End income discrimination against tenants

Read and share our guide on how to avoid income discrimination at your letting agency

End income discrimination against tenants

Read and share our guide on how to avoid income discrimination at your letting agency

This information is for letting agents and people who advertise or let properties to tenants

This guide is designed to help you comply with equality law. It sets out what you need to do to make sure your business doesn’t discriminate against people because of their income.

“No DSS” or “Professionals only” policies make it difficult for tenants to find a home – even if they can afford the rent. Tenants say these types of practices make them feel like second-class citizens, and some people even become homeless as a result of them.

These policies and bans are unlawful and leave you at risk of being sued.

Picture of ads in letting agent window

Income discrimination

Why is it unlawful to discriminate against people who receive benefits?

The Equality Act 2010 made it unlawful to either directly or indirectly discriminate against anyone because of their ‘protected characteristic’. For example, their disability, race, religion, sex, or sexual orientation.

It counts as indirect discrimination when a practice or rule is applied to everyone in the same way, but has a worse effect on people with certain protected characteristics.

A higher proportion of women, people with disabilities, and Black and Bangladeshi households receive benefits than the general population. And this means that these groups are more likely than most to lose out from a refusal to rent properties to people who claim benefits. This is indirect discrimination.

Did you know?

  • 55% of adults who receive Universal Credit are women, despite accounting for just 49% of private renters and only 51% of the population (1)

  • people who receive disability benefits are four times more likely to also receive housing benefit (2)

  • Black households are almost three times more likely than White households to receive Universal Credit (3)

Woman looking at property ads

If tenants can't pay

A woman on the sofa, holding her child, looking stressed and talking on the telephone

Why wouldn't benefits cover the rent?

The range of properties that many tenants who receive benefits can afford is limited. This is because of cuts to benefits and problems with how the benefits system works.

That’s why we, along with private landlords, are calling on the government to make housing benefit fit for purpose.

Can you refuse to rent to people who can't afford to pay?

By law, you can refuse an application from a tenant if it is clear that they can’t afford the rent. But, to make sure you don’t unlawfully and indirectly discriminate, you must consider each applicant’s full circumstances first.

Don’t make assumptions about what people can afford.

If benefit levels don’t cover the whole rent, a tenant may still be able to pay the full rent or rent in advance with other income, savings, or with help from family. They may also have other ways of showing that they’re able to afford the rent.

Advertise lawfully

'No DSS’ and ‘Professionals only’ are common phrases in property adverts. These blanket bans are the most obvious discriminatory practices against people receiving benefits in the lettings market.

They can discourage people who receive benefits from even registering an interest in properties. And this means that you can’t consider their individual circumstances first.

Using this kind of discriminatory language puts both agents and landlords at risk of legal action.

You should avoid using it on your website, property portals, in branch windows, local newspapers, or anywhere else.

Protect your business by making sure your staff understand that they shouldn’t use discriminatory language in adverts - both explicitly and in less obvious ways.

You should also be actively monitoring for any unlawful discrimination across your business as a whole.

Advert containing 'No DSS' statement.

Photo credit: Francis Tyers

End internal policies like 'No DSS'

OpenRent discrimination - man in wheelchair

Did you know?

The Equalities and Human Rights Commission states ‘you must not accept an instruction to discriminate from a property seller or landlord’ (5).

As the courts have ruled (4), it is against the law for letting agents and landlords to have blanket bans on letting to tenants who claim benefits. This is because these bans lead to indirect discrimination.

A written policy refusing all applications from tenants receiving benefits is the most obvious type of ban. But, it still counts as a ban if you refuse to rent certain properties to all tenants in receipt of benefits. For example, those properties where the rent is above the relevant Local Housing Allowance (LHA) rate.

What if the landlord doesn't want tenants who receive benefits?

This is still unlawful discrimination. And, if your agency has a culture of not renting homes to people who receive benefits, this amounts to an unwritten ban.

Your staff will be barring tenants through their actions, even if it isn’t official.

You should take steps to change the culture across your whole business, or in individual branches and teams, as needed. It is your responsibility to always give landlords the right advice and make them aware of the law.

Get all the facts

Woman using her computer, on the telephone

Character reference requests that always ask for an employer reference may discriminate against tenants who receive benefits.

You may find that the tenant can provide a reference from someone else, such as a previous landlord. Or they may have someone who can act as a guarantor.

Consider individual circumstances

Don’t reject an application, or advise a landlord not to accept a tenant, simply because they receive benefits. You must first consider the tenant’s full circumstances to understand the merits of their application.

