Can private landlords refuse to let to Housing Benefit claimants?

Those who believe that Government is not aware of the issues facing landlords in the PRS  may be surprised by the detailed analysis in the Briefing Paper published on 13th October by the House of Commons library.

The summary is quoted below but I recommend reading the whole report, which can be downloaded if you click here 

“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 has raised the question of whether such restrictions amount to unlawful discrimination. Although unlikely to amount to direct discrimination, as income and employment status are not protected characteristics under the Equality Act 2010, it has long been argued that it could amount to indirect discrimination in some cases.

Findings of unlawful discrimination 2020

In what was described as a ‘landmark’ case, District Judge Victoria Elizabeth Mark sitting in York County Court, considered the case of a disabled single parent who had an application for private rented housing refused by a letting agent based on her receipt of Housing Benefit. In a judgment dated 2 July 2020, which was widely reported in the media on 14 July 2020, she held that the letting agent was in breach of the Equality Act 2010. The judgment declared that:

The Defendant’s former policy of rejecting tenancy applications because the applicant is in receipt of Housing Benefit was unlawfully indirectly discriminatory on the grounds of sex and disability contrary to sections 19 and 29 of the Equality Act 2010.

Reacting to the judgment, Chris Norris, policy director for the National Residential Landlords Association (NRLA) reportedly said:

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.

This was followed by a case considered in Birmingham County Court in which judgment was handed down on 8 September 2020. Circuit Judge and Acting Designated Civil Judge for Birmingham (now High Court Judge), Mary Stacey, held that the letting agency, Paul Carr, had operated a blanket ‘No DSS’ policy which amounted to unlawful indirect discrimination against disabled people.

Why are landlords reluctant 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 were introduced; for example, LHA rates were frozen with effect from April 2016 for four years. This 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.”

At the start of the fourth year of the benefit freeze (2019/20), analysis conducted by Shelter noted that the LHA rates for a two-bedroom home did not cover the full rent charged in 97% of Broad Rental Market 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.

The extent of the issue?

There is no definitive information on the extent to which landlords have refused to let to benefit claimants. Reported survey evidence has suggested an increase in the practice in recent years.

Given the increase in Universal Credit claims arising from the coronavirus (Covid-19) outbreak, in June 2020 Shelter raised the potential implications of “No DSS” blanket bans for tenants:

Given the huge rise in the numbers of people receiving housing benefit and what we know about rates of discrimination, we’re concerned that there will be a significant increase in the numbers of people experiencing housing benefit discrimination in the coming months.

As people in existing tenancies tell their landlords they’ve applied for Universal Credit, and those who need to move home begin the search for somewhere to live, renters who are now relying on housing benefit to keep their head above water will be coming up against discrimination.

The likely spike in evictions in the months that follow the lifting of the evictions ban has the potential to exacerbate this further. When the ban is lifted, there will be an upsurge in the number of renters who need to look for a new home. A significant proportion of private renters who may be evicted will likely be receiving housing benefit, especially considering the huge rise in people applying for Universal Credit during the coronavirus outbreak, and so will be met by ‘No DSS’ policies.

In the wake of the finding of indirect discrimination in July 2020, it seems likely that instances of blanket ‘No DSS’ adverts will disappear. However, affordability checks based on a tenant’s individual circumstances will still be possible.

The issue had attracted an increased level of attention in recent years. On 21 February 2019 the Work and Pensions Select Committee launched an inquiry into No DSS: discrimination against benefit claimants in the housing sector – the inquiry had not concluded before the dissolution of Parliament for the 2019 General Election. On 1 March 2019 the then Minister, Heather Wheeler, said the Government was calling for “the end of housing advertisements which specify ‘No DSS’ tenants.” ”

David

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