The judgment follows almost two years of progress in the housing industry which has seen the practice become less tolerated.
In October 2018, Mortgage Solutions reported the case of landlord Helena McAleer who was told to evict her vulnerable tenant or pay £2,500 in early repayment charges by NatWest after the lender found out the tenant was claiming housing benefit.
This led to a nationwide campaign by McAleer and supported by Mortgage Solutions to end the discrimination from lenders that included demonstrations outside bank branches.
However, some landlords and letting agents have maintained the ban on these tenants.
In the latest case heard at York County Court on 1 July, District Judge Victoria Mark ruled the practice was against the Equality Act 2010.
“Rejecting tenancy applications because the applicant is in receipt of housing benefit was unlawfully discriminating on the grounds of sex and disability,” she said.
It is the first time a case overseeing the discrimination of tenants receiving housing benefit has been heard by a UK court.
The case involved a single mother who in November 2018 was denied the opportunity to view a property in York because the letting agent had a blanket ban on accepting tenants receiving housing benefit.
This made her homeless and she was forced to move into a hostel with her children.
Backed by charity Shelter, she subsequently lodged a claim calling for a declaration on the lawfulness of the policy and for damages.
Since the case was lodged the agent has ended its practice admitting the policy was not justified.
In the ruling, District Judge Mark also ordered the letting agent to pay £3,500 of damages to the claimant and pay the legal costs.
Lenders may need to act
A spokeswoman for UK Finance told Mortgage Solutions that lenders would need to consider if any changes needed to be made to existing contracts.
“For some time, lenders have not placed restrictions on landlords letting to benefit claimants in new contracts, therefore any landlord wanting to let to benefit claimants will be able to find a lender that will allow this,” she said.
“It will be the responsibility of lenders to review their existing contracts in the light of this new ruling to identify if any amendments are required.”
Warning of legal action
Shelter said the case was “a clear warning to other landlords and letting agents that they risk legal action if they continue to bar housing benefit tenants from renting”.
A survey conducted by YouGov for Shelter found that 63 per cent of private landlords said they do not let, or prefer not to let, to people who receive housing benefit.
“Research done by Shelter shows that ‘No DSS’ policies put women and disabled people at a particular disadvantage because they are more likely to receive housing benefit,” it said.
“The ruling is a major blow to this unfair practice.”
Shelter solicitor Rose Arnall who led the case said the ruling clarified that discriminating against people in need of housing benefit was not just morally wrong, but also against the law.
“Shelter has been fighting ‘No DSS’ for nearly two years, and this win in the courts is what’s needed to end these discriminatory practices for good,” she said.
“This sends a huge signal to letting agents and landlords that they must end these practices and do so immediately.”
Shelter chief executive Polly Neate added that the momentous ruling “should be the nail in the coffin for ‘No DSS’ discrimination”.
She continued: “It will help give security and stability to people who unfairly struggle to find a place to live just because they receive housing benefit.”
Jane’s landmark case was supported by the Equality and Human Rights Commission, the Nationwide Foundation and barrister Tessa Buchanan at Garden Court Chambers.
No landlord should discriminate
Landlord trade body the National Residential Landlords Association (NRLA) backed the ruling, noting that landlords should not have blanket policies that discriminate against those in receipt of benefits.
NRLA policy director Chris Norris said: “No landlord should discriminate against tenants because they are in receipt of benefits.
“Every tenant’s circumstance is different and so they should be treated on a case by case basis based on their ability to sustain a tenancy.
“More broadly, the government can also support this work by ensuring benefits cover rents entirely. It should also convert the loans to cover the five-week wait for the first payment of Universal Credit into grants.”
Minister for rough sleeping and housing Luke Hall added: “Everyone should have the same opportunity when looking for a home and discriminating against someone simply because they receive benefits has no place in a modern housing market.
“That’s why we have been working with landlords and letting agents to help ensure prospective tenants are treated on an individual basis and that benefits are not seen as a barrier to giving someone a place to live.”