Referencing tenants on benefits
“No DSS” is not a commercial preference any more — it is a legal risk. Two county court rulings in 2020 held blanket refusals to be unlawful indirect discrimination. But that does not mean you must accept every applicant. It means you assess them the same way you assess everyone else.
The distinction that matters
The rulings prohibit the blanket policy, not the individual assessment. Declining an applicant because their total income genuinely fails an affordability standard you apply to everybody is lawful. Declining them because of where the income comes from is not.
What the courts decided
In July 2020, York County Court held that a letting agent's refusal of a disabled single parent's application, because she received housing benefit, was unlawful indirect discrimination on grounds of sex and disability, contrary to sections 19 and 29 of the Equality Act 2010. In September 2020, Birmingham County Court reached the same conclusion about a letting agency operating a blanket “No DSS” policy.
The legal mechanism is worth understanding, because it explains what is and is not allowed. Receiving benefits is not a protected characteristic — income and employment status are not listed in the Equality Act. The claims succeeded on indirect discrimination: a rule applied to everyone that puts a protected group at a particular disadvantage. Women and disabled people are significantly more likely to claim housing benefit, so a rule excluding claimants disadvantages them disproportionately.
One honest caveat, since much of the guidance online skips it: both were county court decisions, and county court judgments do not bind other courts in the way an appellate ruling would. What they did was map out a clear route to a successful claim, with no decision since pointing the other way. A blanket ban is therefore an avoidable and well-signposted risk rather than a statutory offence.
How to assess fairly — and defensibly
- Count all income. Assess total household income including Universal Credit and the housing element. Discounting benefit income while counting wages is the practice that produces a discriminatory outcome — and it is commercially strange, since the housing element is often the most predictable money the applicant receives.
- Write your standard down. One affordability rule, applied to every applicant. A written standard is far easier to defend than a series of case-by-case judgements, and it is what turns a decline into an evidenced commercial decision.
- Set guarantor requirements by numbers, not by source. Asking only benefit claimants for a guarantor, while accepting employed applicants on the same income, recreates the same problem in a subtler form.
- Never advertise an exclusion.Publishing your affordability requirement conveys the same commercial information without excluding a protected group — and the portals prohibit “No DSS” wording anyway.
- Record the reason for each decision. Contemporaneous notes are the difference between a defensible decline and an argument about what you were thinking.
Verifying benefit income
The usual evidence is a Universal Credit statementfrom the applicant's online journal, which shows the housing element separately, corroborated by bank statements or Open Banking so you can see the money actually arriving. Beyond that, reference exactly as you would anyone else: a £9 credit check for identity and adverse history, or a £19 full reference to verify affordability against total income.
You can sanity-check the arithmetic in the affordability calculator — enter the combined income from all sources against the monthly rent, exactly as you would for an employed applicant.
The mortgage-condition objection
Landlords often say their buy-to-let lender or insurer forbids letting to benefit claimants. Historically some did. Two things are worth knowing: it is a matter between you and your lender and has not been treated by the courts as a defence to a discrimination claim, and a number of major lenders removed these conditions after the 2020 rulings. If yours still carries one, it is worth asking them to lift it rather than assuming it settles the question.
FAQ
Is it illegal to refuse tenants on benefits?
A blanket 'No DSS' policy is indirectly discriminatory and should be treated as indefensible. Two county court judgments in 2020 made the position clear: in July 2020 York County Court held that refusing an application because the applicant received housing benefit was unlawful indirect discrimination on grounds of sex and disability, contrary to sections 19 and 29 of the Equality Act 2010, and in September 2020 Birmingham County Court reached the same conclusion about a letting agency's blanket policy. Being on benefits is not itself a protected characteristic — the discrimination is indirect, because women and disabled people are significantly more likely to claim.
Are those rulings binding on every landlord?
Strictly, no, and it is worth being accurate about this because a lot of guidance overstates it. Both were county court decisions, and county court judgments do not bind other courts in the way a High Court or Court of Appeal decision would. What they did was establish a clear, well-publicised route to a successful claim, and no subsequent decision has pointed the other way. In practical terms a blanket ban is now an obvious and avoidable legal risk, even though no statute says 'you must accept benefit claimants'.
Can I still decline someone who happens to receive benefits?
Yes — on genuine, evenly-applied affordability grounds. What the case law prohibits is the blanket rule, not an individual assessment. If you apply the same affordability standard to every applicant, count their total income including benefits, and decline because the numbers genuinely do not work, you are on solid ground. The problem arises when benefit income is discounted or the bar is quietly raised for that applicant alone.
Should benefit income count towards the affordability multiple?
Yes. Assess total household income, from whatever source. Excluding Universal Credit or housing element from the calculation while including wages is precisely the practice that produces an indirectly discriminatory outcome, and it is also commercially odd — the housing element is often the most predictable part of an applicant's income.
Can I ask for a guarantor from a tenant on benefits?
You can, provided you would ask the same of any applicant whose income sits at the same level. Requiring a guarantor only from benefit claimants, while accepting employed applicants on identical income, recreates the same discrimination in a subtler form. Set the guarantor threshold by the numbers, not by the source of the income.
Can I put 'No DSS' in my advert?
No. Advertising a blanket exclusion is the clearest possible evidence of the policy the courts found unlawful, and the major portals prohibit it. It is also unnecessary: publishing your actual affordability requirement communicates the same commercial information without excluding a protected group.
Does my mortgage or insurance stop me letting to benefit claimants?
Sometimes a buy-to-let lender or insurer has imposed such a condition historically, and landlords often cite it. That is a matter between you and your lender, and it does not create a defence to a discrimination claim — the courts have not treated 'my lender said so' as an answer. If your mortgage carries that restriction, it is worth asking the lender to remove it; several major lenders dropped these conditions after the 2020 rulings.
How do I verify benefit income for referencing?
A Universal Credit statement from the applicant's online journal is the usual evidence, and it shows the housing element separately. Bank statements or Open Banking corroborate that the money actually arrives. A standard credit check still applies for identity and adverse history, and a full reference verifies affordability against total income in the ordinary way.
Disclaimer: This guide is general information for UK landlords, not legal or financial advice. Law and practice change — always confirm the current position, and take advice on anything that matters. Discrimination law is fact-sensitive and the cases described here are county court decisions summarised for general information. If you are facing a complaint or claim, take proper legal advice rather than relying on this page.