It’s noble to tackle homelessness, but not by making landlords the scapegoats
Hot on the heels of the debacle in the High Court, where its Right to Rent scheme was judged to force buy-to-let landlords to discriminate against non-UK nationals and British ethnic minorities, the government has launched another salvo against private landlords. This time, it accuses landlords of ‘potentially discriminating’ against tenants on benefits.
Homelessness – are private landlords to blame?
At the beginning of March, the Ministry of Housing, Communities and Local Government announced a raft of measures aimed at tackling homelessness. These included helping new tenants fund their first month’s rent payment, which will be welcome news for the private rented sector.
Then it came out with the big announcement: it wants to ban ‘no DSS’ from rental adverts. That’s right, the government wants to remove the ability for landlords to be upfront about their lack of desire to take in tenants who are claiming social security benefits. It’s like the government is blaming the private rented sector and buy-to-let landlords for the increasing numbers of homeless people on the streets of towns and cities up and down the UK.
A good aim, but is the target the right one?
The aim of the government appears to be well-intentioned. It wants to see homeless numbers come down. The private rented sector may be able to absorb some of these homeless, but not if landlords advertise that they won’t. Banning ‘no DSS’ in adverts may encourage more homeless people to apply for tenancies.
But the target may be the wrong one. The government is quick to point out how many tenants are in receipt of benefits; its numbers suggest almost 900,000 out of 4.5 million tenants in the private rented sector. What the Minister for Housing and Homeless fails to acknowledge is the financial stress that such tenants cause to buy-to-let landlords. RLA research shows that:
- Two-thirds of the largest buy-to-let mortgage providers don’t allow buy-to-let landlords to accept tenants on housing benefit
- The average amount of rent owed by tenants on universal credit is £2,400
So, the government are targeting buy-to-let landlords to help solve the homelessness crisis in the UK. Yet those landlords not only find it difficult to raise funds to invest in property to let to people on housing benefits but then also suffer from unpaid rent when they do.
The real problem is…
I’ve yet to meet a buy-to-let investor who wouldn’t let to someone on benefits if they could be guaranteed to get paid their rent on time every month – or paid at all. It is not the landlord’s attitude that is the problem, it is the system.
Landlords who let through Ezytrac have the advantage of a team of experienced property professionals on their side. Our systems help us to chase up rental payments effectively. We accept payment by direct debit, and our systems alert us the day that a tenant is late paying. We then start chasing rent immediately. But the environment holds systemic challenges:
- Most DIY landlords are not able to spend hours and days chasing rent
- If all housing benefits were paid direct to landlords, this would help
- If financial law made discriminating against landlords who would be pleased to invest to let to tenants on housing benefit illegal, this would help
- The local housing allowance has been frozen so solid that it is no longer in line with market rents
Would a ban on ‘no DSS’ ads work?
It must be questioned whether a ban on ‘no DSS’ ads would actually work. It is our experience that a landlord who really doesn’t want to let to someone, won’t. All the ban might achieve is raising the hopes of the homeless who will be refused once they have been vetted.
Landlords and agents could push rents higher to compensate for the extra time wasted and costs incurred. A waste of time for all, and higher rents for tenants. Another genius governmental policy!
What we believe the government should do
Here at Ezytrac, we want to see the homelessness problem tackled and beaten. But to try to force buy-to-let landlords into taking tenants who receive benefits without the support that landlords need is asking for trouble. So, here’s what we suggest the government should do:
- Unfreeze the local housing allowance and bring it into line with the market rents
- Ensure that all housing benefit is paid directly to the landlord or the landlord’s nominated agent
- Make it illegal for lenders to refuse buy-to-let mortgages to landlords who let to tenants in receipt of housing benefit
- Underwrite all rental arrears of those in receipt of social security benefits and/or housing benefit
These measures may provide the framework in which ‘no DSS’ may naturally come off rental adverts, and perhaps create the environment in which the government could legislate to make such adverts illegal. But until such a framework is in place, we believe it is entirely inappropriate for the government to dictate which tenants a landlord must accept. After all, it is not the government investing and taking the financial risk, it is the landlord.
We’d love to know what you think. Email Michael Hollamby (michael@ezytrac.co.uk) and let him know, and we’ll make sure that we represent your views.
Live with passion
Brett Alegre-Wood