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?

Make Text Bigger
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

ameliahartman

3:25 AM, 12th June 2019
About 7 days ago

Reply to the comment left by Mick Roberts at 10/06/2019 - 17:18
Hello, and peace to all! Thank you for your apology Dylan, and thank you people for acknowledging that we all come to this site to share our own experiences. Yes. It was one of the most stupid decisions ever to pay the housing benefit to the tenant! Even though we can now get it paid to us after 8 weeks of arrears, it is simply not good enough. I can see how it would escalate. Get a bad tenant, they decide to stop paying the rent so the landlord gets it paid to them after 8 weeks passes, and then the tenant gets angry and starts damaging the property and refusing to leave when they are served with their notice!!!
I remember the “housing benefit millionaires” very well. Personally, I just wondered how many landlords on that list were providing tenants with a safe roof over their heads, which is what my husband and I do, and how many might be “slum” type landlords, who don’t care who lives in their properties, or what condition they are in!! It’s impossible to make a profit out of housing benefit, or to charge high rents to benefit tenants, as LHA rents are so ridiculously low!!! Housing Benefit used to almost be in line with market rents many many years ago, but at the lower end of the scale.

MoodyMolls

8:35 AM, 12th June 2019
About 6 days ago

Reply to the comment left by ameliahartman at 12/06/2019 - 03:25
Hi Amelia
I agree thats its now also impossible to make a profit on benefit tenants which is why the adverts were no DSS by Letting Agents. Will you be moving out from this market because of this?
Another area now which will make landlords think twice is the Karen Buck law which is screwed so far in the tenants favour that if a landlord makes a small error he can faced massive costs.
Take mould, condensation tenants cant afford to heat the place dry wet washing on rads dont put fans on or lids on saucepans and keep all the trickle vents closed.
I think the problem with Shelter is the tenants who go to them are mostly benefit tenants and probably are very economical with the truth of why they are being asked to leave ,after all the advisors from CAB and Shelter rec a very one sided view.

Mick Roberts

8:38 AM, 12th June 2019
About 6 days ago

Reply to the comment left by Ian Narbeth at 10/06/2019 - 11:19Ian,
I've never considered myself knowledgable or an expert. I've just rented houses out for approx 22 years, know me stuff with HB, know the difference between right & wrong, helped a lot of homeless HB tenants. As well as the business making a profit. If there is no profit, there is no business & no houses & more homeless.
It's only after more draconian legislation with Govt imposing on us, what Corbyn wants to impose on, what UC gets ridiculously wrong when their sister dept HB/LHA got it wrong in 2008 & learn't fully it was wrong in 2012-so WHY OH WHY would UC repeat the same mistakes, & what the Councils are getting massively wrong with Licensing-Wow this week, one of my Lenders wrote to me saying Mick Naughty boy you've moved address & not told us, u now need to confirm ID etc. (which I'm not) after Nottingham Council Selective Licensing wrote to them for no reason at all other than to put spanner in the works saying Mick Roberts applied for a License & he has a PO Box address for his business-Yes that really made the tenants house much better din't it-Ooh no it's worse now cause I'm spending time sorting the Council's latest fiasco cock-up.
Yes, it's only after all these authorities cock ups, that I'm thinking what a load of thick people we have governing us, I am in fact a Ruddy Einstein compared to these. I have so much knowledge, but to me it's ruddy obvious that it cannot be me that's Superman, it the authorities that are thick as Pig Sxxt.
I have the answer to the UK's homeless & I will give it u free. Come sit with me, it shun't take more than 5 mins, save taxpayers money & everyone will live happily ever after.

Mick Roberts

8:38 AM, 12th June 2019
About 6 days ago

Reply to the comment left by ameliahartman at 12/06/2019 - 03:25Yes Amelia, we on the ground know the answers. I had one yesterday about the 8 weeks arrears & below is some text I wish YOU ALL TO USE to see if one word just one day may make someone in power sit up & say Ooh yeah good point.
And yes I was No. 1 Private Landlord in Nottingham on that list & got the usual trolls, but I just say Who receives even more HB than me? Nottingham Council of course. Unfortunately it's what happens. You house the homeless, the mortgage lender needs paying, who's paying the the mortgage? Cause the Magic money tree in the woods din't have enough money.
And yes, I'd make tons more with private working tenants, but I'm not about to turf out good tenants that have done nothing wrong the past 20 years, apart from the austerity by the Govt not covering their rent.
UC taking tenants word for arrears etc.
If someone come to job centre saying I have 5 kids is there word enough?
Does a new employer take the tenants word for it that they reliable and good? Or do they ask the current or previous employer for a reference?
Does a Letting Agent take the tenants word for it that they paid all their rent and not smashed their current houses up? No, they ask the Landlord.
So why and how can UC just ask the tenant if they in arrears and just take the tenants word for it and then give them up to £1300 FREE taxpayers money and not ask the Landlord who will tell u truth?

