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Landlords are warning that changes to the way housing benefit is paid to tenants wastes millions of pounds and will result in increased homelessness.

The National Association of Landlords' latest research says the new Local Housing Allowance, which was introduced for new tenancies in April 2008 isn't working. Under the newer rules, instead of rent being paid directly to private landlords to cover housing costs, it now goes straight to the tenants who must choose whether or not to pass on the rent money to their landlord.

In practice, the research has shown many tenants are failing to pass on these payments to landlords. This is causing major problems, it says; in the most serious cases, landlords are facing repossession because rent money does not arrive.

The research shows that 52% of landlords surveyed have decided they would not let, or be ‘less likely' to let, to LHA tenants. It also found that a further 43% of those landlords who have already tried the new system said they would now be leaving this failing market because of increased uncertainty about rent payments.

With a forecast £2.6bn being spent on LHA during 2009 to 2010, the NLA is calling for immediate action.
Currently, a landlord must wait for eight weeks of rental arrears before the local authority can take action and an automatic ‘trigger' pays the rent directly. In reality, the NLA says arrears can be as long as three months before the landlord receives their first payment.

Richard Price, director of the NLA, says: "It is clear that LHA is not improving access to housing and has actually reduced tenant choice. This was not the Government's intention but the new system is simply not working. If landlords are opting out of this part of the market, where will these families go? The situation is now becoming very serious.

"Local councils across the country are still not using the available guidance consistently and this is creating confusion. Not only are we calling for the ‘trigger' period to be reduced to four weeks but the NLA believes a more creative working relationship between councils and landlords should be developed.

"Empowerment is about giving people the right to choose. The current situation is not sustainable and the Government must act to ensure that LHA tenants are not further disadvantaged."

SOURCE: NLA, 06/04/09

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