An undercover investigation by housing charity Shelter has found routine discrimination by letting agents against tenants on housing benefit, with national chain Haart named as the “worst offender”.

Working with the National Housing Federation, Shelter researchers called 149 letting branches around the UK, and found that one in 10 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.

While “no DSS” bans – a reference to the now defunct government department responsible for benefits – are not illegal, Shelter is planning a court challenge arguing they breach the 2010 Equality Act, as they disproportionately affect women and disabled people who are more likely to need a housing benefit top-up.

Around 1.6 million adults rely on housing benefit to help with private rents.

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.”

The research also exposed what Shelter called “the wider uphill struggle faced by housing benefit tenants”. It said almost half (48%) of branches called said they had no suitable homes or landlords willing to let to someone on housing benefit.

“We’re not saying that letting agents should just take anyone on, but a lot of people who are on housing benefit have a perfectly clean record, sometimes lasting 10 years or more, and nothing to suggest that they will default on the rent,” a Shelter spokeswoman said.

It highlighted the case of Lauren, 47, a single mother, holding down three jobs who has lived in the same privately rented home in Lewes, East Sussex, for 14 years, and has always paid her rent on time. Due to recent increases in her rent, Lauren is searching for a cheaper home.

‘The letting agents I called were all so dismissive and rude’ – Lauren. Photograph: Alicia Canter/Shelter

“The letting agents I called were all so dismissive and rude, there was no leeway … There is huge discrimination, everyone is tarred with the same brush, and it’s unfair,” said Lauren.

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.”

But letting agents also blamed government policy on the payment of benefits. David Cox, chief executive of industry group ARLA Propertymark said: 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.”

He added that many lenders also have a clause in their buy-to-let mortgage agreements which prevent landlords from letting to housing benefit tenants.

The government urgently needs to build new social homes for those excluded by the private rental market, said David Orr, chief executive of the National Housing Federation, which represents social landlords of around 6 million people.

“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,” Orr said.