Work and Pensions Committee ‘No DSS’ discrimination evidence heard

The All Parliamentary Work and Pensions Committee has widened its inquiries to take in other potential forms of direct or indirect housing discrimination against benefit recipients It will now look at the “no DSS” ads run by letting agents or the tech companies that promote them, to the property insurance policies that won’t cover homes rented to people who claim a benefit. Also asking mortgage lenders and agencies, whether their policies prevent landlords from letting to claimants who are on benefits.

The committee has heard from landlords and tenants, as well as banks, property agents and Shelter. The lenders and property agents are questioned about their policies in relation to benefit recipients, and what action they are going to take to rectify any potential discriminatory impacts of their policies. The landlords and tenants provided personal testimony of their experience of discrimination against benefit recipients in housing, and what the solutions are.

Witnesses Wednesday 24 April 2019 9.30am: Click Here to read the full transcript of the evidence discussed

• Helena McAleer, Landlord
• Lynne Mapp, Mother of tenant
• Phillipa Lalor, Tenant
• Greg Beales, Director of Communications, Policy and Campaigns, Shelter
• Paul Wootton, Director of Home Proposition, Nationwide Building Society
• Lloyd Cochrane, Head of Mortgages, National Westminster Bank plc
• Gordon Soutar, Managing Director of Mortgages, The Co-operative Bank
• Glynis Frew, Chief Executive Officer, Hunters Property Group
• Adam Hyslop, Founder, OpenRent
• Helen Buck, Executive Director – Estate Agency, Your Move
• Matt Campion, Chief Executive, Shepherds Bush Housing Association

Final Exert from the Committee evidence:

Heidi Allen: Would paying the money direct to landlords again help?

Glynis Frew: Yes, that certainly helps. Unfortunately, as far as universal credit is concerned at the moment, it could probably take up to two or three months for that to take place, but that definitely helps. I have had a number of tenants who have said, “I don’t want them to give me the money, because I like to spend it.”

Q97            Heidi Allen: It’s just safer if it goes direct.

Glynis Frew: Yes, absolutely.

Adam Hyslop: I guess the first thing to say is that the worst thing to do here would be to ban the terminology around benefits claimants, without actually sorting the underlying issues. Simply prohibiting phrases in adverts would actually just prohibit us from advertising properties accurately. What we are very keen does not happen out of all of this is that the underlying issues are left unresolved, and that we are not allowed to explain to people whether they are likely to be eligible for a property up front.

That wouldn’t damage our business—to your question, Heidi—but what it would do is basically mean that tenants were spending a lot of time going on fruitless viewings, phoning up landlords and trying to explain their position, when that would have been resolved up front by a clear advert, which is what we believe we currently have.

To take that to the next level down, what we are really keen to do is engage on those three areas I mentioned in terms of why landlords are coming to us and telling us that they don’t want us to send tenants who are claiming benefits. It sounds like, today, you might have made progress on the mortgage side of things.

With regards to being able to insure rental payments, we are now at a scale where we can work directly with underwriters and try to innovate within the insurance industry. We think that, later this year, we will have a product that allows landlords to insure rental income. They are obviously nervous about it because they have never written these policies before, but we do have the scale where we can put it—

Q98            Heidi Allen: The insurers are innovators?

Adam Hyslop: Yes, absolutely. They can be quite slow moving and risk averse.

Q99            Heidi Allen: I used to work in that industry, so I know.

Adam Hyslop: But we can bring the scale so they can run proper trials, and we can hopefully prove to them that somebody receiving income via benefits is not higher risk than somebody earning that income elsewhere.

The third piece is around convincing landlords that benefits income is equivalent to other sources of income. Some of the things that have just been raised are certainly worthy of further investigation. Perhaps almost more effective would be an education piece around making it less scary and understanding how systems work. Yes, obviously, it is important that agents are trained and up to date with how the system works but, ultimately, the people you have got to convince are the landlords who are making the final decision on whether to let their property to this person or this person. We already have quite a lot of procedures and content in place that try to reassure landlords of that. As we have already covered, it is completely rational for landlords to consider a wider range or tenants to let their property more quickly and to ensure that they are happy with who is moving in to their property.

That third area feels like the area where there is a kind of collaboration. I would like to stress that the worst thing that could come out of this would be to prevent us advertising properties accurately without actually addressing the underlying reasons.

Q100       Chair: I agree with you totally; that is a very important point, Adam. Helen.

Helen Buck: My fellow panellists have explained some of the things that would make a big difference. We absolutely support an industry-wide code of conduct. About half of properties in this country do not go through an agent. We believe that we play a valuable role in ensuring that our landlords do comply. We train them on how to comply, we help them comply and we won’t work with them if they don’t comply.

The agent sector is quite an important sector in getting those standards up, but any code of conduct must cover landlords as well. I have already touched on some aspects of the benefits system, particularly universal credit. Under the housing benefit system we had sort of navigated our way in our best branches on how to use it, and there is more we can do across the piece.

Universal credit is challenging. Why would landlords not want to have a tenant where the money is coming directly from the Government? That is really secure. There are a few other things such as clawback worries. Some of our landlords, if they have experienced it, have this concern that, if it has been overpaid, it could come back. I think those are much smaller issues, but they are worth looking at.

