Undercover checks carried out by Shelter working with the National Housing Federation revealed that one in ten letting branches around the UK had a blanket ban rejecting any applicants on housing benefit.
The worst offender out of the big brands investigated was Haart, with an outright ban in a third of the branches called, Shelter said.
Although the practice is not illegal, the housing charity is now planning court action as it argues it discriminates against women and disabled people who are more likely to need a housing benefit top-up.
Polly Neate, chief executive of Shelter, said: “Rejecting all housing benefit tenants is morally bankrupt, and because these practices overwhelmingly impact women and disabled people, they could be unlawful. That’s why we’re urging all landlords and letting agents to get rid of housing benefit bans, and treat people fairly on a case-by-case basis.”
David Orr, chief executive of the National Housing Federation, added: “Landlords and letting agents must see sense and assess people on a case-by-case basis, whilst government urgently need to invest in the building of new social homes.”
Sector leaders from the private rented sector have said landlords and letting agents not renting to those on benefits is not their fault and shifted the blame to government.
David Cox, chief executive, ARLA Propertymark, said: “This is a systemic problem with how housing benefit works. Rents are paid in advance, whereas housing benefit is paid in arrears, and therefore with such a shortage of rental accommodation, landlords and agents will naturally choose a tenant who can pay the rent when it is due, rather than a tenant who is always a month in arrears.
“We have called on government time and time again to resolve this problem.
“But our calls have fallen on deaf ears. To make the situation worse, many lenders also have a clause in their buy-to-let mortgage agreements which prevent landlords from letting to housing benefit tenants.
“This situation does not exist because of landlords or letting agents, it is a systemic problem caused by government and the banks.”
A spokesperson for Haart said: “It is not our policy to refuse housing benefit tenants – anyone who passes referencing checks is able to rent properties listed with our branches.
“This research has brought to light that some of our branches are misinformed and we are working to ensure that this policy is being followed across our network. We are sorry for any occasion where this has not been the case.”