The claim came after a report by housing charity Shelter and the National Housing Federation (NHF) found five of England’s top letting agents actively discriminate against tenants on housing benefit.
In an undercover investigation 149 regional letting agent branches were called by researchers posing as prospective tenants.
Haart was found to be the worst offender out of the six big brands investigated, with an outright ban on housing benefit tenants in a third of the branches called.
The only letting agent not to have any bans in place was Hunters.
Overall one in 10 agents had a branch policy not to let to anyone on housing benefit, regardless of whether they could afford the rent, according to the research.
Almost half of branches said they had no suitable homes or landlords willing to let to someone on housing benefit.
The two housing organisations said the findings were “appalling” and have joined forces to urge letting agents and landlords to remove these bans.
Potentially illegal policies
The policies are also likely to breach discrimination law, according to Shelter and NHF.
There are an estimated 1.64m people who rely on housing benefit to help with expensive private rents – and the majority are women – the two organisations said.
And people who receive disability benefits are also three times more likely to need a housing benefit top-up.
As a result, under the Equality Act 2010, letting agents who reject housing benefit tenants outright could be at risk of breaking the law because of indirect discrimination against women and disabled people.
Polly Neate, chief executive of Shelter, said: “This ugly undercurrent of discrimination is wreaking havoc on hundreds of thousands of people’s lives.
“‘No DSS’ is an outdated and outrageous example of blatant prejudice.
“Private renting is now so expensive that many people simply can’t get by without some housing benefit, even if they’re working.
“Rejecting all housing benefit tenants is morally bankrupt, and because these practices overwhelmingly impact women and disabled people, they could be unlawful.”
Lenders also discriminate against housing benefit tenants
A spokesman for Haart denied it was the agents policy to refuse housing benefit tenants – but added that some landlords could not rent to such tenants because of lender and insurer policies.
He said: “Anyone who passes referencing checks is able to rent properties listed with our branches.
“We do regularly arrange tenancies for those claiming housing benefits and currently have 112 tenancies where this is the case.
“In certain instances, landlords may not be able to let properties to housing benefit tenants for a variety of reasons including lending and insurance criteria.
“Government policy on housing benefit, with payments made in arrears, has also made it more difficult for landlords who require rents to be paid in advance.
“Where landlords are not able to let to housing benefit tenants, we explain this and direct them to properties that are available.
“Where no properties are available we take their details to contact them when properties become available.
“This research has brought to light that some of our branches are misinformed and we are working to ensure that this policy is being followed across our network.
“We are sorry for any occasion where this has not been the case.”
Mortgage brokers agreed that many lenders turned down landlords who let to housing benefit tenants.
David Hollingworth from broker L&C mortgages said: “Although it should be far from impossible to place a case where the tenants will be in receipt of housing benefit there are examples of lenders that will stipulate it as being unacceptable.
“Some may prefer the agreement to be directly with a housing association, for example, whilst others will preclude tenants receiving housing benefit.
“Whilst that criteria is up to the lender, in the same way it may limit the type of property that it’s prepared to lend on, it will naturally reduce the range of options for landlords.
“If that adds to any existing reticence on the part of the landlord then it does run the risk of limiting benefit recipient’s choice of property, irrespective of their track record in meeting rental payments.”
Housing benefit paid in arrears
David Cox, chief executive of trade body ARLA Propertymark, also said the letting agent policies were a result of the government benefit systems, as well as lenders that refuse mortgages to landlords letting to housing benefit tenants.
He said: “This is a systemic problem with how housing benefit works.
“Rents are paid in advance, whereas housing benefit is paid in arrears, and therefore with such a shortage of rental accommodation, landlords and agents will naturally choose a tenant who can pay the rent when it is due, rather than a tenant who is always a month in arrears.
“We have called on government time and time again to resolve this problem.
“To make the situation worse, many lenders also have a clause in their buy-to-let mortgage agreements which prevent landlords from letting to housing benefit tenants.
“This situation does not exist because of landlords or letting agents, it is a systemic problem caused by government and the banks.”
A spokesman for the lender trade body UK Finance said: “Most lenders do not place restrictions on landlords letting to benefit claimants, with each lender’s policy varying according to their commercial business model.
“Any landlord wanting to let to benefit claimants should be able to find a lender that will allow this.
“We always encourage individuals to speak to their lender if they have any concerns and research the market to find the best possible deal for their needs.”