Can Landlords Refuse DSS Tenants UK?

Is 'No DSS' legal?

No. Blanket "No DSS" policies are likely to be unlawful indirect discrimination under the Equality Act 2010. This applies whether the policy is set by the landlord, letting agent, or stated in property adverts.

The term "DSS" (Department of Social Security) is outdated—it was replaced in 2001—but the phrase persists in property listings. Modern equivalent terms include "No Housing Benefit", "No Universal Credit", or "Working tenants only".

All of these blanket restrictions carry the same legal risk.

What did the court cases decide?

Two landmark 2020 court cases established that blanket "No DSS" policies constitute indirect discrimination against women and disabled people—both protected characteristics under the Equality Act 2010.

The courts found that women and disabled people are statistically more likely to receive housing benefits. A blanket ban therefore disproportionately affects these protected groups.

Can I assess benefit tenants differently?

You can assess all applicants on affordability—including benefit tenants. What you cannot do is automatically reject someone simply because their income includes benefits.

Legitimate affordability assessments include:

• Reviewing bank statements and income evidence
• Checking rent-to-income ratios
• Requesting references from previous landlords
• Running credit checks
• Asking how they plan to cover any shortfall between LHA and rent

Apply these assessments consistently to all applicants, regardless of income source.

Mortgage lender restrictions

Many lenders have removed DSS restrictions since the 2020 cases. Major lenders including NatWest, Lloyds, Barclays, and Santander now permit benefit tenants on most buy-to-let products.

If your current mortgage terms prohibit DSS tenants:

1. Contact your lender—the policy may have been updated
2. Request written confirmation of current terms
3. Consider remortgaging to a more flexible lender
4. Note that lender restrictions don't protect you from discrimination claims

Even if your lender hasn't updated their terms, you—not the lender—remain liable for any discrimination.

How to assess affordability for benefit tenants

Treat benefit income as you would employment income. Focus on whether total income sustainably covers rent plus living costs, regardless of the source.

Key factors to consider:

• Total income - Benefits plus any employment or other income
• LHA shortfall - How will they cover any gap between LHA rate and your rent?
• Payment history - Previous landlord references and credit history
• Stability - Is their benefit claim likely to continue?
• Savings - Do they have reserves for emergencies?

Universal Credit - how it works for landlords

Universal Credit (UC) replaced Housing Benefit for working-age tenants. It's paid monthly in arrears to the tenant, who then pays you. However, you can request direct payment to the landlord in certain circumstances.

Direct payments - request UC paid to landlord

You can request an Alternative Payment Arrangement (APA) to have the housing element of Universal Credit paid directly to you. This is granted if the tenant is in arrears or likely to struggle managing payments.

Direct payment is available when:

• Tenant has 2+ months' rent arrears
• Tenant has a history of debt problems
• Tenant struggles to manage money (vulnerability)
• Tenant requests it themselves

Apply through the landlord portal or by contacting the Universal Credit helpline. If arrears exceed 2 months, the DWP may automatically apply for direct payments.

Rent guarantee insurance options

Rent guarantee insurance can protect against arrears regardless of tenant type. Many insurers now offer policies that cover benefit tenants, though premiums may be higher.

What rent guarantee insurance typically covers:

• Unpaid rent (usually up to 6-12 months)
• Legal costs for eviction proceedings
• Sometimes property damage beyond deposit

Check policy exclusions carefully—some policies require tenants to pass specific referencing criteria.

Local Housing Allowance rates

Local Housing Allowance (LHA) sets the maximum housing element for Universal Credit and Housing Benefit. Rates are set by Broad Rental Market Area and property size. LHA rates are often below market rents.

LHA rates were frozen for several years but were reset to the 30th percentile of local rents in April 2024. Check current rates for your area on the GOV.UK LHA rates page.

Key points:

• Rates vary by area—check your local Broad Rental Market Area
• Under-35s usually only get "shared accommodation" rate
• Property size determines rate (1-bed, 2-bed, etc.)
• Tenants must cover any shortfall from other income