Should landlords have the right to refuse DSS tenants?

by Dr Rosalind Beck

10:43 AM, 20th May 2019
About 4 weeks ago

Should landlords have the right to refuse DSS tenants?

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Should landlords have the right to refuse DSS tenants?

And so the onslaught against private landlords continues. Earlier this month, we were shocked to hear that a cornerstone of tenancy law in the UK was to be overturned, with the scrapping of Section 21. Farcically, we were told that a consultation would take place after the decision had been made.

This was an unexpected move, as in fact the Government had been conducting one of their ‘post-decision’ consultations on the idea of ‘3-year tenancies’ (something Shelter had been pushing for). Section 21s had not even been on the agenda. Such is the floundering, knee-jerk politics of today, that a completely different policy decision emerged from it.

The abolition of Section 21s had been called for by the anti-landlord organisation Generation Rent. As part of their campaign, they deliberately misrepresented Section 21 by repeatedly referring to it as a ‘no fault’ eviction – such that this phrase is now used by everyone, as though landlords evict the clients they are dependent on to cover the costs of their businesses, ‘for no reason.’

In fact, as we all know, often Section 21 is used because it is the least awful solution to dealing with rogue tenants. The anti-landlord representatives say it means landlords can evict ‘at a moment’s notice’ when in fact, although it is supposed to take 2 months, the average time taken is 6-7 months if the tenant does not want to leave. During this time, the tenant is often paying no rent.

The reason the only other possible Section – Section 8 – is not used as often is because the tenant can raise spurious defences, for example lying that the house is in disrepair.  The judge often then adjourns the case and the tenant gets even more months rent-free, while the landlord is pushed further into debt through no fault of their own – some even have to take out loans to cover the mortgage on the rental in which the tenant is living.

This is not only costly financially; a survey has found that private landlords’ mental health also suffers significantly because of, amongst other things, the way that the system is set up to enable these rogue tenants to ruin landlords financially, especially, as it is often the case they also wilfully wreck the property. Landlords’ mental health | National Landlords Association

This can cost landlords tens of thousands of pounds. No-one in Government is looking at this issue at all. The demonisation of private landlords has gone so far, hardly anyone in politics or the media is speaking up for them, despite them facing these gross injustices and the legal system completely letting them down.

And now, if, as is expected, the Government continues with its move to scrap Section 21, ‘charities’ like Generation Rent and Shelter will start pushing for the next punitive measure against landlords; the most likely contender for this is to somehow force landlords to take tenants on benefits, even if this is not the client group landlords wish to occupy their properties.

Shelter has been conducting a campaign on this for some time and various Government Ministers have jumped on the virtue-signalling bandwagon. Shelter has even been bullying landlords and letting agents into removing the words ‘no DSS’ from adverts and they also threatened to sue a letting agent, before the agent settled out of court, rather than face the stress and costs of a court case. Shelter now represents this as a legal victory and claims it is now recognised as discriminatory to specify ‘no DSS.’ It isn’t. Being in receipt of benefits is not a protected characteristic according to equal opportunities legislation. Settling out of court to avoid the stress and costs of a £60 million ‘charity’ hounding you through the courts does not create new law.

As part of their campaign on this, Greg Beales, Campaign Director at Shelter, has claimed that there is no evidence that tenants are benefits are ‘less-good’ tenants than others. There’s ‘no evidence that people on benefits are ‘less-good tenants’, says Shelter spokesman

He said that, given that, landlords and letting agents who do not accept those on benefits are engaging in ‘disgusting’ and ‘immoral’ practices. https://inews.co.uk/opinion/comment/housing-benefit-renting-no-dss-shelter/

Such rhetoric demonstrates his ignorance. Of course as Shelter provides no housing to anyone, they would not have first-hand experience of the issues involved. As landlords, however, we know that there are many reasons why it makes no sense to accept people on low wages and/or on benefits. No amount of banning landlords and agents from specifying ‘no DSS’ will change these facts.

Some of the reasons why it often does not make sense to accept people on benefits as tenants:

