I went to a letting agent and wanting to look around a property. Currently £1025 per month near me. They asked me to complete earnings information and I said I could pay 6 months in advance for the 6month assured short-hold tenancy on a low income and/or have a guarantor. I’m currently receiving universal credit that covers the rent and started a self employed business - one invoice this year for £1000 so far. Also I’ve never missed a rent payment in 12 years with my current landlord at a similar rent, who is selling due to his retirement and has served me a section 21. I’ve also told the agent my family are helping support me at present. I was a professional person on a very good salary in the past.
The letting agent came back saying that I need to have 30x the rent price in income per year to pass checks and rent the property, that they cannot accept a guarantor and they won’t take rent in advance. Essentially I can’t rent the flat.
I feel hard done by because I’ve not been well for sometime with ptsd and complex ptsd, hence low earnings but I’m trying to start this self employed business at present. I’ve told the Lettings agent this too.
I think it’s indirect discrimination under The Equality Act (2010) : “Indirect discrimination occurs when a policy which applies in the same way for everybody has an effect which particularly disadvantages people with a protected characteristic.”
Essentially you can rent if you have £30,750 earnings per year but if you can still pay and take out an assured short-hold tenancy for 6 months and I can pay into the future, I can’t rent. This seems extremely unfair and unjust. The agent too want the 6 month assured short hold tenancy for their landlord, but at the same time say you can’t pay in advance with the changes coming in to the renters rights act where tenancies will become periodic (rolling) without 6/12 month assured tenancies.
It seems rather than make renting more affordable by avoiding the 6 months upfront payments the undesirable effect of the impending legislation is just to exclude low earners from renting with these rules which is obviously far worse.
At this point in time the legislation hasn’t changed so to have a policy where they can’t take 6 months in advance, when this has always been their approach, is appalling.
What do you all think? Would welcome any comments and advice.
I agree, the changes in the RRB will disadvantage many tenants, but labour are not listening.
You can call the income threshold discrimination if you wish, so why not instead borrow on a mortgage & buy a property… oh no… sorry… you don’t earn enough… so maybe you should shout discrimination to the mortgage company too.
Realistically, Landlords have to set an affordability threshold somewhere. Where would you set it?
Not particularly kind - I did have a very good salary and expensive BMW company car and was about to buy but I first suffered serious stress working over 100 hour weeks and then I got cancer some years ago and it put me on a long road to recovery. It could happen to you, god forbid.
But if the tenant can pay the rent and live frugally on a low income I don’t see what business that is for the landlord to set an earning level that someone can live more comfortably on. Average earnings are about what they are asking for this flat and I’m below that with a business I’m starting.
If insurers set 30x earnings when they have to comply with the case law and the impending renters rights act, both of which compel landlords to not turn down universal credit tenants, then they can’t have 30x earnings policies anyway and landlords need to comply with the law. Full stop.
Tbh I’d be the perfect tenant - was a loss adjuster and know how to keep properties in good condition - god I visited enough of them, have never defaulted on rent with good savings and keep the property in good condition, plus got on with all my landlords and a mature 50 year old man and keep properties immaculate without more people in the place. More fool any landlord who doesn’t want me but I’m worried about homelessness presently.
I do feel that the system is wrong but I wouldn’t agree that it amounts to indirect discrimination.
At the end of the day, the landlord has to be confident that their tenant is going to pay the rent. The ‘industry standard’ is the rule that the annual household income needs to be 30-36x the monthly rent and as mentioned above, this could be part of the landlords insurance requirement too.
However, that household income can be made up of earnings, universal credit and any other income you or anyone else living with you has.
Having said that, I do feel like if someone is in receipt of the housing element of UC, and the amount you’re entitled to is enough to cover the full rent on a property, you shouldn’t have to meet the 30-36x calculation because UC is paying the rent.
The problem is, since UC replaced housing benefits the housing element of UC is paid to the claimant and not direct to the landlord so there’s actually no guarantee that the landlord would get the money.
