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Renting to DSS tenants can be a good way to minimise vacancies for your buy to let property. However, they also come with potential downsides. As such, landlords and property investors need to know the ins and outs of how to find and secure DSS tenants as well as the potential pros and cons of targeting this segment of the rental market.
DSS stands for Department of Social Security. DSS tenants then are people that receive housing benefits from the council to support them through periods of financial difficulty. Typically this is due to unemployment, disability, or single parents status.
These housing benefits are provided by the government in the form of a monthly allowance for living expenses which also include contributions towards their rent. DSS or Department of Social Security was officially renamed DWP (Department for Work and Pensions) in 2001. However, the term DSS has stuck around since then. It’s important to note that DSS in this context refers to the same thing as DWP.
The process to secure a DSS tenant is much like getting a regular tenant however there is one additional step involving the pre-tenancy determination form.
The tenant will need to enquire as normal, you’ll want to organise a viewing, and if the prospective tenant likes the property and the landlord is happy to proceed then a pre-tenancy determination form needs to be completed and handed to the tenants housing officer.
The council will then determine the house value and assess the tenant’s situation before making a rental offer. This rental offer will cover part or even all of the rent amount depending on the circumstance and the cost of the rent.
Once this step has been completed, the landlord will need to draw up a tenancy agreement as normal, and the tenant will be will need to review and sign it. At this point, the tenant’s housing officer will also typically ask for a copy of the tenancy agreement or at least want to view it once everything is signed, then payments can begin.
Each local council operates slightly differently. Most of them will pay the housing benefit allowance to the tenant themselves and the tenant will be responsible for paying their rent. However, some councils may allow direct payments to the landlord.
This is often dependent on the tenant’s situation as some tenants may be more suitable for managed payment arrangements. You can find out more about managed payments and how to apply at Gov.UK.
As a landlord, it is your responsibility, whether they are a DSS tenant or not, to thoroughly vet potential tenants and ensure that they can afford their rent regardless of how they are meant to pay it.
The process of screening and referencing your tenants could include running an affordability check and asking for references from previous landlords. And of course, you’ll want to make sure that they have the ‘right to rent’ in the first place.
If a potential tenant has a history of problems keeping up with their rental payments then it may be worth investigating managed payments before dismissing their application.
When it comes to finding a DSS tenant one solution is to get in contact with your local council and let them know. Many local authorities don’t have enough housing stock. And so they often rely upon private landlords to cover these surplus accommodation needs.
If this is the case with your local council, then they may very well be able to supply you with a steady source of tenants. Similarly, if you are interested in renting to DSS tenants, then make sure that when you’re advertising online that you’ve made it clear that you’re open to applications from DSS tenants.
There could be many reasons why any tenant might fall behind on the rent. Often it is to do with personal circumstances getting in the way.
If you have a tenant that receives housing benefits or Universal Credit and they stop paying then you can likely apply for managed payments. As already mentioned before, a managed payment essentially means that you will receive the rent payment directly from the DWP as opposed to it going through the tenant. In order to make a claim, your tenant needs to have missed at least two months’ worth of payments so far.
If you don’t want to investigate managed payments, then your only other alternative is to go through an eviction. To do this you will need to follow the usual procedures (for instance, using a section eight notice.)
DSS tenants have historically had it tough. The majority of landlords are unwilling to rent to them simply because of the potential complications that might arise.
On top of this, DSS tenants as a whole have a bit of a bad reputation. However, there are numerous legitimate and responsible tenants that desperately need housing. And by serving this underserved market you can reduce the chances and times of vacancies.
Plus, by understanding the rules surrounding things like managed payments and the process of securing tenants you can also mitigate (though not get rid of) potential risks surrounding renting to DSS tenants such as rent arrears or rogue tenants.
Ultimately, though, whether or not you select DSS tenants for your rental comes down to your personal situation and whether or not your property is suitable.
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