Can a landlord really say ‘No DSS’?

Friday, March 16th, 2018 - By David Smith, Partner at Anthony Gold Solicitors

A recent report on the BBC (read here) has raised the issue of whether or not a landlord can refuse a tenant solely on the basis of them being on state benefits. It has been quite widely reported and has even caused a question to be raised in the Welsh Assembly.

The argument being made was that to refuse all tenants with benefits without even considering their circumstances was an example of indirect discrimination. This type of discrimination occurs when I have a policy I apply equally but that policy is particularly discriminatory against a group with a protected characteristic. A classic example would be a prohibition in a shop on all dogs. This would arguably impact unfairly against blind and other disabled people who use assistance dogs. This is why you commonly see signs on shop doors that prohibit dogs qualified with the statement “except disabled assistance dogs”. In this case the argument being made was that benefits are more commonly claimed by single women than single men and so a blanket ban on all tenants on benefits impacted more substantially on women than men and so was indirect discrimination against women.

However, this is an example of slight over-reaction by the BBC to the situation. The matter was settled out of court and was in fact only in a county court anyway. So no court has made any ruling that it is discrimination to refuse tenants on benefits and even if this court had made that decision it would merely be a county court decision and so could be freely ignored by every other judge, even in the county courts. However, the issue has been raised and it is likely that it will arise again, possibly before a more senior court.

The first question to consider is whether or not this is actually indirect discrimination at all. It may be if the property is for a single person because men and women are not equally likely to be on benefits. However, while single women are far ahead of single men in terms of percentage of claimants they are not far ahead of couples and single men. If a one bed property is equally suitable for an individual and a couple it may be hard to argue that the correct comparator when deciding whether there is discrimination against women is men, it may be more appropriate to compare them with everyone else, in which case the figures are much closer together.

Even if we do accept that there is discrimination against women it may be the case that the discriminatory practice of refusing tenants on benefits is (legally-speaking) justified. This is a general defence to claims of indirect discrimination. So why do landlords refuse benefit tenants? Well there are two common reasons. The first is that tenants on benefits are paid four-weekly in arrears. This contrasts with the normal residential rental practice of asking for rent monthly in advance. So, a tenant on benefits is likely to be in arrears for most of the time. The other reason commonly given is that if the tenant is asked to leave, for whatever reason, a tenant on benefits is likely to approach the local authority for assistance and will then be told by them to remain in the property until a court order is obtained and a bailiff appointment made, thereby increasing landlord cost.

The second of the two reasons is not terribly strong as there is little evidence that this happens more with tenants on benefits and is in any event nothing more than the exercise of the tenants’ legal rights. In addition, this will change once the Homelessness Reduction Act comes fully into force. A better argument may be the financial one. This is essentially that the cost that a landlord incurs in housing a tenant on benefits as a result of the rent arrears position is one which a landlord should be allowed to freely opt-out of. Whether a court would be prepared to accept that is uncertain.

The fact is that this situation is likely to recur. It is even more likely to recur now that it has been highlighted by this case. Landlords and agents should probably avoid making blanket statements that they will not accept tenants on benefits and should consider the issue more carefully on a case-by-case basis and then decide based on the nature of the applicants who they wish to accept.

If you have any questions and would like legal advice, please contact David Smith who is a Partner in the Housing team at Anthony Gold. His email is David.Smith@anthonygold.co.uk

Please note that the views and opinions expressed in these blogs are those of the author and do not necessarily represent the views of London Property Licensing. These blogs are designed to stimulate discussion and debate within the property industry.

For all the latest news and comment, you can sign up for the free London Property Licensing newsletter here.