Can Landlords evict or refuse Tenants on benefits?

Last months BBC’s Panorama identified the increasing number of people being asked to leave private rented accommodation once their fixed term Assured Shorthold Tenancy comes to an end. Whilst the programme focussed on the difficulties some tenants were having finding alternative accommodation after their Landlord had obtained possession, an interesting point was raised regarding tenants on benefits. 

Landlord, Fergus Wilson, who owns 1000 properties in the South East, has evicted 200 tenants. The reason being that the tenants were on benefits and Fergus Wilson believed those tenants were at a greater risk of defaulting on rent payments. The decision was made to evict them, in the correct manner, to reduce the risk of rent arrears accruing. 

An obvious question arises, can a Landlord evict or refuse to accept a tenant simply because they are in receipt of benefits? 

At the present time, there is no legislation to prevent this, subject to any arguments on discrimination. However, you may not be aware that such legislation was proposed in the House of Commons in the form of a Bill. A Bill is a proposal for legislation which, if it passes through the required procedure and is approved, becomes a new law/legislation. This Bill, the Regulation of the Private Rented Sector Bill, sought to ensure that Landlords could not refuse a tenant simply because they were in receipt of state benefits. If the Bill became law, Fergus Wilson, and many other Landlords would be in trouble. 

So what has happened to the Bill? 

Whilst the Bill passed its first reading in the House of Commons, it did not complete its passage through Parliament. To complete its passage, a Bill must be read in the House of Commons 3 times, and complete a further 3 readings in the House of Lords. To become law, a Bill must complete its passage before Parliament closes for the summer. Fortunately, as no extra time was granted to consider the Bill, it will not be considered when Parliament reconvenes in September. 

What does this means for the future? 

You can sigh a breath of relief as the Government is not going to force you to accept tenants on benefits if you do not want to. However, there is nothing to stop MPs in the future seeking a Bill to ensure that Landlords cannot refuse or evict tenants because they are on benefits. If it does, I will post an update on our website, so keep an eye out. 

Will Landlords be forced to accept tenants on benefits? 

Many Landlords are happy to accept tenants on benefits and experience no difficulties. There are some Landlords, however, who have had bad experiences of tenants on benefits because they did not pay their rent. These Landlords are then reluctant to accept tenants on benefits in the future. A recent BBC report can only add to that reluctance as research found that between April and November 2013 only 41% of tenants on housing benefits had paid their rent in full. This means a staggering 59% of tenants (300,000 in total) were in arrears, with 39% only making some contribution to the additional rent but 20% paying nothing at all. 

That being said, Landlords can have as much difficulty obtaining rent from tenants who are not on benefits and largely it is luck of the draw whether you get a good tenant who will pay you on time. 

Whilst Landlords should not impose a blanket ban on tenants on benefits, it is difficult to understand why they should be forced to accept such tenants if they do not want to. Surely this is akin to a Company being forced to enter into a contract with a customer when they do not want to and is against any right to freely trade? Perhaps the compromise is to ensure that Landlords consider all potential tenants, whether on benefits or not, but Landlords are left to decide which tenants they prefer? 

I would advise Landlords against imposing a blanket ban on considering any tenants who are in receipt of benefits and to keep an eye on our website for future updates! 

For more information on the above, or Residential Landlord and Tenant disputes in general, please contact Joanne Green on 01332 225232 or joanne.green@smithpartnership.co.uk.