DSS Tenants – another issue

by Mark Trenfield

22:38 PM, 18th July 2012
About 9 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

21:35 PM, 19th July 2012
About 9 years ago

Bravo Mark! I have recently let my property to a young lady who was staying in b&b with just 3 weeks before delivering her baby. She had been turned down by countless landlords because she was on benefits, and was desperate. I agree that we all share the responsibility to care for those who have been down on their luck and found themselves homeless. Her partner has now joined her and they are a delightful little family! OK, sometimes one may have problems with Housing Benefit claimants, but, on the other hand employed people can so easily find themselves without a job these days, then Landlords do not get paid their rent. So, not good to generalise. Give people a chance!

22:07 PM, 19th July 2012
About 9 years ago

Easily the most condascening article I've seen on this otherwise very good website. Do you think we're stupid? Shame on you Mark Alexander for publishing this patronising rubbish.

22:17 PM, 19th July 2012
About 9 years ago

Hi Puzzler, Point taken (re: DSS existing between 1988 - 2001) ...... I stand corrected!

I'm still puzzled though - like yourself - why landlords are still using NO DSS some 11 years after it was abolished.

Regarding lenders and renting to DWP tenants - many lenders will allow you to do this as long as the tenancy agreement is created between landlord and tenant (rather than landlord and local Council).

Regarding leaseholds - some leases allow it ... others don't ..... not a problem, of course, if you buy freehold properties!

Thanks for your comments ...

Mark

22:18 PM, 19th July 2012
About 9 years ago

Hi Rosey,
Thanks for sharing your experience with us all. Your story underlines the point that not ALL benefit claiming tenants are bad.

Mark

22:20 PM, 19th July 2012
About 9 years ago

Hi Laura,
Thanks for the post (and the personal TWEET earlier). I agree that taking a benefit claiming tenant can be a brave thing to do - and is often against perceived wisdom.

However - the most successful (and riches) property investors that I have ever met are ALL focused on providing housing to benefit claiming tenants.

I think that speaks volumes ..... by turning away the DSS tenants ... landlords are turning away PROFIT.

Mark

22:25 PM, 19th July 2012
About 9 years ago

Hi Magden,
I know the HB system is unpopular and I know this upsets many landlords.

However - landlords soon get used to the HB system and as long as you get your rent money in the end ... and you enjoy virtually zero void periods as well ... I don't see the problem with the odd payment being _delayed_.

HB assessors need to ensure that benefit claimant are entitled to their benefit - which is why delays can be introduced from time to time .

It seems to me that you need to take a look at your cash flow within your BTL business if a delay in a benefit payment can cause you so many problems.

The blog is certainly not biased or ill informed ... it is based on 10 years experience of renting over 200 properties to benefit claiming tenants .....

Mark

22:28 PM, 19th July 2012
About 9 years ago

Hi Ian,
Sorry to hear about your bad experiences. As I said - not all DSS tenants are good!

Having a good relationship with your local Council is important. Many Councils will now pay the LHA money directly to the landlord (which is what should have always happened) and many Councils - including my local Council in Swindon - will suspend the HB claim as soon as the claimant is 4 weeks in arrears.

If my tenants fall into arrears then I give them chance to adhere to a repayment plan. If they repay back what they ow - they stay - if they don't - we evict.

Mark

Mark Alexander

22:29 PM, 19th July 2012
About 9 years ago

Hi Neil, thank you (I think). Mark Trenfield is a landlord and has a strategy to share. Controversial as it might be, as we can see from the comments, there are variety of opinions on this strategy and on that basis it makes for a good discussion in my opinion.

HMOLandlady

22:48 PM, 19th July 2012
About 9 years ago

Following a prompt from Mark on Twitter as I was reading through the comments (I was, for once, one step ahead!) the problem is generalisation. We can't say that ALL LHA claimants are difficult in the same way that ALL people are not the same. The point that needs to be made clear to the powers-that-be is that the housing payment system ISN'T WORKING! Yes, some tenants pass their LHA on promptly and, yes, I find that they are in the property for the long term. However, if they are depressed or teetering on the edge of whatever, it only takes one cock up with the payment routine and the increasing rent arrears causes them to throw caution to the wind and stuff up their tenancy and get into debt.

I have a tenant in prison at the moment. Despite only renting a room he's already £1000 in arrears. He's out next Friday, I've written to Housing Benefit (who haven't bothered to reply) and they, in turn have written to him giving him 28 days to respond to the allegation of being 8 weeks in arrears (which he was before he went in).

Now, as I take him for a walk in the car park, how do you think the conversation will go? "Here's my plan to pay off the arrears and I'll be straight within 6 months?". Whilst I'll give him a chance to come up with a payment plan, with the best will in the world, he's not going to cover the arrears and stay on top of his rent unless a huge dose of good fortune comes his way.

I like the longetivity of LHA claimants but simply can't afford to take risks any more.

Gilly

23:55 PM, 19th July 2012
About 9 years ago

May I say that getting the rent paid direct to the landlord is not necessarily such a good thing. I would not want it ever again, because in the past I had a tenant who claimed benefits and I had the rent paid to me. It then turned out it was a fraudulent claim as he was working all along and the Council simply demanded the money back from me and I was supposed to chase him for this money . By this time, he had done a runner and was claiming from another address - but the Council couldn't tell me where he was because of data protection. After a huge battle, they kindly wrote off my debt, although they initially just began to deduct it directly from my Bank account. Nightmare times (as normal when dealing with the Council imho..)

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