DSS Tenants – Worth The Risk?

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Whilst searching for new tenants you will invariably receive that unfriendly, one lined message from someone with no respect for grammar and apparently no time for pleasantries.

My last tenant search saw me inundated with such messages and they all said the same thing –

“u take DSS??”

Is it wrong that when presented with said messages I find myself involuntarily taking a sharp intake of breath (not unlike the proverbial mechanic) before sending a polite, but curt, “no” ?

It’s just that DSS tenants have a bad rap in the eyes of the landlord and this is not without good reason. They do pose a larger risk – this is fact – and so I think we can be forgiven for avoiding them in favour of those who are on their financial feet. But are we missing a trick? Or are we being unreasonable to those down on their luck? We list below the pros and cons of exposing your rental to the DSS market and let you make up your own mind;

Pros

DSS Tenants are easy to find 

You won’t need to go looking under rocks for your next tenant when you accept DSS – they tend to come to you. There are requests a plenty on websites like Facebook and Gumtree which costs you nothing to search. You’re also likely to find scribbled ads in your local shop window and you may, like us, find that they literally come to your door unannounced on viewing day to offer themselves up.

This may sound like a pain but if you’re skipping paying an agent’s extortionate finder’s fee every time you need a new tenant you’ll end up saving yourself a lot of money over time.

DSS turnover is low

Unlike private renters DSS tenants tend to stay in the same place for a while. Not only does this save you money on missed rental months and agency fees, it’s likely to save you a lot of time dealing with property related admin and maintenance issues.

High turnover is bad for business which means that DSS tenants are..good for business??

You want a warm and fuzzy feeling

DSS tenants will find it harder to secure a rental property outside of council housing because people don’t trust them (see why below). It probably feels good to buck the trend and help out someone who is quite possibly very nice and just needs someone to give them a chance.

If you’re lucky that warm and fuzzy feeling won’t later turn to sick and dizzy when it all goes wrong.

Cons

Financial Instability

Okay, I’ll say it. When I think DSS I picture the line up of the most recent Jeremy Kyle episode. Inbred oddballs with no desire to work for a living who prefer to live off of the Government (and inadvertently all of us) whilst chain smoking marijuana and popping out kids just to up their weekly giro amount.

Whilst this is not true of all DSS tenants (most are probably genuine people who can’t make ends meet) there is no doubting that these people are financially unstable and are often without employment.

This is quite a terrifying prospect for a landlord.

Mortgage Matters

We realised early on that our mortgage carried a clause which stated clearly that we were not permitted to rent our property to DSS tenants. Rather than feeling the relief you would expect, we were initially right royally peeved to have had our tenant pool narrowed by an external source who we don’t much like in any case (interest rates are a sticking point).

Before you even consider your first (or next) tenant, check the small print of your mortgage. If it says you can’t rent to DSS tenants, you can’t. End of.

Missing Rental Payments

One huge redeeming feature for the DSS used to be that rent was paid directly to the landlord by the council. Generally a very secure payee, this saw the number of landlords accepting DSS tenants increase as the lure of guaranteed monthly income was too good an offer to refuse.

HOWEVER, new rules recently implemented by the government mean that rent is now paid to the individual themselves and they are then responsible for paying the landlord – something that they may forget to do (or choose not to do) when push comes to shove. That safely blanket you once enjoyed having wrapped around you has since been whipped away – along with any real incentive to continue down your DSS path. Whilst non-payment can also arise with non DSS tenants, it is less likely and they tend to be a lot easier to evict.

It may seem that I’m unfairly biased here, however this blog is supposed to include honest accounts of our land-lording experience and the truth is that even though we have never actually had a DSS tenant, our experience with them has always been unfavourable – from the crappy and rude initial e-mail to the aggressive follow ups demanding that we find them alternative accommodation because they are just too thick to understand that we aren’t here just to serve them.

I digress…

Many landlords still think the DSS tenants are worth the risk, but know your exposure from the outset and tread carefully. And let’s face it – we’ve all had that horrendous private tenant that makes us think that maybe a DSS tenant wouldn’t be so bad…

Do you accept DSS tenants? Do you avoid them like the plague? Let us know in the comments below.

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Caroline Engstrom

Caroline Engstrom has a passion to help landlords and tenants by providing helpful tips and advice regarding real estates.

2 thoughts on “DSS Tenants – Worth The Risk?

  • October 21, 2014 at 9:14 pm
    Permalink

    DSS tenants are just people, some need a chance others need a wide berth. My experience on DSS is no different to those in work, I will only take tenants who have a guarantor, I will only take tenants with a deposit (or a council scheme that provides a bond, I will only take tenants that pass credit and reference checks. Most bad tenants will not pass all tests. With DSS in mind remember that insurance premiums increase with DSS tenants and councils pay in arrears not in advance. One problem I have had with DSS tenant is when a tenant has received benefits that they are not entitled to the council comes after the landlord on the basis that the tenant should not have had the money, we have had direct benefits reduced.

    Reply
    • October 22, 2014 at 6:58 pm
      Permalink

      Thanks Andy – lots of extra tips in there too

      Reply

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