from their benefit.
5/ The ability to discuss ANY aspects of the tenant's domestic circumstnaces without there being a need to obtain permission(I appreciate one could overcome this isuue by having a condition in the AST agreement)
These are all I can think of at the moment.
Of course NONE of the above will ever happen which is why I do NOT take on LHA claimants.
It is the system which conspires against both LL and LHA claimant and not the LHA claimant per se.
We have yet to see how UC will be operated to ascertain whether the system will protect LL from LHA claimants.
In my water I feel the only thing that will change is direct payments to LL will no longer be permitted, though I have heard rumblings that this may still be possible in extenuating curcumstances.
Therefore I will still NOT rent to LHA clamants.

18:57 PM, 19th July 2012
About 8 years ago

sorry to disagree but all the dss or dwp that I have had have been a total pain used to think like you but no more after none payment and damage give me a working tenant any day. main problem on rent is they are paid the rent then they are spouse to pay you this does not happen then you have to wait for them to default 8weeks before you can ask for direct payment or the route of a section 21 just to get your property back. after talking to a lot of my local landlords there all of the same opinion since they changed the payment method from payment to the landlord to payment to the tenant it has lead to loads of abuse. so if you wont them you can keep them

regards Ian Goode

19:36 PM, 19th July 2012
About 8 years ago

A really biased report! Most landlords don't want Housing Benefit because of the benefits system and NOT the tenants themselves! Benefits Agency don't give a damn when delaying payments to landlords every time there's a minor change in claimants circumstances. To blame landlords of discrimination is a very narrow and ill informed view.

19:45 PM, 19th July 2012
About 8 years ago

How very true. I too have turned my back on LHA tenants.

Gareth Thomas

20:31 PM, 19th July 2012
About 8 years ago

If I could get landlords to give me their properties and they let me guarantee their rent (albeit below market rents in the area but the landlord won't have voids!) then I'll rent them myself to LHA claimants and I'd make a killing in London. Win - win - win I think.

Calling all landlords in Tower Hamlets, London. Let me rent your property from you and I'll let it to LHA clamaints with no headaches for you.

Mark Alexander

20:47 PM, 19th July 2012
About 8 years ago

Interesting, so how would that work then and how can you demonstrate the value of your guarantee? For all landlords reading this know you could just be a chancer who takes the rent when the going is good and disappears when it isn't. Are you a member of SafeAgent or any of the bodies providing client money protection? Is you "guarantee" insurance backed? What happens if the property gets trashed, i.e. who pays to get it put back in order?

Gareth Thomas

21:02 PM, 19th July 2012
About 8 years ago

My word is my bond Mark 🙂 Nuff said my friend...and that's better than us landlords get from many agents EVEN WITH all their memberships of ARLA and guarantees and bonds and stuff like that!

21:03 PM, 19th July 2012
About 8 years ago

I rent a one bedroom house out to a DSS tenant through a letting agency, and I can say that I have had absolutely no problems. At first I was very skeptical when the letting agent suggested a DSS tenant, especially when I found out the the rent is paid to the tenant and it is their responsibility to pay the rent. When the tenant came to view the house, I was at the house to meet her, so that I was comfortable with her renting my house. My tenant pays her rent on time and looks after the house, she has repainted the house and put new flooring in the living room and bathroom. On the flip side, if my tenant has wanted something, I do all that I can to ensure that it is sorted as soon as possible. As long as my tenant continues to pay the rent and look after the house, she can have anything that she wants. In fact, I would seriously consider buying a 2 bed property, to keep her as a tenant, if she wanted a larger property.

Puzzler

21:07 PM, 19th July 2012
About 8 years ago

I don't wish to be pedantic but the DSS as so named did exist between 1988 and 2001 (see Wikipedia for verification), I am guessing Mark is a young man but as a business journalist he should check his facts, especially as it is so easy to do.
I would have no problem with letting in this sector except that either or both the property lease or the lender's Ts & Cs prohibit it. Is there a mechanism for borrowing which would allow it e.g. from local authorities? You would think so, wouldn't you, given the housing shortage? I have been unable to find it, but if anyone knows please advise.

Mark Alexander

21:22 PM, 19th July 2012
About 8 years ago

mmmm! I see, best you get back to your office now then, there may be a long queue forming and you wouldn't want to have a crush when you open the doors in the morning to sign up all the landlords wanting to take up this incredible offer would you?

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