UPDATE: Two courts in England have now ruled that an agent's refusal to allow an applicant to view a property because the applicant was in receipt of benefits was unlawful and indirectly discriminated against the applicant on grounds of gender and discrimination. Read more about this case on Shelter's website.
It is very possible that courts in Northern Ireland would take a similar approach and find that a policy of refusing services to tenants in receipt of benefits is unlawful indirect discrimination.
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High profile English landlords Fergus and Judith Wilson announced that they will no longer offer tenancies to employees on zero-hours contracts. This comes in the wake of their decision to evict 200 tenants who were receiving benefits. With this worrying trend on the increase in England, we investigate whether NI landlords can legitimately refuse to rent to tenants on benefits.
Affordability is a big issue in the private rented sector and a major hurdle to many prospective tenants. The way in which housing benefit is calculated for private tenants has changed drastically in the past six years, due to the introduction of the Local Housing Allowance sy/housing-advice/help-pay-housing-costsstem and government commitments to reforming the welfare system.
These changes have made some landlords wary of renting to tenants in receipt of benefits. It’s common for a tenant to receive significantly less housing benefit than the tenant is expected to pay in rent. While there is some assistance available to these tenants, in the form of Discretionary Housing Payments, landlords are concerned about what they may see as an increased risk of rent defaults amongst tenants relying on benefit payments. People often assume that landlords who refuse to accept housing benefit are operating a discriminatory policy, but this is not the case.
Landlords who refuse to accept tenants on benefits
There is no law that specifically says a private landlord cannot refuse a property to a tenant who will be claiming benefits. However, it is very possible that a blanket policy of refusing to let to tenants in receipt of benefits will be viewed as indirect discrimination. Indirect discrimination on certain grounds is unlawful unless the person with the discriminatory policy can provide reasonable justification.
Landlords have cited a number of reasons for refusing to rent to tenants in receipt of benefits, including:
- procedural and administrative delays with processing claims can lead to a build up of arrears
- housing benefit is paid 4 weekly and in arrears, while rent is generally demanded in advance and on a monthly basis – reconciling these systems can cause difficulties for tenants and landlords
- many mortgage lenders impose conditions on the mortgage forbidding a landlord from renting to a tenant in receipt of benefits
- insurance companies can impose higher premiums on properties occupied by tenants on benefits
- local housing allowance rates are set at the lower end of the rental market and tenants may have difficulties topping up the shortfall between their benefit payment and their rent.
Evidence in England shows that increasing numbers of private landlords are not renting to HB claimants. The National Landlords Association gave evidence to the House of Commons Works and Pensions Committee stating that “...in the last three years there has been a 50% drop in the number of landlords taking people who are on benefits. It is now down to only one fifth; 22% of our landlord members whom we surveyed say they have LHA tenants, and 52% of those surveyed said they would not look at taking on benefits tenants.”
There are also worries that the impact of Universal Credit will make renting to HB claimants even less attractive.
Are landlords discriminating illegally against benefit claimants?
Anti-discrimination legislation protects against discrimination on certain grounds; such as race, religion, gender, sexuality and nationality. Income or employment status is not a protected ground.
Our anti-discrimination legislation protects people from both direct and indirect discrimination. Indirect discrimination occurs where a policy, which is not discriminatory in itself, if likely to impact disproportionately on people who are protected under equality laws. Some people may argue that this type of policy could be seen as indirect discrimination if, for example, housing benefit claimants were predominantly female or predominantly from an ethnic minority group. However, this type of discriminatory practice can be legal if it can be reasonably justified. A landlord whose mortgage lender imposed these conditions on him or her would be justified in adopting this practice.
Tenants in Northern Ireland have a right to apply for housing benefit
Private tenants in Northern Ireland have a right to apply for housing benefit. The Tenancy Terms Regulations (NI) 2007 require that landlords provide tenants with a tenancy statement which must include information explaining the tenants right to apply for housing benefit to help with rental payments.
While all tenants can apply for housing benefit, not all tenants will receive a payment. Whether or not they will receive any benefits will depend on the tenant’s individual circumstances.
Once the landlord has granted a tenancy, a tenant can apply for housing benefit. To be eligible for housing benefit, claimants must have a legal obligation to pay rent. The Housing Executive asks all private tenants to have their landlords or agents complete a section of the form to evidence this obligation. If the landlord refuses to sign the Certificate of Occupation, the Housing Executive will need to accept other proof of the tenancy. Tenants could submit a tenancy agreement, rent book or evidence of a history of rental payments to show that a tenancy does in fact exist.
The situation in Northern Ireland
Demand for private rented sector accommodation is continuing to grow against the backdrop of growing waiting lists for social housing and high levels of repossession. The NI Family Resources survey reports, between 1991 and 2001 there was a 505% increase in usage of the private rented sector with nearly one in five people now renting privately.
Recent research suggests that the private rented sector is increasingly accommodating low income and unemployed households; the very people who, traditionally, would probably have been living in social housing. Historically, the social rented sector housed the highest proportion of households on a low income. However, this changed in 2011-12 and the private rented sector now has the highest proportion of households on a low income.
Considering the demands for private rented accommodation in Northern Ireland, it would be worrying if landlords here followed suit in refusing lettings to HB claimants on a wide scale. Two significant court cases in England have found that it is unlawful to refuse tenants to service because they are in receipt of benefits, and it is very possible that a court in Northern Ireland would reach a similar position.
Finding landlords who will accept tenants on benefits
Tenants on benefits should contact Smartmove who have a database of landlords who are happy to accept tenants in receipt of benefits. The officers at Smartmove can also help tenants make a claim for housing benefit and Discretionary Housing Payments.
Further reading
The House of Commons Library has produced a briefing on this issue.
Kate McCauley — Chief Executive