Renting to tenants on benefits — What landlords can and cannot do

“No DSS” policies — refusing to rent to tenants receiving housing benefit or Universal Credit — have been found unlawful by courts and will be explicitly banned under the Renters’ Rights Act from 1 May 2026. England landlords need to understand what they can and cannot do when a prospective tenant is on benefits. Reviewed March 2026.

What the rule is

Courts in England have consistently held that blanket “no DSS” or “no benefits” policies amount to indirect sex discrimination under the Equality Act 2010, because they disproportionately affect women (who are more likely to be in receipt of housing benefit). The Renters’ Rights Act goes further: from 1 May 2026, it will be explicitly unlawful to refuse to let to a tenant because they are receiving, or entitled to receive, housing benefit or Universal Credit housing costs.

When it applies

• Any time a landlord or agent declines an applicant because they are on benefits
• Advertising that states “no DSS”, “no housing benefit”, “employed only”, or equivalent
• Applying eligibility criteria that automatically exclude benefit claimants (e.g. “rent must be less than 30% of gross income” applied without considering Universal Credit)

What landlords must do

• Do not refuse applicants solely because they receive benefits
• Do not include “no DSS” conditions in advertising or tenancy agreements
• Apply referencing criteria consistently — assess benefit claimants’ total income (including UC/LHA) alongside employed applicants
• Understand how Universal Credit housing costs work — the housing element is included in the standard UC payment
• If concerned about rent arrears risk, explore options such as requesting Alternative Payment Arrangements (APA) from DWP so rent is paid directly to you

Understanding Universal Credit and housing payments

Under Universal Credit, housing costs are included in the tenant’s monthly payment and are paid to the tenant by default. Landlords can request an Alternative Payment Arrangement (APA) from DWP in certain circumstances, which directs the housing element straight to the landlord. Managed payments are available for tenants in financial difficulty.

Local Housing Allowance (LHA) sets the maximum DWP will pay for private rents, based on the broad rental market area. LHA rates are often below market rents, meaning tenants on benefits may need to top up from other income.

What evidence to keep

• Records showing referencing criteria were applied consistently to all applicants
• Any correspondence where an applicant was declined, with documented objective reasons
• Evidence that benefit claimants were not automatically excluded from advertising

Common mistakes

• Advertising “employed only” or “no benefits” — this is discriminatory advertising, unlawful before and after 1 May 2026
• Assuming UC payments are unreliable — UC is a government payment; the risk of rent arrears is no higher than with employed tenants as a rule
• Not knowing about APAs — direct payment arrangements are available and underused
• Setting rent above LHA without considering the full picture — this isn’t discriminatory in itself, but automatically rejecting LHA claimants is

What changed on 1 May 2026

The Renters’ Rights Act makes it explicitly unlawful to refuse a tenancy to someone because they are in receipt of, or entitled to, housing benefit or Universal Credit. Local authorities can enforce this with civil penalties. The rent in advance cap (maximum 1 month) also affects how some landlords managed risk with benefit claimants previously.

FAQ

Is a blanket “no benefits” policy unlawful? Yes — courts have found such policies constitute indirect sex discrimination, and the Renters’ Rights Act makes it explicitly unlawful from 1 May 2026.

Can I still require a guarantor from a benefit claimant? You can require a guarantor in the same circumstances as you would for an employed applicant on a similar income. Requiring a guarantor only from benefit claimants could itself be discriminatory.

How do I get rent paid directly? Contact the DWP to request an Alternative Payment Arrangement. You can also use the Landlord Portal on gov.uk to manage claims.

What if LHA doesn’t cover my rent? LHA rates are set by the government and are often below market rents. This doesn’t make it unlawful to charge market rent, but landlords should understand that LHA tenants may have a shortfall to cover.