Robert Mellors

10:42 AM, 12th June 2019
About 6 days ago

Fact: It costs the landlord more to house benefit tenants (wear and tear, damage, lack of ability to recover debt, etc).

Fact: Landlords generally receive less rent from benefit tenants, as the LHA rates are lower than the "market rent".

Fact: Benefit rules/regulations mean that rental payments can stop suddenly, and landlord is unable to get the benefit back into payment (as it is the claimant who has to take whatever action is required).

Fact: If benefit is paid direct to landlord, then council/DWP can recover it from the landlord if the tenant was not entitled to it, even if the "overpayment" is not caused by the landlord.

Fact: If a benefit tenant leaves owing money (rent arrears, damage, etc), there is very little chance of the landlord recovering the debt as there may be no effective means of enforcement (no assets, no employment, no savings, etc).

Fact: Delays and errors by Universal Credit and Housing Benefit are common.

Fact: Housing Benefit and Universal Credit pay "in arrears" instead of in advance when the rent is actually legally due).

While it may be desirable for all private landlords to consider applications from all potential tenants, the private landlord (as a matter of general business sense) has to also consider the factors above, and weigh up whether they wish to take on the extra risk of letting to tenants on benefits. There may be ways to mitigate some of the risks, but these could then increase the costs to the landlord.

Increased risks = increased rent needed.
Increased costs = increased rent needed.

It does not matter whether the process is simply called "No DSS", or whether it is called "we will consider all applications on their own merits, taking account of affordability and risk factors", it is the same thing!!!! The facts remain the same! The considerations remain the same!

When will Government, and Shelter et al, realise this? The higher the risks and costs to a business (including the landlord), the higher the cost of the product/service/rent will be to the end consumer (tenant).

Mick Roberts

11:40 AM, 12th June 2019
About 6 days ago

Reply to the comment left by Robert Mellors at 12/06/2019 - 10:42
Some brilliant simple facts there Rob.

I'm gonna' be borrowing your list for my usual rants elsewhere when the Job Centre asks me what the Problem is Mick.
That's the second list I've nicked off u in two months. U should copyright em ha ha.

Me & U could change the system in a 10 min meeting.

Robert Mellors

12:00 PM, 12th June 2019
About 6 days ago

Reply to the comment left by Mick Roberts at 12/06/2019 - 11:40If only they would listen to us Mick!!!
I've also scheduled this post to go on my Choice Housing Ltd Facebook page, and my Linked In page, at 8.45am tomorrow morning, so if you and other landlords are on Linked In or Facebook, then you can simply "share" the post to any social media you are on. (The post itself is too long for Twitter, but you can "share" (tweet) the link to the post).

Annie Landlord

18:32 PM, 12th June 2019
About 6 days ago

Yes, Rob and Mick, you two could sort out the system between you! Shelter has just 'launched' a questionnaire for PRS landlords because they now want to work with us! I can't seem to upload the screenshot, but here's the text:
"Landlords - share your views with us! Take our #survey to help us understand what's important to you and how we can best work together towards developing a better private rental sector. Your answers are completely anonymised"
And the link: https://forms.office.com/Pages/ResponsePage.aspx?id=gCAAK3_gpE-WU1S_fGTCqzxrEb0UDJpGmnzCaV4D_EVUQ1AwWUM5VDNBNTJXQ0VQRllJQ0tOSkxMWS4u
It's a data gathering exercise with a few "what do you think about Shelter" questions. I've had my say on Twitter. Whether they will respond remains to be seen!

Appalled Landlord

20:08 PM, 12th June 2019
About 6 days ago

Reply to the comment left by Robert Mellors at 12/06/2019 - 10:42
So the following statements must be pure fiction:

“I mean I actually think facts show that people on benefits are very good tenants.(with an emphatic shake of his head), landlords make as much profit from people who are on benefits as landlords make from people who aren’t on benefits”.

