The leading organisation for the private rented sector in the UK today backed a government crack down on housing benefit against local authorities that have brought the system close to collapse.

The Residential Landlords Association, whose members own more than £1.2billion worth of property and manage more than 30,000 tenancies in the UK, said the administration problems were a national scandal that had forced many investors out of the marketplace.

The group also warned the problems with the scheme would eventually lead to a shortage of accommodation at the lower end of the private sector scale, leaving a gap in the market for tenants looking for flexibility and choice.

The shortage could lead to unemployment problems for people who rely on flexible living arrangements to be able to move around the country and follow work.

The organisation also revealed that more than 300,000 tenants on housing benefit had been lost from the private sector over the last three years as social security secretary Alistair Darling cracked the whip against local authorities handling the scheme.

He told the Commons the government is to appoint a help squad to work in local authority housing benefit blackspots following complaints from tenants evicted because administrative chaos forced them into rent arrears.

Mr Darling said the system was failing miserably in some areas and that the government would simplify the rules.

Martin Moylan, chairman of the RLA, welcomed the move.

He said: "We have been pressing the government to take urgent note of the situation before it begins to have dramatic and lasting implications on affordable housing in this country.

"The poor administration of housing benefit is a national scandal with extremely late and wrong payments and procedures that are unfathomable even to housing benefit staff.

"The simple fact now is that landlords are no longer investing in property to let to tenants on housing benefit and where there is no alternative they are selling up and leaving the market. Our research shows that 99 per cent of landlords no longer want to take tenants on housing benefit because of the poor administration of the scheme and the government needs to take note as this has major implications for affordable housing and government finances.

"Landlords and tenants need the same thing - economic rents and assurances of unbiased professional administration."

The association also raises the point that people under 25 can no longer get accommodation in the private sector because of the draconian under 25 rule, which limits housing benefit to the rent on a room only.

Shadow social security secretary David Willetts described the housing benefit system as shambolic this week.

He said the system was costing the country almost £500million a year and called for wholesale reform which would involve the Benefits Agency taking over the administration from local councils.

Ends 12 December 2000