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New changes to the welfare system may mean that landlords who rely on their tenant's benefit might find themselves short changed at the end of the month.

The Government is proposing cutting housing benefits by £15 – not a lot on the face of it, but landlords whose tenants are on benefits will struggle even more to pay their own mortgage. This also just adds to the pain that landlords face of trying to extract their rent from tenants – the Local Housing Allowance was introduced last year for new tenancies whereby instead of rent being paid directly to private landlords to cover housing costs, it now goes straight to tenants who are expected to pass on the rent money to their landlord.

In practice, many tenants choose not to do so and this is causing major problems, according to the National Landlords Association. In the most serious cases, the NLA says some landlords are facing repossession because rent money which they rely on for mortgage payments does not arrive.

Richard Price, NLA director of operations says: "Landlords up and down the country need to join forces and demonstrate to Government just how much this new system is not working. If something isn't done then landlords who currently operate in this market will be leaving in their droves and it will be the most vulnerable tenants who will be left out in the cold."

The best way to be sure that you can pay your buy-to-let mortgage is to have a good relationship with your tenant – keep regular conversation going with them, and be aware if they are having trouble covering their debts. Ignorance will only lead to financial pains on their part and on yours.

SOURCE: NLA, 07/09/09

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