Over recent years, DSS (or benefit) 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.
Universal Credit has also made the situation worse, with many claimants suffering long waiting times in the switchover from the old welfare system to the new. Additionally, a number of DSS tenants have had their benefit allowances cut, and those that live in private rental accommodation are now 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DSS stands for Department of Social Security, which is now a defunct Government agency that has been replaced by the Department for Work and Pensions (DWP).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.
A Guide to Letting to Benefit Tenants
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.