Some landlords may feel concerned about benefits being paid in arrears. But, by looking at a tenant’s individual situation, you may find that they can pay the rent in advance with savings (or other means) until their benefit payments start.

References

Most agents have processes in place to establish how suitable prospective tenants are, including affordability checks and character references. You must make sure that your processes don’t discriminate against tenants receiving benefits.

Advocate for best practice

Giving landlords the right advice

The value of a good letting agent is the advice that they can give to their clients. Many landlords rely on their agents to tell them how to meet their legal duties.

Giving landlords bad or incorrect advice puts you in legal jeopardy – and fails your client.

Advice about unlawful discrimination

If a landlord wants to ban all tenants who receive benefits from their properties, this counts as unlawful discrimination. The law applies to them in the same way as it does to you, and we have advice above about how to handle this situation.

You must make sure you and your client act lawfully. Some landlords may be concerned that the terms of their mortgage or insurance policy don’t allow them to rent to people who claim benefits.

Industry leader Mortgages for Business thinks that over 99% of the buy-to-let mortgage market is now ‘No DSS’ free, so this fear is outdated (6). And most insurance brokers can find suitable and affordable rent guarantee products to cover letting to tenants receiving benefits (7).

Even when the terms of your client’s financial products do include restrictions on tenants claiming housing benefit, this doesn’t allow them to act in an unlawfully discriminatory way. If they do, tenants could claim against them and their mortgage lender.

Landlords will want to know if people who receive benefits will be able to afford the rent for their property.

In order to give your clients the correct advice, your business must have at least a basic understanding of the benefits system and what tenants are likely to be entitled to,

Image of adverts displayed in a letting agents' window.

Advice about benefits

Many landlords may not know exactly how the benefits system works. They may have questions about:

Equality law states that ‘you must not accept an instruction to discriminate from a property seller or landlord’.

Find out more

Implementing change

Training your staff

To use this guide effectively, you may need to train your staff. We recommend aiming for these goals. All staff should:

  • recognise that it is their personal responsibility to avoid unlawful discrimination

  • know what income discrimination looks like, and how to avoid it

  • be able to give a minimum level of accurate advice about benefits. Not every staff member must be an expert, so we recommend having one person with in-depth knowledge in each branch

  • know the value of benefits to your business

  • avoid making assumptions about people who receive benefits – 21% of all private tenants claim benefits and two thirds (68%) of them are in work (9)

Picture of two people having an animated conversation.

It’s simple: to stop discriminating against people receiving benefits, you just need to treat them in the same way as you would any other tenant.

Using our guide should help you to work confidently with the millions of tenants who receive benefits and avoid committing acts of unlawful discrimination

Read our live blog to keep up with our fight against income discrimination

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Footnotes

1. Taken from the Department for Work and Pensions (DWP) statistics on people claiming Universal Credit in April 2022 compared with Census 2011 data on housing tenure by sex.

2. Thirty-five percent of people in receipt of Disability Living Allowance in 2017-20 also received housing benefit compared with 9% of those not in receipt of Disability Living Allowance. Calculated from DWP households below average income figures derived from the Family Resources Survey with data combined for 2017-18, 2019-20, and 2020-21.

3. In 2020-21, 11% of households where the head identified as Black African, Caribbean, or Black British claimed Universal Credit compared to 4% of White households. Taken from the DWP Family Resources Survey 2020-21.

4. In a hearing on Wednesday 1 July 2020 at York County Court, District Judge Victoria Elizabeth Mark confirmed that rejecting tenancy applications because the applicant is in receipt of housing benefit is unlawfully indirectly discriminatory on the grounds of sex and disability, and is contrary to sections 19 and 29 of the Equality Act 2010. In a hearing on Tuesday 8 September 2020 at Birmingham County Court, her Honour Judge Mary Stacey also confirmed that rejecting tenancy applications because the applicant is in receipt of housing benefit is unlawfully indirectly discriminatory on the grounds of sex and disability, and is contrary to sections 19 and 29 of the Equality Act 2010.

5. See the Equality and Human Rights Commission’s guidance on equality law for estate agents, letting agents, and property management companies. Accessed on 23 May 2022.

6. Industry leader Mortgages for Business carried out research for Shelter in November 2020 and told us that over 99% of the buy-to-let mortgage market is now ‘No DSS’ free. All the major players have removed their ‘No DSS’ clauses, including in historic contracts, and have confirmed that they would never enforce them in any case.

7. The British Insurance Brokers Association confirmed in a survey of their members that 58% would be able to arrange rent guarantee insurance for a landlord wanting to let to a tenant in receipt of benefits.

8. See the government’s guidance for more information about managed payments.

9. See households below average Income data in Stat-Xplore.