Greg Beales, Shelter’s Director of Communications, Policy & Campaigns, on the Victoria Derbyshire programme of 22 August 2018.

https://www.property118.com/will-shelter-sue-birmingham-city-council-letting-agents-landlords/

With the words “I think” and “facts show” he gave himself some wriggle room in case someone challenged his ludicrous claim.

I thought it strange at the time that he shook his head instead of nodding. Today I googled it.

“Shaking the head when saying something positive is a negative signal and may indicate the person does not believe what they are saying”
http://changingminds.org/techniques/body/parts_body_language/head_body_language.htm

Then in November 2018 he said there was "no evidence" that people receiving benefits were "less-good tenants".
https://talkradio.co.uk/news/theres-no-evidence-people-benefits-are-less-good-tenants-says-shelter-spokesman-18110928716

Beales is a former Downing Street adviser to Prime Ministers Gordon Brown and Tony Blair, and formerly Director of Strategy and Planning for the Labour Party.

He is the driving force behind Shelter’s campaign of harassing letting agents about No DSS adverts.
https://www.property118.com/shelters-harassment-letting-agents-futile/

https://www.property118.com/shelters-campaigns-director-misrepresented-law-agent-harassed/

He was at yesterday’s meeting with Heather Wheeler. He is second from the right in the NLA’s photo. https://landlords.org.uk/news-campaigns/news/nla-attends-no-dss-roundtable-no-10?utm_source=twitter&utm_medium=WebsiteNews&utm_term=&utm_content=&utm_campaign=News

ameliahartman

1:49 AM, 13th June 2019
About 6 days ago

Reply to the comment left by Robert Mellors at 12/06/2019 - 10:42
Hi. In reply to Robert. Yes, some benefit tenants DO cause damage to properties, and run up bills in extra repairs. However in our experience, we have actually been very lucky, and only ever had it happen. But then the largest family we have ever housed was a couple with four children-not six. Two of them were from earlier marriages, and were older teenagers, and the other two were aged 10 and 12, when they first signed for the tenancy with us. They are still with us now 22 years later, unbelievably, although 3 of the children have moved out, and one still lives there with his wife and his two children. It’s our only four bedroom house. Obviously we have had to do a lot of routine maintenance on the house in 22 years, but nothing like the kind of thing which is being talked about here-cupboard doors, etc.
Whether or not you receive less rent from benefit tenants than you receive from working tenants is really in the control of the landlord and the rent which you charge. You don’t price your property at one monthly rental price for working people, and another for benefits!! If benefit tenants are going to move in, they have to have demonstrated to you that they can afford to cover the full rent, the bills, and all of their living expenses.
With some benefit tenants, there IS the risk that housing benefit payments can get suspended or stopped if something goes wrong, so I highly recommend that all landlords who house these tenants have a good relationship with them from the very beginning, and make sure you see their completed housing benefit application form. Even send it off yourself, or deliver it to the council yourself, along with your declaration, so that you know it got there!! Also fill in the declaration that gives you permission to be told everything which happens with your tenants claim, so that your tenant can never lie to you about it, and make sure they sign it and you send it. You can also do these online. You may also want to try applying for a Discretionary Housing Payment. Keep in regular contact with your tenant, and visit regularly. If anything goes wrong, work with them if it’s not their fault, but if it turns out that they are a fraudster, then you would have to get rid of them. But you do NOT let them away with the arrears, court costs, and any damage they cause. You get these costs awarded to you in the county court, and then you pursue them. Even if you get £11.60 per week out of their ESA for the next 5 years, at least you get your money back!!! Always chase rent arrears, costs and damage to your property.
But if you take out Rent Guarantee Insurance (yes they cover benefit tenants as well), then all rent arrears are covered after the first month if the tenant defaults, all court costs and legal costs if you have to evict a tenant, and all damage caused to the property by the tenant. My husband and I have just started buying these, and we have bought five different policies from five different companies, with slightly different prices, to see which we prefer. If Section 21 goes, we will definitely need it!!
Housing Benefit made SOME errors but UC make NUMEROUS.

1 8 9 10 13

Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

OR

BECOME A MEMBER

Post-Brexit binge in commercial property?

The Landlords Union

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents

Learn More