“No DSS” – One reason why housing benefit costs are so high.

This post was written by Reuben Bard-Rosenberg on June 8, 2010
Posted Under: Employment

So the con dem coalition are looking to make cuts a little bit more popular. And what better way than to talk about cuts to housing benefits. If you read the papers last year you would have seen a number of “scandals” over the high amounts of rent local authorities were paying to house larger families. Councils have a (fairly weak) statutory obligation to ensure adequate housing, and often such homes were amongst the cheapest that could be found.

Yet there is a reason that renting homes for people on benefits can cost so much. If you have dealt with landlords or letting agents any time recently you will have become used to a notice emblazoned on virtually every website and shopfront: “no DSS”. In other words we won’t rent to the unemployed. It such circumstances it is obvious that the small number of letting agents who are willing to deal with these apparent untouchables will be able to charge what they like.

It is in fact a disgrace that years after the worst forms of housing discrimination started to be tackled, this kind of crap is still allowed, and for no good reason. Renting to somebody on benefits is in fact less risky – because the money comes straight from the DSS. And moreover the idea that everybody on benefits shares certain unesirable characteristics is – not least in the present climate – obvious rubbish. The unemployed now acccount for 2.5 million people. Considered against the fact that there are only 500,000 vacancies in the economy, it is patently obvious that unemployement is for many people an inevitable reality.

Given the coalition aim to bring down benefit bills, and given the moronic Iain Duncan Smith’s professed concern for the most vulnerable in society, then they really ought to do something about this. I wouldn’t hold your breath.

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Reader Comments

Dave

The landlord/tenant laws in this country are remarkably fair, but the result is that either side can abuse them to some extent.

The problem here is actually quite subtle. It’s not that there is a particularly large proportion of bad DSS tenants, but that the good ones don’t move, and the bad ones rarely last more than six months or a year in the same place. As a result, although the proportion of bad tenants is low, the chances of getting one are quite high.

Make no mistake, the bad tenants can cost a landlord significant amounts, over and above lost rent. One property I worked on renovating had been occupied by the tenants for a year, in which time six months’ rent was paid. The entire central heating and wiring systems needed replacing, every wall needed replastering, and every carpet and piece of furniture in the place was ruined. On top of the six months’ lost rent, it took another three months to fix up, and cost far more than the six months’ rent that was paid. The higher rents charged are largely justified, but the risk taken in return is fairly high – a lot of landlords are not in a secure enough position to take the risk because they require a dependable, if lower, cashflow to meet their debts etc.

It would make sense simply to indemnify the landlords against loss, at which point the ‘No DSS’ signs would vanish, but I’m not sure it’s cheaper.

Really, though, whittling 10% off each rent bill won’t do it; the other 90% will still kill us. The only genuine solution to this problem is to create jobs.

#1 
Written By Dave on June 8th, 2010 @ 7:34 pm
Sean

While I agree in principle with the point about disallowing the discrimination, you’re wrong about the rent being more secure; in most circumstances, housing benefit is paid to the tenant, not the landlord. My letting agency take housing benefit tenants, and they certainly do have some trouble with rent not arriving, though I doubt it’s as bad as those with ‘No DSS’ signs would believe.

#2 
Written By Sean on June 8th, 2010 @ 7:53 pm

Test

#3 
Written By Reuben on June 9th, 2010 @ 12:57 am
Reuben

Test2

#4 
Written By Reuben on June 9th, 2010 @ 9:32 am

Wow, I didn’t know this. That’s totally fucked. There should definitely be a campaign around this – do you have time to set up a petition or something? It’s a start..

#5 
Written By Elly Badcock on June 9th, 2010 @ 10:25 am

There really should be a campaign around it. Was thinking of calling up a few in my role as a third estate journalist and asking them to explain themselves.

#6 
Written By Reuben on June 9th, 2010 @ 10:40 am
Dave

Reuben>

I don’t know why I bother, since you plainly haven’t bothered to read Sean and my posts explaining why your basic premise is wrong – the discrimination, if short-termist in outlook, is not unjustified – and pointing out the basic factual errors – e.g. rent not paid directly, rents set by councils, not landlords.