My understanding of the RRB is that a landlord cannot use discriminatory language in their adverts like “No DSS”. And they must not prevent those on benefits from viewing and applying for the property. Most LLs do not have a first come first serve policy. They will still be able to choose the tenant that they feel is most suitable. My properties are in a large town in the South East and when I listed last July, I received 50 people who were interested.
Apologies. I wasnt intending to be unkind, but merely point out that lenders have to set affordability requirements for mortgages, and I am ‘lending’ a tenant my house, so the risk is not dissimilar.
I sympathise for tenants in this situation, but it is not Landlords making. Prices are going up due to a failure of supply of properties. Simples.
Personally, I do not discriminate against anyone, and in fact the tenant I have just moved into one of my properties, is a non-working single mum on benefits. However, whatever an applicants situation, I do rely on tenants being referenced, and the referencing company judges affordability linked to income amount, as is so common in the industry. I dont feel this is unfair. The alternative would be a Landlord disecting your income & outgoings, and that would be time-consuming, and considered intrusive to some.
No one can tell Landlords that they ‘have to rent’ to someone on benefits, regardless of what you think the RRB will achieve. If the Landlord doesn’t want to, they will sell, and invest elsewhere, the net result being another lost rental property, and increasing prices.
I am a relatively new landlord of 2+ years. I admit I don’t fully understand UC but I have read of other landlords issues on this and other forums.
Examples;
UC pays rent in arrears instead of in advance.
Issues with late payments.
Tenants making fraudulent claims and UC claiming it back directly from the landlord.
UC rates frozen from 2020 - 2024 although rents went up each year etc etc.
Whatever the law states, landlords will do what is best for them. As lenders do. Rightly so, it’s massive risk. Landlord is being responsible by mitigating the risk. Unfortunately you can’t have what you can’t afford in this world.
Prices are undoubtedly going up due to immigration because wages are lagging behind rents and according to a capital economics survey the extra houses means demand is higher and way higher than labours house building promise. The fact to the immigration pressure has been year on year with the last 3-4 years being the worst on record and coinciding with the 25% increases in rents we’ve seen. Higher interest rates is keeping rental stock occupied as first time buyers are not entering the market and nobody can save with rents as they are.
An argument as to what set huge rents off was buy to let landlords 20 odd years ago which meant anyone could get 0% deposit mortgages so I think there is give and take in your argument. Also the housing crash that followed.
I think it requires a pragmatic approach of whether the property is mortgaged as to wether 30 times earnings needs to happen, and it’s about the history of the tenants to and if they have defaulted (I’ve never in over 20 years) and mortgage lenders and landlords realising that if they get in this game, follow the legislation to the letter or don’t do it at all, because everyone has to comply with the law and not bend rules. The alternate is you risk actions under the Equality Act (2010) for discrimination which nobody wants.
I agree you need the stock to keep everyone happy for tenants but the way of declining tenants who can pay is not the way forward for the landlord, agent, insurer and mortgage company. They all have to comply with legislation. All it will do is push rents up further and make housing more pricey and that’s not in landlord interest too if houses are only the preserve of those on average or higher earnings and let me tell you i don’t choose to be in this position! Houses or flats are for everyone and we have to live in them all.
I personally think most landlords would way more do themselves a favour if there was direct connections between landlords and renters like on this site, because it’s only when you have a direct connection and understanding a property is the tenants home and not merely being ‘lent it’, that landlords get the best tenants and vice versa.
The thing is if you don’t comply with it and you say things like no dss in adverts or it’s obvious to the tenants you’ve not chosen them because they are on benefits, then that’s breaching case law on the subject and you could find someone very easily pursuing a civil claim under the equally act (2010) even before discrimination of dss tenants is made law under the renters rights act.
I hope pragmatic changes come in banks and insurers that don’t make it onerous on mortgage lenders or insurers to have x30 earnings, such that good misfortunate tenants can still rent and you’ll have good tenants.
Also the best way is understanding the persons personal circumstances and some personal association in renting and knowing them and the fact they won’t default, because that way you stay on the right side of discrimination law and you also get a good tenant who can pay in the best possible relationship.
