Why DSS tenants really are the best

It's time to ditch prejudices, writes Christopher Browne

Landlords and lettings agents' prejudice against DSS tenants could be costing them dear. While single private tenants produce returns on investment of 11.1 per cent, private landlords are getting 14.3 per cent from tenants who claim housing benefit, says a new report by the broker Mortgages for Business (MFB).

'The two biggest advantages of the DSS tenancy is that the rent is paid directly into the landlord's bank and local councils use registers to find accommodation with no charges to the landlord. Single tenants with busy jobs usually ask a lettings agency to find them a house or flat which costs the landlord up to 17 per cent of his annual rental income,' says David Whittaker, MFB's managing director.

However, many lenders still won't finance social landlords. 'Lenders see the housing benefits sector as high-risk, due to the historical view of the DSS tenant as someone with a poor credit history who doesn't look after his or her rented property,' says Whittaker.

But it is families who top the investment return charts - based on a property's rental income and capital growth - with annual returns of 28 per cent.

'Some families prefer to rent rather than buy for mobility reasons, job relocation, an illness in the family or to be near ageing rela tives,' says Whittaker. Unlike single tenants, families prefer to answer advertisements in local papers when seeking out likely lets - a cost-saver for landlords - and then sign up for long tenancies, says the MFB survey.

'The families who rent may need to stay for several years, particularly when their children attend local schools, which obviously appeals to private landlords. Our survey shows families are generally tidier and more responsible than single people too,' adds Whittaker.

Landlord Jim Baxter, who owns seven buy-to-lets in Tooting, south west London, says: 'The best tenant I've ever had was a mother who received no maintenance from her ex-husband and claimed housing benefit so she could bring up her two young daughters properly. She stayed five years and her previous job as a professional cleaner proved a real bonus.

'DSS tenants get a bad press, but it's often down to individuals and circumstances.'

Malcolm Harrison, a spokesman for Arla (the Association of Residential Letting Agents), says: 'DSS tenancies can work very well, particularly if they are well managed.

'The longer the landlord or local authority has been managing and letting, the better the tenancy is likely to be.'