Just stop and think for one second, instead of knee-jerking that ‘discrimination is baaaaaad, mkay?’, and you’ll see that (ordinary, non-racist) people who want to make money don’t normally discriminate against any customer *except those who have a high chance that they won’t pay them*.

Let’s stipulate for one moment that, in fact, the ‘no dss’ signs, whilst unsavoury, are not unjustified. If that is so, what would be the consequence of a ban? Well, the landlords would still need to cover the increased risk of the tenant-group, so rents as a whole would rise slightly. Instead of charging one small group a good bit extra, they’ll charge everyone a little more. Of course, instead of the burden being shared over the whole population in proportion to people’s tax share, and paid for out of our tax revenues, the burden will fall only on those who rent – largely, the poorest, least-well-paid members of our society.

Basically, this is a proposal to move the costs of scum trashing houses from being borne by the country as a whole to a much smaller group of low-paid workers – it’s a proposal to tax non-homeowners. What an equitable plan that is…

#7 
Written By Dave on June 9th, 2010 @ 12:49 pm
Reuben

Dave, apologies.

As yiou can see from my test comments we have been having some trouble with the comments system and my last comment was rushed out to test the system before i left the house (i got sick of writing test).

Anyway, you and sean do raise some important things that I hadn’t cconsidered and didn’t know about.

I take Sean’s point about who pays the rent and also yours about risk and return. I realise that landlords often do rely upon the rent to pay the mortgage. I think the idea about indemnifying landlords – or offering low cost (potentially loss making) insurance – is a good one and could be treated as part of the cost of providing housing benefit (with potential savings in terms of more competitive rents). Such a policy could be a quid pro quo for legislating out discrimination – ie the government saying “we will make it harder for you to discriminate but in return take on some of the risk for default”.

One thing I wouild say again though, is that with 2.5million unemployed – and unemployment resulting from a huge disequilibrium between the supply of labour and the quantity demanded – unemployment is right now a pretty poor marker for whether someone would be a shite tennant.

I do agree with you that getting people working matters. And it distresses me that in comparison with recessions of the past, unemployment isnt seen as a funcdamental #political# issue which the government ought to prioritise solving.

#8 
Written By Reuben on June 9th, 2010 @ 2:40 pm
Dave

Sorry, don’t know why I was so rude. This whole internet thing is very dehumanising – I’m sure I’d never have said anything like that face-to-face, even if I did think you were ignoring me.

Re unemployment as a political issue, I’m not sure quite what you mean by that, but I’d have said it’s exactly what it’s not. Rather than being a matter of debate over basic beliefs, it’s a simple problem of resource and economic management to resolve basic practical issues. Since 99% of our attention is paid to the arguments over policy matters, it’s easy to forget that 99% of government is actually a management job.

It’s worth noting that broad economic policy is already focussed solely on job creation, which is the most important part of fixing the problem. On top of that, extensive deregulation of small businesses will help immensely, but take longer. Right now, though, although things look bleak, conditions are fantastic for anyone who wants to start a new business. Credit is cheap, and labour availability is high. What would really make an immediate difference, though, is if we didn’t so strongly discourage anyone on benefits from starting their own business.

#9 
Written By Dave on June 9th, 2010 @ 3:23 pm
Sally

I make the following comments from direct experience..

The present system punishes the majority for the sins of the minority. And I believe whilst not only unfair & totally immoral, it is also economically disastrous.

For example, it allows discrimination against those who are ill. It is not a character flaw that leads them to be off work or part time work and needing to claim housing benefit, but something beyond one’s control. An argument used by Human Rights organisations.. one cannot change one’s race/ skin colour/ disability.. nor can a person cure their cancer so they can go back to work.

Whilst some landlords may be persuaded by a face to face meeting explaining the reasons why a tenant needs Housing Benefit, it is often impossible to get past the letting agent to do this. Believe me, I’ve tried until I’m blue in the face, and it can be quite humiliating. It is often a case of computer says NO.

