Local Housing Allowance bad news for landlords and tenants

Permalink: Local Housing Allowance bad news for landlords and tenants
by Gill Montia

A firm that specialises in securing property and rent arrears on behalf of landlords claims that changes to the way in which housing benefit is paid has increased the risk of rent arrears.

April of last year saw the introduction of Local Housing Allowance (LHA) whereby housing benefit is paid to tenants rather than directly to landlords.

The change was intended to improve tenant choice but Landlord Assist argues the increased risk of arrears through non-payment means landlords are less likely to take on new LHA tenants in future.

The company’s managing director, Graham Kinnear, comments: “Every day we are speaking with landlords whose tenants are on housing benefit and have received the benefit but not paid the rent.”

He adds: “This is impacting the cash flow of landlords who are already hard pushed as a result of the economic environment and the increased costs of complying with EPC legislation and the like.”

Recent research from the National Landlords’ Association (NLA) supports the claims and also reveals the extent to which landlords are wary of the new benefit.

In a survey of NLA members, 52% said LHA had made them less likely to take on new benefit tenants or had failed to convince them to start renting to benefit tenants in the first place.

Fifty-four per cent of respondents who would not rent to benefit tenants said that it was because of fears of rent arrears.

The NLA claims that LHA is now actively contributing to a shrinking housing supply for benefit claimants and is calling for immediate government action.