The thing is people need housing and you can’t not have it. People can’t just go and live in the woods, so the market requires everyone to be responsible.
We are in a time where housing is never any more expensive. Lenders will have to get with the legislation to not discriminate as it will be though an indirect mechanism if they don’t.
Disagree. A property may have zero mortgage, yet the risk of default on rent is still the same. Some landlords choose to take money out and reinvest, others choose to pay off any mortgage. LL should not be penalised due to their business decisions. Likewise it would not be fair for a landlord who has no mortgage to have to charge lower rent.
Are we going to start assessing landlords individual financial affairs?
The risk of default isn’t the same. As if you’ve got someone on £20k with benefits, which is about my situation at the moment, why penalise them in not letting to them when they could be one of the most conscientious tenants you’ll have. Also it’s up to them if they can afford it like me but they choose to live frugally and how they choose to live their life and priorities for spending is their business. Also you don’t know if they are being helped and frankly that’s none of the landlords business anyway.
To say you need £30,750 or 30x rent in the context of no mortgage requiring 30x rent of tenants, when someone can still afford the property on a lot less is really not fair and it penalises and discriminates against benefit tenants.
The way to reduce the risk is have a relationship with the tenants, know the sort of people they are, what they are trying to achieve and been through, have they defaulted before and what are the references and what’s gone on in their lives. If you do it by salary that’s no guarantee they won’t default as they could become in debt or loose a job - all sorts of reasons.
Most people just go on a periodic after the assured tenancy has finished since if they are reliable and pay the rent which really ought to come from a check from the previous landlord (s) then you could almost put them on a periodic straight away.
You cannot have a relationship with a potential tenant as you will not have known them long enough. Previous landlord references cannot be trusted as a landlord might lie to get rid of a tenant. . Housing associations have the majority of benefit tenants, check out how many millions in rent is owed. Even a government survey shows the risk of default is greater with a certain group of tenants
You can take a view and if they’ve paid all their previous rent, come with references and have the ability to pay, what more do you want?
As regards references from past landlords saying all rent paid ok, you can check bank statements to see payments of rent for the 12 years - very easy to do with an itemised statement.
You can’t tar everyone with the same brush and apply prejudice. Everyone has a story. Benefit tenants are working too and on low incomes and more often than not are responsible members of the community. Also I’ve fallen on hard times and was not on benefits for half my working life on a very good salary. Do you put me in with the benefit tenants you don’t think pay?
I think you’re misunderstanding what has been said. From a landlords perspective, they don’t know the prospective tenant so the landlord can’t assume that one tenant is more conscientious than the next. As Colin says, the landlord cannot be expected to form a relationship with every prospective tenant before they decide who to offer a property to, it’s just not practical and that’s why the industry has formed a generic set of criteria to follow - that said, it’s still always down to the specific landlord to make a decision on whether they will take the risk or not.
Bank statements are easily ‘modified’. We had a tenant apply for our property and he had amended his bank statement to make it look as though he was not living in an overdraft.
I agree 100% with this statement but as above, without knowing a prospective tenant personally, a landlord is not going to know every tenants story, and with all due respect, there are prospective tenants that will tell you what they think you want to hear so it’s not a foolproof method either.
You have to form an understanding of who they are . Maybe a relationship is a bit far but you’ve got to take a view on who they are surely. A person who comes across well spoken and polite is a better risk than someone you catch swearing to their friend in the car park in earshot of other people. All that stuff matters.
You ask the tenant to get the bank statement and you ask the bank to email it from an official address or stamp it etc.
As I say, I completely understand why you feel aggrieved but you need to remember, for most landlords, renting a property is a business transaction and emotion doesn’t come into it. It’s about using numbers and data to minimise the risk to the landlord.
A bank isn’t going to email a landlord a copy of someone else’s bank statements. They have to come from the tenant. The only saving grace would be using a system that uses Open Banking but most referencing systems have the option for the applicant to bypass that and upload bank statements instead.