Tenants on Benefits: How to Make It Work
- 3 hours ago
- 4 min read
A letting agent was recently dismissed after reportedly making a derogatory comment about tenants on benefits. The incident reflects a negative view that still exists in parts of the rental market, but it also shows the reputational and legal risks of judging applicants by their income source rather than their individual circumstances.
Tenants who receive benefits are not one uniform group. They may be working and receiving Universal Credit to top up a low income, living with a disability, caring for children or receiving temporary support after a change in circumstances.
For landlords and letting agents, the right approach is to assess whether an applicant can afford and sustain the tenancy, then use practical safeguards to manage any genuine risk.
Understand the law on rental discrimination
Landlords and letting agents in England must not refuse to rent to someone simply because they receive benefits. This includes:
Refusing a viewing
Withholding information
Making an applicant less likely to secure the property
Instructing a referencing company to ignore benefit income.
The rule also applies to anyone acting on a landlord’s behalf.
Blanket phrases such as “no benefits”, “no DSS” or “professionals only” should not appear in listings or internal policies. A mortgage term that prohibits renting to people on benefits is generally unenforceable under the new rules.
This does not mean that landlords must accept every application. They can still carry out affordability, credit and referencing checks, provided they apply fair criteria and count benefits as income.
Assess the person, not the payment method
The safest and most useful approach is to apply the same core process to every applicant. Consider:
Total household income, including earnings and benefits
The applicant’s regular outgoings
Credit history and previous rent payments
The amount of housing support available
Any gap between the benefit entitlement and the rent
How the applicant plans to cover that gap
Do not assume that employment income is automatically more reliable. Jobs can end, hours can change and businesses can fail. Benefits can also change, but what matters is the applicant’s complete financial position and their track record of managing housing costs.
Use a written affordability policy so staff make consistent decisions. Avoid setting a higher income threshold for a tenant simply because part of their income comes from benefits.
Check the Local Housing Allowance rate
For many private tenants, the housing element of Universal Credit or Housing Benefit is linked to the Local Housing Allowance rate. This depends on the area, the household’s bedroom entitlement and the applicable property size. The tenant may receive the actual rent or the relevant LHA amount, whichever is lower.
Check the current rate for the property’s postcode and compare it with the advertised rent. Do not treat the result as the applicant’s entire affordability assessment because they may have earnings, savings or other income to cover a shortfall.
However, a large unexplained gap between the housing support available and the rent deserves a sensible conversation before the tenancy begins.
Ask for the right evidence from tenants on benefits
Applicants may need to provide evidence of their entitlement and wider income. This might include a Universal Credit statement, award notice, bank statements or evidence of employment.
Only request information that is relevant to the affordability decision. Explain why you need it, store it securely and apply the same standards to comparable applicants.
Make sure the tenancy agreement clearly separates rent from utilities, service charges and any other payments. This helps the tenant provide accurate housing cost evidence for a Universal Credit claim.
Use guarantors fairly
A guarantor can give the landlord additional protection, but it should not become an automatic extra hurdle for every applicant receiving benefits.
Require one where the same financial evidence would lead you to request a guarantor from another applicant, such as a low income, limited rental history or weak credit record. Do not insist on a guarantor merely because the tenant receives Universal Credit.
Where a guarantor is appropriate, check that they understand the extent and duration of the guarantee. Give them the tenancy agreement and guarantee document before they sign and recommend that they seek independent advice.
Explore council support
Local authorities may operate schemes that help tenants access the private rented sector. Depending on the area, these can include:
Rent guarantee arrangements
Landlord incentive payments
Tenancy support services
Help with rent in advance
Tenants receiving Housing Benefit or the housing element of Universal Credit may also be able to apply for a Discretionary Housing Payment. This can sometimes help with a deposit, rent in advance or a temporary shortfall between benefit entitlement and rent. Awards are discretionary, so they should not be treated as guaranteed long-term income. Build relationships with local housing teams so you know which schemes operate in your area.
Respond to arrears early
When renting to tenants on benefits, do not wait until several months of rent have built up. Contact the tenant as soon as a payment is missed and establish whether the issue is temporary, administrative or part of a wider affordability problem.
Agree a realistic repayment plan where appropriate and confirm it in writing. Signpost the tenant to their council, Citizens Advice or an independent debt adviser. Where the criteria apply, consider requesting a managed payment or rent arrears deduction through Universal Credit.
A calm, early conversation is usually more productive than threats or assumptions about why the payment was missed.
Train staff and review agency language
Make sure all staff understand the difference between risk assessment and discrimination. Review:
Telephone scripts
Referencing criteria
Landlord instruction forms
Applicant emails
Staff training materials
Relationships with referencing and insurance providers
Even an informal remark can damage the agency’s reputation and provide evidence of a discriminatory approach.
Focus on sustainable tenancies
Renting to a tenant on benefits can work in the same way as any other successful tenancy: assess affordability properly, communicate clearly and respond early when circumstances change. The strongest safeguards are not blanket bans. They are accurate affordability checks, good referencing, realistic rent levels, reliable records and a professional relationship with the tenant.
For help with the administration of tenancy agreements and many other aspects of property management, talk to Executive Property Management Solutions on 0208 5757630.
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