  1. Tenants on benefits often cannot afford the rent. This is partly because benefits have been capped and have not kept pace with market rents. Housing benefit on average only covers 57% of the cost of a private rental. https://speyejoe2.wordpress.com/2018/08/23/dear-polly/ What I want to know is: why would a person agree to rent a home to someone who so clearly cannot afford to rent it?
  2. The housing element of benefits, including in the new Universal Credit system, is paid in arrears, and landlords need the money in advance as that is when they pay their mortgages. Working tenants pay in advance and are therefore able to meet the terms of the tenancy agreement.
  3. If for some reason the tenant does not make the benefits claim in the right way, on time or at all, or if they do not turn up for an appointment, lie or make a mistake in reporting on any work they’ve done for example, the benefit can be stopped. The landlord then does not receive the rent because of something the tenant did or didn’t do. Large amounts of arrears can accrue in this way, which the landlord will not get back.
  4. If it is discovered that the tenant in some way claimed fraudulently, the authorities have been known to threaten the landlord and/or ‘clawback’ the money by not paying the rental element for another claimant the landlord is housing. A landlord was recently threatened with having to pay back 4 years of the housing element paid to him, because of a fraud by the tenant. What landlord wants to face this prospect, when they can simply house people in work?
  5. If a tenant does not pay the rent and is evicted owing a lot of arrears and/or having caused damage to the house and the landlord has incurred legal and court fees, with a working tenant they can apply for an attachment of earnings and eventually the debt can be repaid to them. With a tenant on benefits there is no employer on which to apply an attachment. There is therefore no way the landlord can ever recover the debt.
  6. If a tenant is on benefits and/or on low wages, they may struggle to heat the house. Without proper heating and ventilation, the house may fall into disrepair. If the Environmental Health Officer then calls around, they will most likely blame the landlord for the disrepair. So the landlord’s home is adversely affected and they then face possible fines.
  7. People on benefits naturally spend more time at home. This increases wear and tear on the property.
  8. Often insurance companies and lenders specify that they will not accept tenants on benefits. In such circumstances, if the house burnt down for instance, the landlord’s insurance would be invalid. In terms of contravening the lender’s requirements, the landlord could face the liquidators being called in if the lender finds they have contravened the terms of the mortgage. The landlord could face a demand to immediately pay back the capital; this will usually be impossible. The landlord in this situation would face huge losses, purely because they had accepted as a tenant someone on benefits.
  9. Because of the Government’s fiscal attack on private landlords – most outrageously and absurdly in Section 24 of the Finance (no.2) Act 2015, which means landlords now cannot offset the finance costs of their businesses before calculating profit – it is imperative that landlords select the tenants with the greatest means and get the rents as high as they can go. This is not for the landlords’ benefit, but rather to pay the huge new tax liability, which can exceed 100% of actual profit. This is explained in a briefing paper I wrote for the Institute of Economic Affairs with the economist and professor Philip Booth. Taxation without justification — Institute of Economic Affairs
  10. Also, if Section 21 is scrapped, landlords face tenants being granted lifetime tenancies. If this is the case, then landlords will want the best possible tenants to occupy their properties – ones who have no problem paying the higher rents forced on the sector by the Treasury and ones who, as mentioned, can afford to look after the house properly. This will greatly restrict the options for those on benefits. As the economist Ryan Bourne has stated: “The results of this policy are therefore obvious to anyone who understands basic economics. First, landlords will be far less likely to rent to tenants they consider high-risk. The incentive to engage in serious vetting, demanding extensive guarantees from tenants, will skyrocket. https://www.telegraph.co.uk/business/2019/04/26/no-fault-evictions-ban-epitomises-paucity-tory-economic-thinking/

This final point demonstrates how various forms of Government interference in the private rented sector are having the opposite results to the alleged intentions. One change causes landlords to not be able to take on tenants on benefits; the next tries to ban them from not taking on tenants on benefits. We all know the next will be rent caps. It is like trying to shove a lid on a boiling pot when it is about to boil over.

And at the same time that they are trying to ‘disallow’ landlords from having control over their own assets, are ‘disallowing’ landlords from offsetting their finance costs, and ‘disallowing’ landlords from choosing the tenants they want, they leave the social sector completely alone despite 61% of eviction notices actually coming from this sector 24housing and despite the fact that this sector also is moving away from accepting tenants on benefits.

As an expert on this said: “Shelter and the National Housing Federation are engaging in deliberate known deceit in their combined campaign over NO DSS in the private rented sector – A campaign that is so superficial it shames them both…Social landlords… do routinely operate affordability tests and they do refuse to accommodate the benefit tenant and thus they operate the same NO DSS practices as the private landlord.” https://speyejoe2.wordpress.com/2018/08/23/dear-polly/

Where is the hue and cry about that?

No. They turn a blind eye to this, because they are fixated to an almost manic degree on private landlords; a fixation which is already starting to wreck people’s lives by pushing them out of housing.



Comments

Dr Rosalind Beck

18:31 PM, 20th May 2019
About 4 weeks ago

I have sent the link to this article to both Polly Neate and Greg Beales at Shelter and asked them to deal with the substantive points. If others can also do this, that would be good. I found some email addresses by googling which I hope are correct. In addition, I would be grateful if some of you could post a link to this on the Shelter FB page or if they don't allow links point out they can do a search along the lines of the title of this article. I can't post on their page as I am banned. I have also tweeted it to them. I am trying to give them no excuse for saying that they haven't seen the evidence which proves that their campaign is ignorant of the facts and ill-conceived. A normal person or organisation would then refrain from pursuing it.

