Lets be honest mentioning DSS tenants strikes fear into some private landlords. Well it doesn’t always have to be like that. The media hasn’t always painted DSS Tenants in good light, but i know many landlords, myself included who have had positive outcomes from renting to DSS tenants. I hope to outline such positives.
1) DSS TENANTS ARE FREE
If you know where to look of course. Resources like loot, gumtree, online notice boards can offer free and direct access to tenants. Or simply putting in a single line advert for your rental property will lead to you being bombarded with enquiries as it has happened to myself.
With not using an agent you will have to get up to speed with referencing your potential tenants. With the introduction of ‘right to rent’ you will need to do the necessary checks to make sure your tenant qualifies for this. However enough information is on the internet to help you through this. We will do a blog at a latter date going through the different referencing methods and the most effective.
The great thing about finding tenants this way, it will save the landlord loads of money in letting agents fees. Where fees are normally charged from 6% to 15% of the annual rent, where an extra fee is required for management type services. I can tell you with experience its not rocket science managing you’re own property. If you can get to grips with this you can save tonnes of money – so to speak.
2) SUPPLY AND DEMAND
A lot of Landlords and Letting Agents refuse to deal with DSS tenants, but that means a higher rent is achievable as demand is greater than supply. This is very true and you can capitalise on this and come off quids up.
When we advertise properties we will consider all tenants even DSS ones. We know that a proportion of these DSS tenants are actually working, have stable jobs and can provide full references but they are getting topped up with housing benefit. In these cases they are probably on a lower income however, in my opinion we found these type of tenants in most cases to be excellent.
Remember not all DSS tenants are ‘drug taking down and outs, who will wreck your property’. You got to ask the right questions, find out a bit more about them, dig a bit deeper and you may indeed find a gem.
As demand out strips supply with these tenants you will find that these type of tenant can pay ‘just that bit more’ if you give them a chance.
3) RELIABLE INCOME
The good thing about DSS tenants is that their source is generally reliable because it comes direct from the government. That in some cases seems to be more reliable than a salary at the moment. With economic crisis and uncertainty in the market a reliable income is important.
4) PAYMENT GOES STRAIGHT TO THE LANDLORD
Housing benefit payments can be arranged that it goes directly into the landlord’s account which is extremely convenient in keeping track off rent payments. It avoids the sometimes painful staking task of collecting rent and gives you somewhat more control. With the recent introduction of Universal credit which is a single payment combining different benefits. At this stage i believe it doesn’t allow landlords to receive the rent part of the benefit directly. It will be paid to the tenant, who will then be required to pay the landlord. Not an ideal situation for the landlord if you like your rent paid directly. As a landlord I would ask potential tenants how are they receiving their benefits. Whether directly as housing benefit or as Universal credit.
5) £5,000 TO LET TO DSS TENANTS
More and more councils to incentivise private landlords to get them on board. Cash payments of up to £5000 are being offered to private landlords to accommodate homeless families.
Many councils are now advertising cash incentives, here are some that we came across:
- Westminster council in London are paying up to £4000 sums with two or more bedrooms
- Haringey are offering one off payments of £3000 for a 2-year tenancy
- Tower Hamlets is paying £2500 for one bedrooms leased to them for two years and and £4000 lump sums with two or more bedrooms
- Barnet are offering one off payments of £3000 for a 2-year tenancy
- Southward are offering one off payments of £3000 for a 2-year tenancy
With increasing private sector rent rises and the LHA rent freeze councils are putting their hands in their pocket in incentivise landlords to stimulate this end of the lettings market. It seems for longer tenancies the bigger the lump sum payment.
We’ll be keeping an eye on these for a later time.
CONCLUSION
With the economic crisis and uncertainty with Brexit I believe you can’t rely solely on the private rental sector anymore. People earning over £100k + are losing jobs as much as lower income workers. I understand that too many landlords and agents don’t take DSS tenants. But there are many good DSS tenants that can be found for the reasons stated above. They can also be found for free if you know where to look. They are being discriminated more on stigma than reason and if you can understand this you can have a successful buy-to-let with the benefits of zero letting fees.
