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Why landlords must not use ‘no DSS’ to discriminate against benefit tenants

29 July 2020 512 Views
Why landlords must not use ‘no DSS’ to discriminate against benefit tenants

In recent years, there has been considerable controversy over the use of ‘no DSS’ in homes being listed for let, with a number of high-profile cases of people winning out-of-court settlements from letting agents or landlords on the grounds of indirect discrimination.

In the latest court case in York, a judge ruled that buy-to-let landlords must not discriminate against benefit claimants, with blanket bans on claimants strictly forbidden on the grounds of discrimination.

The court ruling found a single and disabled mother-of-two had experienced indirect discrimination when a letting agent refused to rent to her. As a result, she ended up homeless with her two children, but the judge ruled that ‘no DSS’ rental bans are against equality laws.

Last year, the government launched a crackdown on buy-to-let landlords and letting agents posting ‘no DSS’ adverts discriminating against tenants claiming housing benefit – who make up around a fifth (20%) of those living in rented accommodation in the UK.

In response to the York court ruling that it is unlawful to discriminate in this way, Chris Norris, policy director for the recently formed mega trade body the National Residential Landlords Association, commented: “No landlord should discriminate against tenants because they are in receipt of benefits. Every tenant’s circumstance is different and so they should be treated on a case by case basis based on their ability to sustain a tenancy.”

He added: “More broadly, the government can also support this work by ensuring benefits cover rents entirely. It should also convert the loans to cover the five week wait for the first payment of Universal Credit into grants.”

What is the recent history on this?

In March last year, the government revealed its plans to change the policy around homes for rent being advertised with the phrase ‘no DSS’ attached to listings.

At the time, the then-Minister for Family Support, Housing and Child Maintenance, Justin Tomlinson, said that landlords can receive rent payments from housing benefit and Universal Credit directly to their accounts, enabling them to provide homes for people who need them.

The Ministry of Housing, Communities and Local Government (MHCLG) insisted that it wanted to clamp down on blanket exclusions in property adverts, with the ultimate goal of ending them entirely.

Soon after, high-street lender NatWest announced its plans to relax its lending policy for buy-to-let landlords who took housing benefit tenants in their rental properties.

And the property portals soon followed, with Zoopla announcing that it had altered its terms and conditions to prevent the use of ‘no DSS’ on its website. Meanwhile, Rightmove said it was banning the phrase ‘no DSS’ from its listings, as well as working on software to automatically remove the term from any listings it appeared on.

Other buy-to-let lenders also followed suit as pressure grew to make it easier for landlords to accept tenants in receipt of housing benefit, with Nationwide and Cooperative Bank both loosening their criteria around no DSS. In Parliament, MPs rallied to call time on blanket bans on benefits tenants.

What do landlords need to bear in mind?

The bid to outlaw ‘no DSS’ properties gained significant impetus last year when it appeared in the news a number of times, and this latest case has brought it back into the headlines, with a strong directive that blanket bans on benefits tenants is discriminatory and unlawful.

The case against DSS listings in relation to the Equalities Act seems to be very strong, and there may even be legislation introduced to this end at some point in the future.

A recent Shelter analysis of more than 7,000 online letting adverts from a range of websites showed that over one in 10 used phrases such as ‘no DSS’ or similar, despite these being banned by Rightmove and Zoopla.

Furthermore, a recent YouGov survey found that some 86% of landlords thought ‘no DSS’ was lawful or were unsure, while almost a third did not currently let to housing benefits tenants and had been advised not to by their letting agent.

There is a strong likelihood that more cases of letting agencies and landlords paying out compensation or legal costs for being viewed to have discriminated against a tenant who receives housing benefit will come to light, which means you need to be very careful about your wording and actions with regards to ‘no DSS’.

Even if you don’t think it is discriminatory, and believe it is merely sound business practice, the law is currently saying otherwise. You should work with your letting agent to understand the rules around ‘no DSS’ to ensure you don’t fall foul of any issues.

No DSS is in itself an outdated, archaic term – a legacy of the Department of Social Security, which ceased operations nearly two decades ago in 2001 – and many argue the use of it in listings should be consigned to the dustbin of history as well.

It’s more important than ever that you don’t discriminate against tenants and show compassion and understanding where possible, while still getting the most out of your rental properties.

To do this, you need to partner with a reliable, local letting agent embedded firmly in their local community. Here at Angels Sales & Lettings, we can offer exactly that. For more information on letting a home in areas like Enfield and Haringey, please get in touch with us on 0800 043 6778. 

If you would like to find out how much you could be generating in rent each month, you can request a free and instant online valuation today. 

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