Note: Articles on the Renters (Reform) Bill will be continuously updated as details emerge
Article last updated on 31 October 2023
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Although the Renters (Reform) Bill was introduced to Parliament on 17 May 2023, there was a lengthy delay before the second reading of the Bill, which finally took place on Monday 23 October 2023. It’s predicted that significant changes to the Bill are likely during its next stage as it progresses through Parliament. For a detailed update on the likely changes, head over to our Renters (Reform) Bill hub.
Secretary of State, Michael Gove, reaffirmed the Government’s commitment to introducing the Property Ombudsman which will be responsible for making sure landlords don’t discriminate against prospective tenants due to them being in receipt of benefits (or having children). However, given the current rental shortage, landlords will ultimately still be able to decide who they let to, so this may be difficult to enforce.
We will update this article again as more details emerge. Read on for more background to the current proposals on unfairly discriminating against tenants on benefits.
One of the most contentious issues facing the private rented sector at the moment is the ongoing practice by many landlords of refusing to accept tenants in receipt of benefits.
By ‘many’ the Government means the 45% of landlords it canvassed who said they were unwilling to accept them.
Thousands of rented property ads on the big portals stipulate ‘No DSS’, referring to the now defunct Department of Social Security that used to administer benefits in the UK.
Following a recent court case brought by Shelter on behalf of a tenant, landlords and tenants who advertise properties as ‘No DSS’ are leaving themselves open to prosecution, although in reality very few are actually prosecuted.
Nevertheless, back in 2020 a ruling at York County Court found that a ‘No DSS’ practice unfairly discriminated against a single mum-of-two with a disability, on the grounds of sex and disability under the Equality Act.
The Government’s Fairer rented sector white paper made clear that it wants to put this ruling, and possibly a wider ban on ‘No DSS’ on a more formal legal footing, and this was expected within the Renters (Reform) Bill. Although it was not in the actual Bill, in its statement of ‘further measures we will legislate for in this Parliament’, the Government has committed to work closely with landlord, tenant and local government groups to bring forward legislation at the earliest opportunity to ‘make it illegal for landlords and agents to have blanket bans on renting to tenants in receipt of benefits or with children.
This includes introducing a ban on landlords or agents operating a blanket policy of refusing tenants who are in receipt of Universal Credit or housing support, saying it wanted to urge them to make
“informed decisions on individual circumstances rather than relying on blanket bans”.
But while this is laudable, there is more to this argument than meets the eye.
Most landlords are not banning tenants in receipt of Universal Credit or housing support because they are mean spirited (although some are), but rather because the current way benefits are paid to them is unwieldy and highly bureaucratic. And because Local Housing Allowance (LHA) rates are capped, it is often the case that tenants who rely on benefits simply can’t afford local private rents and would be unable to pass referencing affordability checks, regardless of a change in the law.
Several years ago, the Government decided it would be a good idea to pay the housing element of Universal Credit directly to tenants rather than to landlords in a bid to persuade claimants to take responsibility for their finances.
While this was a good idea on paper, in practice this has created huge headaches for thousands of landlords who have tenants in receipt of benefits.
This is because the Alternative Payment Arrangement system the DWP set up to pay the housing cost element of Universal Credit direct to the landlord in certain circumstances – including if the council believes the tenant is unlikely to be able to pay the rent or they are more than eight weeks in arrears - often goes wrong.
In addition, councils have the right to try to claw back past rent payments from landlords if it turns out the tenant was claiming benefits fraudulently.
And the reality is that the impenetrable nature of the DWP’s ‘customer service’ offering means it can be extremely difficult for both landlords and their tenants to sort things out, despite a parliamentary investigation by MPs that directed the DWP to complete a thorough overall of the system ‘urgently’.
For more insights on the Renters (Reform) Bill, listen to a special episode of The Property Cast with Sean Hooker, Head of Redress at the Property Redress Scheme, and leading property expert Kate Faulkner OBE, who share their initial reactions to the Renters (Reform) Bill – will it deliver what tenants need and will it have unintended consequences? Tune in to find out what the experts think.
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You can also visit Total Landlord's Renters (Reform) Bill hub which will be regularly updated as more details emerge.