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You might sometimes still see the phrase ‘DSS’ on adverts for rental properties. But what is a DSS tenant exactly, and what do landlords need to know about renting to them?
DSS refers to the Department for Social Security, a government department that was responsible for benefit payments. That department was shut down in 2001 as part of reforms to the benefits system.
The term DSS endured, primarily in adverts for rented properties. This is why you could still see ‘no DSS’ or ‘accepts DSS’ in listings, which showed whether a landlord or letting agent was willing to let a property to tenants that get benefits (and now Universal Credit).
So, a DSS tenant is a tenant that will be using benefit payments to pay their rent.
But the courts have ruled that blanket ‘no DSS’ listings are discriminatory, meaning landlords and agents need to consider each tenant individually. This doesn’t necessarily mean you have to accept a particular tenant, but you shouldn’t refuse applications outright because the tenant receives benefits.
Property listing websites Rightmove and Zoopla banned ‘no DSS’ from listings in 2019. Online letting agent OpenRent allows landlords to use the phrase ‘accept DSS income’ to show tenants that they have a great chance of being accepted.
When Rightmove made the change, they suggested that if a landlord has a restriction that means they can’t accept tenants on benefits (for example, their mortgage term), that should be listed in the advert instead.
However, some mortgage lenders have also made changes to their policies to remove these restrictions, so landlords should double check their terms when deciding on the type of tenants to accept.
In 2020 there were high-profile court cases that have essentially declared ‘no DSS’ benefits discrimination as unlawful.
At a hearing at York County Court, the judge said that rejecting tenants because they get housing benefits is discriminatory on the grounds of sex and disability. The case involved a single mother who lives with a disability. She was told by a letting agent after applying to rent a property that they have a policy of not accepting tenants who get housing benefit.
In a separate case, disabled dad Stephen Tyler won a case at Birmingham County Court. The judge declared that a blanket ban on accepting tenants who receive housing benefit is indirectly discriminatory, as it disproportionately affects disabled people.
Both cases were supported by housing charity Shelter.
Blanket bans on letting to tenants who get housing benefit is discriminatory, but landlords might still be nervous about letting property to tenants on low incomes. The worry is that those who receive benefits may not keep up rent payments.
But Universal Credit claimants, as well as their private landlords, can apply for an alternative payment arrangement if they can’t manage their monthly payment. This means payments will go directly to the landlord. Applications are considered on a case-by-case basis.
Plus, tenants still need to pass all of the usual affordability checks. Bank statements and references should be able to show that they can pay rent, and you can ask for a guarantor. Read our guide on tenant referencing for landlords.
If you’re worried about the fact that both Universal Credit and housing benefits are paid in arrears, you could ask for rent in advance. Shelter mentions that two month’s rent in advance should cover the period while the claimant is waiting for the application or change to be processed.
Legally, there's nothing to stop you renting a property to DSS tenants. All the terms of a tenancy agreement remain the same and you're not required to provide anything extra.
If you’re worried about your property insurance when it comes to DSS tenants, most insurers now cover rental agreements made with these tenants as standard.
The majority of insurers available through Simply Business will give a quote to cover DSS tenants, but if you’re in any doubt make sure you check the details of your policy and contact your insurer directly.
As mentioned, blanket bans on accepting DSS tenants are discriminatory. This means that you should consider all applications on an individual basis.
If you’re still unsure, remember that the tenant has to go through all of the usual checks, and there are options open to you if the rent isn’t paid.
And if you’re struggling with lower rental demand, giving all applicants equal consideration – and then accepting tenants that can pay their rent, whether they receive benefits or not – can help you reduce void periods and tenant turnover.
Simply Business Editorial Team
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