Glynis talked about the plethora of legislation. It is a lot, and it is our job to work through it and to ensure we help our landlords, but because it has come in over many years and is a bit piecemeal, we would really welcome something that stepped back and said, “How can we make sure this all fits together in a sensible way?” That needs to be across Government and industry, incorporating all the key players.

Q101       Chair: If we made some proposals where new laws were required, we could also make a recommendation, couldn’t we, Helen, that they consolidate into that Act all the other important bits and pieces from previous Acts, to codify into one Act what the arrangements should be?

Helen Buck: I agree. It has just been a long period of time. That was for good reasons, and we support trying to improve the quality of the housing stock available to tenants, but it has ended up being quite piecemeal, and there are complexities in it that we could simplify. Then we could help our landlords to ensure more easily that they are fully compliant.

Q102       Chair: Can I ask Matt to come in on this?

Matt Campion: The area where I have sympathy with the landlords is the administration of universal credit. In Shepherds Bush we run a debt and welfare benefits advice service that is not available just to our residents, but to any member of the west London community—

Q103       Chair: You must be overrun with cases and inquiries, aren’t you?

Matt Campion: We do have a lot of demand. We find that a lot of the cases that are difficult involve some kind of dispute over medical assessments from the client’s claim, particularly where there is an ESA or PIP—personal independence payment—claim. We find that a large number of cases are refused at the mandatory reconsideration phase, but then we go on to win at tribunal phase. I can see, for landlords, that means a long delay in getting that income and uncertainty as to whether they will get it. If you are an individual buy-to-let landlord or you only have two or three properties, you will not have the resources or the time that we would have at Shepherds Bush to navigate through that benefits system. While clearly I am a strong believer in not banning residents who are claiming DSS, the interplay with universal credit needs to be looked at to make that work.

Q104       Derek Thomas: Can I pick up on that? If we achieve this wonderful thing, so that in future there will be no “No DSS” adverts and that culture is gone from the market, do you see that we will end up with landlords insisting that the universal credit part of housing benefit be paid direct to them as part of the tenancy agreement? That is picking up on your point, Matt. Can you see that becoming the default position, to address some of those concerns?

Matt Campion: Potentially. My understanding is that, if a private landlord has a tenant who is working, they would insist that that person set up a direct debit to pay their rent every month, so I do not see why they would not insist that somebody who has a benefit-derived income could set up that direct debit. Certainly, within our ethical lettings, we find that residents on benefit-derived income can sometimes find that difficult, because if there is a delay in their benefit claim for some reason, their direct debit can bounce, and that causes all sorts of costs with their banking. But I suppose that would be the nirvana we want to reach, where people claiming benefits receive their benefits on time, without interruption and possibly in advance for their housing costs, where they have to pay a month’s rent in advance or pay a deposit.

Q105       Chair: If only.

Matt Campion: If only wishing made it so.

Q106       Derek Thomas: Would you be fairly comfortable, then, if we got to that point where part of the agreement was that you give permission for the housing part of your benefit to be paid directly to the landlord? Are you fairly content with that? It would help to reassure landlords and potentially open up more properties.

Matt Campion: I think so. That is probably a question that other panel members can answer better than I can.

Q107       Derek Thomas: You are nodding, so I assume you would.

Glynis Frew: Yes, I think it would be a lot better, because it minimises the risk. That is the thing, isn’t it? It minimises the risk.

Helen Buck: That is what landlords are looking for. All they really want is a secure source of income that comes in on time and can pay off the mortgage if they have one. So that helps enormously.

Adam Hyslop: If you boil it down to the motivations of different parties, whether mortgage lenders, insurers or landlords, if they see benefits income as equivalent to earned income, there is absolutely no rational reason—let alone a moral one—to discriminate based on the source of that income. Anything you guys can do to convince landlords, lenders and insurers that these things are equivalent would be welcome. Even better, to Helen’s point, if that money is coming direct from Government, you might be in a position where that is considered superior to income from other sources. I think the ideal outcome of this would be that those income sources are then on parity. Nobody is currently insisting that that money is earned in a particular industry, so why should they insist on whether it comes from benefit payments?

Q108       Chair: Taxpayers are always more reliable than anybody else, aren’t they? We have taken on board your point, Adam: we must not push this underground. If we are serious about this, we must get lenders and insurers to stop the discrimination.

Adam Hyslop: Absolutely, because currently we can educate landlords and say, “Look, you should be looking at benefit applicants,” but there are two places to hide, which we just highlighted, where currently we cannot really—

Chair: As we heard from our first witness, if the lender and insurer tell you that you can’t, what are you to do?

Q109       Heidi Allen: To summarise, between you, you represent a big chunk of the private rental market. Matt is an intermediary that you have created to navigate some of the issues. But it sounds like you have not had active involvement with the DWP in terms of helping. So I think one of our recommendations should be for you to be involved as a stakeholder partner with DWP so that the Government can fully understand not just the mechanics of how it works at the moment but the additional difficulties that universal credit is placing on top of this already difficult, dysfunctional market, to see the damage that UC is doing. It will only go one way.

Chair: They should have rent coaches as well as work coaches.

Q110       Heidi Allen: You have just given Matt a job. If that would seem useful, it should be a recommendation that your industry is more heavily involved with the DWP on how this works, because it is clearly dysfunctional and not working for great swathes of people who are on benefits.

Helen Buck: Yes.

Glynis Frew: Yes.

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