Housing Benefit can be paid to direct to the landlord from the local council and I can see no problem in making this a condition of tenancy. If the benefit entitlement ends due to increased income, then the tenant simply becomes responsible instead of the council. Simples.

We are curently homeless because we cannot find anywhere that will accept housing benefit.

We have just moved out of a house that suffered from systemic damp and dry rot. It was not only falling apart but damaging our health.

There had been a patch up job done on the house which covered up its faults and duped us into thinking it would be a suitable home. We took the property on because it was all we could afford and the landlord did not care about “income multiples” (income must be 2.5 or 3 times annual rent) when deciding to let us have the property. This is an issue for us as my hubby is self employed with a small start up business and our income is currently very low. He also has serious health problems and being self employed is the only way he can keep in regular work. The landlord was extremely slow in making repairs to the foul & damp kitchen caused by rising damp and would not fix any of the other problems in the rest of the house, inc a dangerous chimney stack. The advice from the CAB (read their website for proof) and solicitors is just to move out. Legal action is unlikely to succeed and would be very costly.. of course we cannot afford that anyway. It is not legal to withhold rent as an “incentive” to make landlords carry out work. There is no minimum standard for accommodation and no inspection body to help tenants enforce their legal right to have the landlord maintain/ repair the property. Landlords can stall longer than tenants can put up with the conditions. In the end the tenant leaves and some other desperate person takes the house. Oh, and if there has been bad feeling, a tenant loses their reference. The implication then unfairly being that they are a bad tenant, compounding the difficulties they have in getting another place to live.

Add to this the referencing, credit checking, inventory etc etc fees that tenants have to pay, frequently £280- £400 in my area (this could be every six months if you are unlucky) and you have a system that heaps the burden most heavily on those who can afford it least. We have slowly gone further and further down the market in part because of this. There are very few privately rented properties in our area so virtually no choice but to go through an agent or risk repeating our recent experience.

There is no protection for tenants in this marketplace and they are unable to simply vote with their feet and move to another property because of the unfair restrictions and sheer expense.

We could borrow money from our credit card (we have good credit so must be doing something right) to pay up front as this satisfies most landlords, but in another twist, housing benefit cannot be claimed against rent already paid, even if you can prove that you borrowed the money specifically to pay the rent and secure a place to live.

Undoubtedly, there are some landlords that incur costs because of damage caused by tenants (those people should be pursued throught the courts) but let us not forget that this is supposed to be a free market at work.

The absolute, vast majority of landlords are in the property business to make a profit (inc as a pension etc). As such they should be the ones that bear the risk, through insurance policies or absorbing the costs as any other businesses do. OK, so you could argue this would cause rents to rise as costs are inevitably passed on, but if more housing were released to a wider market, this should restrain rents or even cause them to fall as there are more houses for people to choose from; less competition between tenants driving up the already high prices.

And if landlords can no longer make money from renting out property, then they should give up and sell their business (in this case the property), just a plumber or car mechanic might have to sell his business/ van or workshop. This in turn would release more houses for sale and bring down the exorbitant sale prices we see nowadays.

AND, as if all this wasn’t enough, plenty of landlords discriminate against tenants with children. Surely it cannot be right to inflict housing problems on innocent children and even restrict a person’s right to procreate for fear of losing their home?!!

So I say regulate away, this housing stranglehold is simply making the economic and societal situation worse. Regulate to compensate and make the market work.

Let’s not forget that whilst it may be one thing to profit from people’s disposable income because of their desire for designer handbags/ fast cars etc, it is quite another to have a system that directly contributes to homelessness, poverty, lack of social mobility, family breakdown and arguably the breakdown of society itself.

#10 
Written By Sally on December 18th, 2010 @ 2:14 am
sally

and I am up at this hour trawling the internet trying in vain to find somewhere to live.

#11 
Written By sally on December 18th, 2010 @ 2:16 am
sally

Apologies for the lack of line spacing.. lost in the cut and paste!