Dylan Morris

18:59 PM, 20th May 2019
About 4 weeks ago

Social tenants should be provided for by social housing. I’m a private landlord and have no obligation to house social tenants.

JamesB

19:29 PM, 20th May 2019
About 4 weeks ago

Reply to the comment left by Dr Rosalind Beck at 20/05/2019 - 18:31
I will take great pleasure in posting as suggested . Excellent article well done again for fighting the landlords corner

Dr Rosalind Beck

19:54 PM, 20th May 2019
About 4 weeks ago

Reply to the comment left by JamesB at 20/05/2019 - 19:29
Thanks, James.

Chris Daniel

22:12 PM, 20th May 2019
About 4 weeks ago

Even Shelter's figures state that for a 2 bedroom property, LHA is below market rent in , wait for it - ' 97 % ' of the country.
But still Shelter campaign against Sec 21.
Lots more posts against the abolition of Section 21 on Facebook @possessionfriend

wanda wang

22:36 PM, 20th May 2019
About 4 weeks ago

Reply to the comment left by Dr Rosalind Beck at 20/05/2019 - 18:31
Hi Dr, how about organise all the landlords demonstrate in London and make our voice heard.

wanda

DavyboyHMO

22:58 PM, 20th May 2019
About 4 weeks ago

Excellent Post 👍🏼
The government is going to force alot more landlords to sell and who is going to buy the houses?
The government is seriously causing havoc with landlords, making it so difficult to invest in Property and doing whatever they can to favour the other side.

What would the government do if all landlords in the UK put all out mortgages on interest only to keep the costs low (if applicable) and refuse to rent out houses out to people? Yes ok we are loosing out, but what on earth would the government do??
We are bailing this country out by helping people rent rooms/houses. Not everyone is in the position to buy a house!!!
100% tax on rental income... 3% stamp duty, section 21. Seriously.... What next?

I do not and will not rent to DSS. Simple as? I would rather leave it empty until a good working professional shows up. Been in that position a few times where I get desperate and rent to DSS. Payments are missed, house gets trashed, if you even mention eviction they stop paying and I have to pay them to leave the house! 'surender of a tenancy'

The government needs to start looking after landlords otherwise the housing market will suffer. Unless the government are doing on purpose and buying the houses themselves? I don't know.... But SORT IT OUT!!!!!

Dr Rosalind Beck

23:36 PM, 20th May 2019
About 4 weeks ago

Reply to the comment left by DavyboyHMO at 20/05/2019 - 22:58
Yes, there is no justice for private landlords in this country. It was already bad in terms of the onerous legal processes and the way tenants get away with huge debts and damaging homes - estimated at costing private landlords £9 billion a year. But now with anti-landlord organisations, a hostile media and an almost unanimous attack by politicians, it is getting truly intolerable.

JB

7:30 AM, 21st May 2019
About 4 weeks ago

I hope all the many, many good tenants out there will realise that all the penalties landlords are suffering will have a direct effect on them.
1. Reduced supply of rental property available as landlords bail out
2. Increased rent from tax changes and restrictions on dealing with non paying tenants
3. Homelessness for people with less than perfect credentials.
Tenants need to mobilise with landlords to fight these changes.

Chris Daniel

8:20 AM, 21st May 2019
About 4 weeks ago

Reply to the comment left by JB at 21/05/2019 - 07:30
You are so right JB, but unfortunately the majority of good are not seeing the damage and the minority criminal tenants are having huge support ( perversely enough ) from Tenant groups such as Shelter, Generation Rent and Acorn - leading to what the Govt have perceived as an easy vote- win.

Landlords can see, but so should the general public, that Tenant groups are NOT acting in the interest of the majority of tenants.
Why are Tenant groups doing this ? - morally there is no reason, other than their donations from the majority of Good tenants ( who will be adversely affected ) and much of their deluded sponsors brings them a lot of income.

Some ( genuine ) charities such as Crisis and the Wallich actually do very good work with these funds. They provide practical assistance to the street Homeless.( the Genuine Homeless )
Others who just provide advice to intentional homeless, criminal tenants who are being evicted, usually by Section 21 [ as the Sec 8 process is problematic ] because of lamentable FAULT are attracting huge sponsorship from organisations who are supposed to support Landlords. I'll just mention a few ;

Nationwide - who many landlords have Buy to let mortgages with.
Legal & General, BTL Insurance,
B&Q with Landlords Trade cards, paradoxically, in partnership with Landlord Associations )

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