Is Renting to DSS Tenants a Good Idea?

Department of Social Services tenants, otherwise known as DSS tenants, are those who claim housing benefits due to financial difficulties relating to unemployment, disabilities and/or being a single parent. Many landlords are understandably reluctant to rent to this group of people. The uncertainty of rent payments, combined with the complications of the benefits system and the bad reputation that the majority of these people have been unfairly given has put them at the back of the line when it comes to choosing tenants. The truth of the matter is that a lot of DSS tenants are in need of permanent accommodation and with the housing crisis getting worse, their situation is not getting any easier.

Why the bad reputation?

Landlords are also often put off by the benefits system. It’s always changing and instead of trying to keep up, many landlords choose to simply opt out. Previously, DSS tenants were an attractive prospect for a landlord as the rent came directly from the council, meaning guaranteed payments. This process has now changed and, in a bid to encourage tenants to be more responsible with money, the payments now go to the tenant and it is their responsibility to transfer it to the landlord. Some councils do still allow direct payments to the landlord but not in many cases. If tenants need extra help with covering their rent, they can apply to the council for a Discretionary Housing Payment.

Additionally, the councils retain the right to try and regain past payments from landlords if it later emerges that a tenant was either claiming fraudulently or was being overpaid. There’s nothing a landlord can do about this, even if they were completely unaware of the tenant’s change of circumstances. Buildings and content insurance premiums are often higher when a landlord is letting to DSS tenants. Sometimes, insurance is even refused altogether, along with some buy-to-let mortgage loan terms and conditions not allowing landlords to let to tenants on any kind of benefits or income support.

The advantages

Despite the system not making it easy for landlords, it’s definitely possible to have a very successful renting relationship with DSS tenants, and many landlords do. Generally speaking, these tenants will stay with you longer as they are looking for the stability of a long-term lease which is a huge plus point and actually adds financial security to the tenancy.

The opportunity to market your property to a much wider pool of tenants

Social housing is unable to keep up with the demand nowadays in the UK, so you’d be opening up your property to a huge number of prospective tenants. They are also extremely easy to find – you can list your property on sites such as DSS Move. Let your local social housing office know that you’re a landlord who takes on DSS tenants and some local authorities will also give your details out to DSS tenants looking for accommodation. These methods are all completely free and you won’t have any letting agent fees to contend with.

Makes it less likely that you will have a void period

You won’t be earning money from rent while you have an empty property. So, this situation is something that you ought to avoid at all costs as a landlord. Another advantage of opening up your property to tenants claiming benefits such as Univeral Credit is that you are far less likely to have such void periods where you property is laying empty while you still are paying out for buy-to-let mortgage payments and upkeep costs.

It shows you don’t discriminate against tenants

Being a landlord with an open mind when it comes to screening tenants is a much better look than being one who is seen to discriminate. Landlords and letting agents can actually be taken to court for unlawfully discriminating against tenants on the basis of disability, gender, or sex under the 2010 Equality Act, which protects people from discrimination in the workplace and wider society.

A landmark ruling at York County Court in 2020 ruled ‘no DSS’ policies as unlawful and in breach of the equality act. This was deemed as discriminatory because such policies put women and disabled people at a higher disadvantage because they are more likely to be recipients of housing benefit. This case is an example of how other landlords risk legal action if they continue to bar housing benefit tenants from renting. Accepting DSS tenants could help to demonstrate that you are a landlord that doesn’t discrminate, and in turn allows you to avoid the risk of stressful litigation that you could really do without.

If you are worried about taking on DSS tenants, it’s a good idea to arrange to meet them in person and also ask for character references from previous landlords or get the details for a guarantor – ideally an employed home-owner. In most cases, the tenants themselves are completely unproblematic and reasonable. DSS tenants will suit some landlords but not others. It’s very important not to make presumptions or judgements about people or get put off by scare stories. Regardless of whether your tenants receive housing benefits or not, there will always be the risk of them not being able to pay their rent. Many people have no choice but to claim benefits and the fact that social housing is being reduced by the government adds even more pressure. If you do decide to branch into this avenue of renting, be sure to do your research on the system to ensure that it’s a good move for you. If it is, we at CIA Landlord Insurance can offer you DSS insurance.

Taking out DSS insurance can provide you with much needed peace of mind, giving you added protection if your tenant stops paying the rent. Simply compare landlord insurance quotes with CIA and choose the best landlord insurance for your needs.