Still looking for somewhere to live…

#12 
Written By sally on December 18th, 2010 @ 2:23 am
Lynda

This is going to be a long post, but im going to explain the effect that renting in the private sector whilst on housng benefit has had on my daughter… and the huge costs involved which are NOT paid for by benefits.
just over 2 years ago my daughter split with her partner and was classed as homeless, but because she never had children the council did not have a ‘responsibiltiy’ to house her, so she spent weeks sofa serfing whilst trying to fnd a landlord who accepted housing benefit.. 2 months went by and in the march of that year my daughter and her new partner finally found a letting agent. I agreed to help by paying the upfront costs of which were . £115 admisitration fee (for EACH tenant), £550 deposit and £550 one months rent in advance, within 2 months the letting agents were threatening them with an eviction notice as the housing benefit hadnt come through yet, so to top the threat of eviction I paid the amount outstanding, then my daughter got into difficulty with bank charges so it was agreed by the council that the HB be paid directly to the landlod as a special case. They had no problems after this until September of last year, when for reasons unknown the housing benefit was suspended, my daughter was also in hospital, the letting agents contacted me(even though i was not a guarentor) saying they could not get hold of my daughter or her partner, i told them the reason why, they then started going on about the HB being ssupended and that a notice would have to be issued soon if the money wasnt paid, so again i paid the outstanding fee, (of £350). In November my daughter finally got a council flat. But now we have since found out that the lettng agents did not register the deposit with anyone (which is a leal requirement). they did send a cheque of to one of the TDA’s but cancelled the cheque for the reason being that the tenants were on benefits… they have also foud out that the letting agent is not registered with any governing body.. so ths is now an ongoing thing to try to get the deposit back. So it is a 2 way thing with tenants on HB, as they can be treated quite badley by the letting agents.. Who wants to live their life with the constant threat of eviction.. through no fault of their own? My daughter health has suffered quite badly and is now being treated for panic disorder due partly to the hounding and threats of eviction by the letting agents

#13 
Written By Lynda on January 30th, 2011 @ 11:48 am
ikram

@last post who the hell needs a tenant like your daughter!!

#14 
Written By ikram on February 26th, 2011 @ 6:26 pm
Shannon

Hiya, I’m on housing bebefit and find it increasingly difficult to find a home for me and my kids. I’m on housing benefit not because I dont want a job and lazy, it’s simply because I’m disabled and cannot work. I think its really sad that landlords find the need to discriminate, which they are, by thinking that most people on dss won’t pay or are unreliable. People need to stand up against this. I really do have to move as my current home is becoming increasingly unsuitable for me but just cannot find anywhere to take dss, it’s really sad. xxxx

#15 
Written By Shannon on March 12th, 2011 @ 3:44 pm
RenentlyUnemployed

After 40 years i employment I find myself for the first time claiming benefits. I was made redundant of over 18 months ago and not wishing to be a burden, used my savings to try and weather what I considered to be a short-term hiccup. This was a mistake. My savings having been depleted, I was then forced to seek benefits to pay the rent, electricity water etc.

Believing in our system, I wrongly assumed that I could get support whilst continuing to find employment as painful as it was for me to admit that I needed assistance. How wrong was I? Very.

Since April 2011, the method of calculating the amount of rent for private tennants has changed. They now calculate based on the 30th percentile of rents in the area and state that 3 in 10 rentals should be affordable for DSS claimants. This is not strictly true. Since whilst according to the figures it “should” be affordable the choice is not 3 in 10 and definitely not affordable.

9 out of 10 rental properties in my area dictate “No DSS” on their advertisements and, approaching the other 10%, it invariably ends with some excuse for not accepting me even though I have several references from previous landlords. So that is 1 in 10 of ALL properties that are available to DSS. This is before we look at afford ability.

