Over recent years, DSS tenants have been given a bad name, which has led to many landlords becoming wary of letting to them. The problem is that during the recession, landlords across the country saw more of their tenants struggling to afford their rent payments, and unfortunately DSS tenants seemed to suffer the most.
2013 made things even harder for DSS tenants, as the coalition government rolled out the much discussed welfare reforms. After they were put into place, a number of DSS tenants found their benefit allowances cut, and those that lived in private rental accommodations were made responsible for paying their housing benefit to their landlords. Even though recent events have made it sound like letting to DSS tenants is too risky, the fact of the matter is that it is necessary, and with careful planning it can even be financially viable. So here we look at everything landlords need to know about letting to DSS tenants:
What is a DSS Tenant?
DSS stands for Department of Social Security, which is now a defunct government agency that has been replaced by the Department for Work and Pensions (DWP). The DWP is the sector of the government that is in charge of welfare and pensions, therefore a DSS tenant is one that receives welfare.
Generally, DSS tenants are those that receive housing benefit, with the amount they receive depending on their circumstances and income. When looking for a property to rent, a tenant will usually tell you if they receive benefits up front, as if you agree to let to them, they will have to fill in certain forms that notify their housing officer.
What are the Risks?
One of the main reasons landlords are uninclined to let to DSS tenants is because they have a bad reputation. There are those that believe that someone must have done something wrong or be irresponsible with money if they require benefits, and news stories featuring DSS tenants who have destroyed private rental properties have done little to help matters.
Furthermore, some DSS tenants’ rent is higher than the amount they receive in housing benefits, meaning they have to make up the shortfall each month. This often concerns landlords as it means there is a higher risk of their tenants falling into rent arrears, which they will then have to chase up, or even start the eviction process if it happens on a regular basis.
Why Let to DSS Tenants?
The fact of the matter is, that even though DSS tenants have a bad reputation, it is unfair to tar them all with the same brush. Regardless of whether your tenants receive housing benefits or not, there is always the risk that they could fall into rent arrears, which is why all landlords should have an extensive landlord insurance policy complete with rent guarantee insurance in place.
With the right protection and contingency plans, letting to DSS tenants isn’t too much of a risk, and you may even find it beneficial to your business. Furthermore, those on housing benefits are practically guaranteed to receive a set amount of money each month from the Government, while tenants that solely rely on their salary to pay their rent could find themselves struggling if they are made redundant. In a way, if you negate certain risks, letting to DSS tenants can be more stable than letting to those who do not receive benefits.
How to Protect Your Business
There are a number of ways to protect your business against the risks associated with DSS tenants, including:
- Creating a detailed tenancy agreement, including information on late payments and rent arrears.
- Meeting your tenants in person to gain an idea of what they’re like and whether they seem trustworthy.
- Performing thorough background checks on each tenant, including whether they have ever missed rent payments before.
- Asking your tenant to arrange having their housing benefit paid directly to you, especially if you are worried about their budgeting skills.
- Having a contingency plan in place should your tenant fall into rent arrears or you come across any other issues.
- Just Landlords’ Report on George Osborne’s plans for 2014/15. (2014). Retrieved from the Just Landlords website: https://www.justlandlords.co.uk/blog/just-landlords-report-george-osbornes-plans-201415/
- Why DSS tenants really are the best. (2005). Retrieved from The Guardian website: https://www.theguardian.com/money/2005/may/15/observercashsection.theobserver3
- Housing Benefit. (2013). Retrieved from the GOV.UK website: https://www.gov.uk/housing-benefit
Disclaimer: This article is for information only and is not official guidance, FCA approved, or legally precise. Just Landlords has used all reasonable care in compiling the information but make no warranty as to its accuracy. If you require information on landlord legislation or best practices please contact your legal representative. For details see our conditions.