This briefing paper considers evidence of private landlords' reluctance to let to prospective tenants in receipt of Housing Benefit/Universal Credit. The paper looks at the reasons behind this reluctance and action being taken to challenge landlords/agents who operate a "no DSS" policy.
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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 raises the question of whether such restrictions amount to unlawful discrimination. Although it is unlikely to amount to direct discrimination, as income and employment status are not protected characteristics under the Equality Act 2010, it is argued by some that it could amount to indirect discrimination in some cases.
Why do landlords refuse 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 have been introduced; for example, LHA rates have been frozen since April 2016 and will remain so until April 2020. This has 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.”
As we enter into the fourth year of the benefit freeze (2019/20), analysis conducted by Shelter notes that the 2019/20 LHA rates for a two-bedroom home do not cover the full rent charged in 97% of Broad Market Rental 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.
A growing problem?
There is no definitive information on the extent to which landlords are refusing to let to HB/LHA claimants. Reported landlord survey evidence suggests that there has been an increase in the proportion of private landlords who are unwilling to let to HB claimants.
The issue is attracting an increased level of attention. On 21 February the Work and Pensions Select Committee launched an inquiry into No DSS: discrimination against benefit claimants in the housing sector and on 1 March 2019 the Minister, Heather Wheeler, said the Government was calling for “the end of housing advertisements which specify ‘No DSS’ tenants.”