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A landlord’s guide to renting to DSS and Universal Credit tenants

Millions of households in the UK receive government help with paying their rent, but stereotypes and assumptions mean not all landlords are comfortable renting to benefits claimants. But due to changes under the Renters’ Rights Act, discriminating against certain types of tenants can now lead to heavy fines.  

To clarify what these formal protections mean in practice, we look at rental discrimination under the Renters’ Rights Act and explain what you can do to protect your rental income.  

28.08.26

By Clare Waring

This content was factually correct when written but may not reflect current developments or information.

Guide to DSS tenants

What does 'DSS tenant' mean today? 

A DSS tenant was someone whose rent was covered by Housing Benefit paid by the Department of Social Security (DSS). The DSS was renamed in 2001 and is now known as the Department for Work and Pensions (DWP). 

The term DSS has remained commonly used within the property industry and is often used to describe tenants receiving the housing element of Universal Credit (UC) or Housing Benefit (from the legacy system).  

How much is Universal Credit (housing element) and Housing Benefit?

The housing element of UC and Housing Benefit use the Local Housing Allowance (LHA) to calculate how much someone can receive to cover rental costs. The LHA varies according to: 

  • Age 

  • Whether the claimant lives alone or with others (their ages and sexes also affect LHA) 

  • Rental costs in the area 

  • Whether the tenant has any disabilities 

If you want to know what tenants are eligible for, you can check LHA rates for your area at: DirectGov, Local Housing Allowance rates.  

Is it illegal to refuse tenants on benefits in 2026? 

It is illegal to refuse tenants solely because they are claiming benefits. The Renters’ Rights Act formalises the term ‘rental discrimination’ and sets out clear guidance about what this means:  

“If you are a landlord in England, you must not do anything to make a tenant less likely to rent a property (or prevent them from renting it) because they have children or get benefits. This is called ‘rental discrimination’”. * 

All prospective tenants must go through the tenant referencing process, which verifies affordability and their legal right to rent (applicable in England). As part of this process, you can also request references from previous landlords to assess reliability. If tenants fail part of this process, this can be grounds for refusing their application to rent, but you will need evidence to show why they have been rejected.  

If you’re found to be discriminating against certain types of tenants, you can be fined up to £7,000 for each offence you are found guilty of.  

Why do some landlords worry about renting to benefit claimants? 

One of the biggest worries is the risk of rent arrears. While that’s a risk with any tenant, administrative delays in issuing benefits can slightly increase that risk. Additionally, under the UC system, tenants are paid the housing element directly, which increases the risk of further delays on top of any clerical issues. Some tenants may also struggle with budgeting, which can cause additional challenges.  

Similarly, there may be a shortfall between what a tenant receives in LHA and the actual cost of rent, raising concerns about how they will cover it. However, affordability checks should highlight any genuine reason for concern.  

Can Universal Credit be paid directly to the landlord? 

Yes, the housing element of Universal Credit can be paid directly to landlords as a ‘managed payment’ under an alternative payment arrangement (APA). This is mainly aimed at tenants who need extra help managing money.  

An APA can be arranged at any point during a UC claim but is often considered if a claimant is in arrears or continually underpays. Other factors also play a part, for example, if the person is dealing with addiction, learning difficulties, or mental health issues that make managing money stressful or difficult.  

Tenants can request that payments be made directly to the landlord by logging into their UC account and leaving a message, or by speaking with their case manager. Landlords can also request this if a tenant has repeatedly underpaid or is in arrears by making an application. 

Do mortgages and landlord insurance restrict DSS tenants? 

Historically, some buy-to-let mortgages and insurance policies did prevent landlords from renting to tenants receiving benefits. This is no longer the case, as such discrimination direct contradicts Renters’ Rights Act legislation.  

When it comes to your landlord insurance, you’ll be asked to state your ‘tenant type’ (for example, whether they’re a professional or in receipt of UC). Not providing accurate information can void your policy, so you won’t be able to make a claim.  

Fundamentally, as long as tenants are properly referenced and any policy conditions are met, the policy will be valid.  

How to protect your rental income 

As a landlord, it’s your responsibility (or your letting agent’s) to check potential tenants can afford their rent, regardless of how they pay it. But, while there’s a risk that any tenant’s financial situation can change (such as redundancy), you can protect your rental income by: 

  • Carrying out tenant referencing – this includes affordability checks, references, and their right to rent (if in England).  

  • Using a guarantor – if you’re particularly concerned about financial risks (for example, if someone is a first-time renter), you can ask your tenant to nominate a guarantor who will cover any rent if the tenant can’t. Guarantors must agree to this in writing and can be sued if they also decline or fail to pay rent that’s owed. You should also ensure that any guarantor passes higher affordability checks.  

  • Including legal & rent guarantee insurance in your landlord policy – as long as you meet any conditions of the policy, and tenants have undergone tenant referencing, legal & rent guarantee covers payments if a tenant defaults or is in arrears while assisting you with regaining possession of your property.  

How do I evict a tenant who is in arrears? 

If you’re faced with the worst-case scenario and a tenant simply stops paying rent (and refuses an APA), you may have no choice but to issue a Section 8 notice and start the eviction process. If you also have landlord legal expenses insurance, you may be able to make a claim under it to help cover solicitor and court costs and to help you regain possession of your property. 

Landlord insurance to suit your needs

No matter how your tenant pays their rent, landlord insurance provides a safety net that can protect you from missed payments and malicious damage, as well as cover the building itself and any contents you provide. To find out more about how a tailored policy can help you protect your assets.

Speak to us:  01603 216399

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