Should Landlords Accept DSS Tenants?

Should Landlords Accept DSS Tenants?

For a starter, as a homeowner, you may have to deal with DSS tenants.

But you need to understand what DSS means.

The Department of Social Security (DSS) used to be a department under the British Government.

Today, DSS is virtually non-existent.

Nevertheless, you may come across the “No DSS” message.

Letting websites and property adverts usually use this term.

They use this message to indicate they do not want DSS tenants.

What does “No DSS” message signify?

Nowadays, both property owners and letting agents use “No DSS” colloquially.

Today, the term is not about someone working with DSS.

It rather shows that the property is not for tenants receiving any form of benefits.

Or renters that depend on housing benefit.

The term does not have any distinct indication.

It only means the house owners do not want renters receiving benefits.

What does housing benefit mean?

DSS tenants
Housing benefit

Housing benefit is for a set of individuals.

These are individuals who are either unemployed or getting a low income.

So, the local council offers these people a monthly allowance for rental payments.

The allowance may be enough to pay a part or the whole of the rent.

Also, the allowance depends on if the rental is from a council or a private owner.

If the people rent privately, the council will determine the amount of allowance through the local housing allowance (LHA).

There are geographical differences in the applicable LHA rate.

What must homeowners understand about housing benefit?

Here are some important tips for landlords on housing benefits:

The clawback clause

It is possible for the renter to get more benefits than they deserve.

This usually happens for some many reasons.

DSS tenants
Compensation and benefits

Firstly, it can be because they do not have the right to get the benefit at all.

Secondly, the tenant might not have declared their savings and/or income.

Lastly, the council might make a mistake in giving them the benefits.

Regardless of the reason, the local council will act.

This usually involves asking the homeowner to return the money.

In other words, the landlord may lose their rent.

Considerations for LHA

It is possible for the housing benefit payments to be lower than the rent.

So, the renter will have to find a way to pay the remaining amount.

Resultantly, the rental payments will come from two different sources.

This does not necessarily lead to any problems if the tenant has stable employment.

Possible challenges

So, why do landlords and letting agents avoid DSS tenants?

This is because there are potential risks.

DSS tenants
Risk

The DSS tenants usually do not have good, regular income that can settle their rent.

Also, unlike before 2008, the council now pays the benefit directly to the tenants.

Hence, you will need to wait for the renter to send the rent to you.

Unfortunately, the renter may decide not to do so.

Furthermore, the amount of benefit may also change suddenly.

Consequently, the tenant may not have enough to cover the rental payments again.

Nevertheless, a reduction of housing benefit is usually a result of an increase in income from other sources.

Therefore, as long as the tenant does proper budgeting, rental payments should not be a problem.

Resultantly, renting to DSS tenants does not provide benefits for landlords.

Approaching the local councils

According to lots of homeowners, dealing with local councils is problematic.

The landlords usually contact the councils when DSS tenants are missing rent or paying late.

DSS tenants
Local counsel

However, the council may not provide help in any way.

Because of the Data Protection Act, the council will not give any information.

Nonetheless, there is a regulation that helps property owners.

If your tenant has not paid rents for eight weeks, the council can pay you the benefit directly.

All you need is to submit an application.

However, the process can be time-consuming and laborious.

Also, after eight weeks of non-payments of rental, you can apply for possession of your property.

In many cases, this may be the best option.

Landlord insurance and landlord mortgage companies

Many landlord insurance providers offer no coverage for DSS/housing benefit renters.

So, if you want to protect yourself, you may have a problem at this point.

Also, a few mortgage companies have conditions that prevent renting to DSS tenants.

Therefore, before getting DSS/housing benefit renters, discuss with your landlord insurance/mortgage company.

Understand whether they will cover you or not.

If they won’t cover you, you may want to avoid DSS tenants.

Receiving rents from renters on housing benefit

The council does not pay local housing allowance calendar monthly.

Instead, the council pays it two or four weekly.

To avoid issues, your tenancy agreement should demand rent payment every 4 weeks.

Notably, some banks prohibit setting up four-weekly standing orders.

Hence, you may also need to think about this.

Alternatively, ask the DSS tenants to get a guarantor.

DSS tenants
Guarantor

A parent or relative is a good option for a guarantor.

Having a guarantor makes many tenants avoid missing rent.

Even if they miss any rental payments, the guarantor will have to cover for them.

Protect yourself during renter referencing

When investigating an applicant, get a reference from a past landlord.

The past landlord can let you know how well the tenant did in their previous rental.

If they have a history of the anti-social act, property damage and so on, they can let you know.

Also, do not overlook the importance of credit check.

Should you rent out your property to housing benefit claimants?

DSS tenants
Tenant

As a homeowner, no one can take this decision for you.

This ball is in your court to decide what you want.

While DSS tenants have certain risks, other renters are not completely free of risk too.

Well, there is no law that prohibits landlords from turning down DSS tenants.

So, you can add “No DSS” to your property adverts.

However, you are reducing the possibility of getting renters when you do so.

It is recommended that you carry out due diligence when looking for new renters.

Through this, you can let out your property to anybody without problems.

Finally, what are your challenges with DSS renters?

Do you need assistance with getting renters?

Are you in need of any real estate service?

If yes, Reneza is your dependable team.

Speak to us today.

DSS tenants
Join the revolution

 

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