Say yes to DSS – why landlords should let to families on benefits

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Are you blessed with long, trouble-free tenancies with no voids and an amazing agent? If the answer is yes, you may be hard to convince!

But if not, you should look at the growing number of working families who claim benefits and just need an affordable home.

In recent years, there has been steady growth in the number of working families claiming universal credit. Since Covid hit, there has been a big jump in claimants. This has meant many more landlords find themselves with tenants on benefits for the first time.

In Great Britain, half the families with children living in the private rented sector are claiming universal credit, according to an analysis of government statistics by Generation Rent.

In London, over half (56%) of homeless households are in work and just need to be able to find an affordable home.

In other words, there is a growing number of potential tenants who are claiming universal credit and looking for settled homes. Saying yes to DSS is saying yes to a growing market with high demand.

Properties do need to be affordable for families who are claiming benefits. The rent must be at the local housing allowance (LHA) rate, which is set by the government and based on rents in the bottom 30% of a local rental market.

Universal Credit (UC) replaced Housing Benefit and has a “housing element” for the rent as part of the payment. The LHA rate is used to calculate the housing element for tenants renting from private landlords.

Depending on your property and its location, the LHA rate may be closer to your rent expectations than you might think. But there are also other upsides to consider.

Landlords working with Capital Letters can access a significant incentive payment of up to £4,000 when your property is let, which – unlike a deposit – is kept by the landlord. We offer a free tenant finder service, and support new tenants with benefit claims and setting up utilities and managing their tenancy.

Our tenancy sustainment service is also there for our landlords, to ensure that the tenancies are successful and work for both parties.

According to researchers from the University of York, who recently surveyed 1000 landlords and agents, some landlords are seeing a business opportunity in letting to people receiving benefits.

“Landlords who were letting at the bottom of the market tended to pursue cost minimization rather than rent maximization. The most common tactic for reducing costs was minimizing turnover and voids which meant attracting and retaining good tenants through charging a lower-than-market rent.”

We work regularly with one agent who tells his landlords that tenants backed by the benefits system may be a safer bet in uncertain economic times. Admittedly he’s an agent not an economist but he may have a point!

By working with Capital Letters, you can get all the upsides of letting to families on benefits while minimising the risks. Please do give this opportunity your consideration.

Sue Coulson is the CEO of Capital Letters, which works with landlords and two-thirds of the councils in London to find settled homes for families in the private rented sector.

www.CapitalLetters.org.uk/landlords

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