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“No Benefits” Back in Court15th July 2020 Commercial Litigation
There have been reports of another court decision on the use of “no DSS” limitations by agents and landlords. Shelter were heavily involved in this case and are reporting it as the court ruling that such blanket limits are unlawful. The position is however more nuanced than this.
So what was happening here? In this case the agent had adopted a blanket policy of not letting to people on housing benefit. They, unwisely, put this in an email to the tenant. The tenant sought help from Shelter and it ended up before the courts.
Firstly, looking at this specific case. It’s a little bit inaccurate to suggest that the Court found that DSS discrimination was unlawful. The case was settled by consent and the Court did not therefore spend time hearing argument on the topic. It in fact largely adopted and quoted the views of Shelter on this issue and there was no effort to make a case that the policy was justified.
So is No DSS Unlawful Discrimination or Not?
This is a hard question to answer. Discrimination is split into two types. Direct discrimination where I discriminate against a protected characteristic overtly. For example, refusing to let to people from a specific racial group. There is also the concept of indirect discrimination. That is where I do not discriminate directly against a protected characteristic but engage in a practice which has a disproportionate effect against people with that characteristic. It is this second type of discrimination which is relevant in this case.
Shelter are advancing two arguments. The first is that more single women renting privately are on housing benefits than single men. Therefore, a blanket “no DSS” policy puts women at a disadvantage as compared to men. It therefore discriminates on the basis of gender, a protected characteristic. The second argument relates to disability. People who claim disability benefits in the private rented sector are far more likely to be claiming housing benefits as well. So, a blanket policy refusing to let to tenants on housing benefits is at risk of unlawfully discriminating indirectly against women and disabled people.
However, it’s not that simple. The problem of indirect discrimination is that it can be argued a lot of different ways. Looking at the gender point first. Shelter prefer to remove all couples on housing benefit from the equation and then say that single-household women on housing benefits represent 18.8% of those claiming benefits as against 12.4% of men, so women are more greatly disadvantaged. However, looked at another way single-household women make up just 18.8% of the private renting population on benefits as against 12.2% men and the balance being couples, which largely include women. Therefore if you group single-household women together with couples including women and simply talk about households with women in them then women are not particularly disadvantaged as compared to men. This may seem academic but the issue of the proper comparator is critical in discrimination cases.
Looking at disability the situation is much simpler. The question of comparators does not really arise in that there is far less question as to what the proper comparator is.
There is also the question of justification. It is possible to objectively justify discrimination in some cases although that is for the landlord or agent to prove. It could be argued that insurers refuse to cover tenants in these cases (as some do) or that the mortgage does not permit tenants on housing benefit (a few lenders remain in this category) and so the landlord or agent is simply reflecting that restriction. There are also arguments around clawback, the difficulty of ensuring direct payment, and the fact that tenants on housing benefit are less likely to depart a property at the end of a tenancy.
Part of the problem in this case was also the manner in which the policy was expressed and provided. Social landlords often get around the issue of not wishing to accept people on benefits by focusing on affordability and stating that the tenant cannot afford the property without the addition of housing benefit. This is not a good argument in relation to disability, but a better one in relation to gender.
A better solution altogether is for landlords and agents not to operate blanket policies at all and to treat each case on its merits. Even if there is a reluctance to accept someone on housing benefit, these distinctions are rapidly being eroded as people move to the single benefit structure of Universal Credit. Given the number of benefits and the wide range of people on them operating a “no benefits” (or “no DSS” policy) is unrealistic and would exclude a large number of excellent potential tenants.
Eventually there will need to be a full consideration of a “no benefits” decision or policy by the courts. This case is not the best one in which to consider it but it is almost inevitable that there will be a larger challenge to Shelter’s views at some stage.