Understanding DSS tenants

Thursday 27 August 2009, by

Should you rent out to a DSS tenant?If you’ve been looking for new tenants, you may have come across a type of person known as the DSS tenant. Here’s a quick primer on what you need to know about this type of tenant:

What’s a DSS tenant?
DSS stands for Department of Social Security, which means DSS tenants receive financial housing benefits from the local council, also known as Local Housing Allowance (LHA). The allowance will contribute towards their living expenses e.g. rent.

The good
DSS tenants have the financial backing of the council, which is a reliable source of income, so you’re pretty much guaranteed your tenant will receive their benefits. In this climate, that seems to be more reliable than a salary. A lot of landlords and lettings agents refuse to deal with DSS tenants, but if you’re comfortable with that, you could ask for higher rent since demand is greater than supply.

The bad
On the flip-side, DSS tenants are seen as high-risk, because of the historical view that they have poor credit history and don’t look after the place they’re living in. They also  typically have to cover a shortfall each month. For example, if the tenant’s rent is £500pcm, they may receive an allowance of £400 per month. In that case, your tenant will have to cover a shortfall. Bear in mind that a lot of DSS tenants aren’t employed, so it’s important to investigate how the tenant will cover this shortfall.

In summary
There’s good and bad in every kind of tenant, and although DSS tenants get a lot of negative publicity, they should be treated like any other tenant.

Want more landlordy advice? We’ve blogged previously about how to improve your Rentals ad, ways to save money and how to interview your prospective tenants.

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