I am now in the position that I have lived in my current accommodation for 3 years. If calculated, my rent would actually be in the 32 percentile and is actually very cheap for a fully furnished rental as opposed to an unfurnished rental which are generally slightly cheaper. The maths doesn’t factor this in at all as it took me 7 months to find my currently fully furnished property – and I have not seen another since. So I will not receive enough to cover my rent. I cannot afford to move since I do not have a deposit and even if I were to find that 1 in 10 AND actually got it against the 30 odd other people also looking for it; it would be unfurnished and I would be sleeping on the floor.

This means basically that in 2 months time I will be homeless with zero chance of employment and at the same time in debt (first time ever). But at least I’ll be off the statistics and therefore of no consequence.

I would be better off in prison.

#16 
Written By RenentlyUnemployed on April 28th, 2011 @ 4:06 pm
Marine

I’m on housing benefit and I also work part time and don’t have any problem to pay rent and saving money!!!I’m looking for a flat now and I’m already fed up of people not accepting me because of that!it is real discrimination, like any other kind of racism. I’m really disgust with the people advertising house for professional single, quiet and tidy person and what else?no right to bring people, cook after ten and even breathe, come on let’s face it, society is sick.

#17 
Written By Marine on February 6th, 2012 @ 2:54 pm
Mark

Dave, from reading the opening statement of your post at the top it was quite clear that you are a landlord and you are only defending your own interests. The fact that there is a serious social problem caused by homelessness is of no consequence to you or your morals.

Let me make a few facts clear that economic lightweight such as Margaret Thatcher did not foresee. Banning local authorities from using the funds of council house sales meant they could not replace them. The result was that demand for affordable housing went up as supply went down. The simple law of supply and demand gave rise to the price boom in the late 1980s and is the reason that house prices are still so unrealistic. High house prices lead to high rent. High rents and mortgages mean that people have less to spend elsewhere in the economy and also means that council tax has to rise to cover the inflated housing benefit bill. And nearly all of this combined money went to the banks, they made some shoddy gambling decisions and we are now in debt to China and lots of unnamed ‘private investors’.

Now of course this does not affect you directly but it does affect you. Perhaps you cannot see through the myriad of rubbish fed to us by the press but this, and other socio-economic problems were caused by privatisation in general. Don’t write me off as a communist, I am talking from a mathematical perspective here. Bills have gone up and the recipients are now the minority and no longer the majority.

You say we should create jobs. Ok, this is my suggestion. The Government are prepared to spend £32 billion on the HS2 rail link between London and Birmingham. Whilst this is an attractive project, I fail to see how this will increase prosperity and nobody is prepared to tell us. (So I suspect there may be a level of bribery involved)

£32 billion is enough to build about 320,000 homes if we take a building cost of £100,000 per home. This would create a lot of jobs!! On top of that, it would halve the cost of housing benefit to anyone living in one who was unfortunate enough to lose their job. So there would be a massive saving to the economy.

The only problem for people such as yourself is that the supply/demand situation would be reversed, house prices would fall and rents would drop. Therefore I do not expect you for one moment to support this idea. However, please justify why not, with clearly argumented statements because I would be very curious as to your thoughts on the current shortage of housing for the less well off.

#18 
Written By Mark on February 13th, 2012 @ 7:16 pm
Mark

Addition: Dave mentions that ‘The landlord/tenant laws in this country are remarkably fair’. Please state which country you are referring to.

Tenants in the UK have very little legal protection and tenancies are ridiculously short. This is different to parts of Europe where long term tenancies are common and people actually feel that they belong in their home. Landlords are typically medium sized businesses and not just some wannabe jumping on the bandwagon.

A friend of mine got evicted last year. She works and paid her rent on time. Her parasite landlord did not pay the mortgage and the bank repossessed.

Another friend, a city professional, lost his high flying career following a head injury that required brain surgery. He split with his partner a year later and had no end of trouble finding a landlord to accept him. He did find one but in his case at least, that kind of discrimination was nothing different to making an assumption of somebody due to race, sexual orientation, gender and so on so forth/

#19 
Written By Mark on February 13th, 2012 @ 7:26 pm

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