Government reforms backfire as ...

LANDLORDS THREATEN TO QUIT THE HOUSING BENEFIT SECTOR

Housing benefit recipients are spending their way through government payments intended to cover their rent - according to the Residential Landlords Association.

And the leading professional organisation for private landlords is warning of a massive walk-out as up to 95% of landlords prepare to withdraw their properties - shifting crippling pressure onto the public sector.

The threat will come as an embarrassment to this week's Labour conference as the RLA presses for a re-think on the problems and issues arising from the government's Pathfinder programme

Vulnerable tenants often realise they have difficulty managing their money - but the Government's rules are too rigid and don't allow them to agree that rent money can be paid direct to landlords.

So the new system of paying housing benefit direct to claimants - now called Housing Allowance - is actually damaging future housing prospects as landlords threaten to withdraw their stock of good quality, affordable housing.

At the heart of the problem is the failure of claimants to pass-on their housing allowance to landlords. "It disappears on other 'overheads'," says Mark Butterworth a director of the RLA - whose members are responsible for over 100,000 private tenancies in the UK.

"The system is intended to encourage personal responsibility by paying allowances to claimants instead of direct to landlords. That way they can pocket the difference if they find a cheaper property or choose to fund the balance for a more expensive one. As it happens they do neither … many of them keep the lot."

A survey of landlords in Blackpool - one of 13 'Pathfinder' areas trialling the new system in the private rented sector - gave it a resounding thumbs-down. Eighty six per cent said it was a bad move for landlords, 78 per cent reported financial loss as a result and 95 per cent showed unwillingness to accept housing benefit tenants in future.

The RLA is now keeping an eye on the other 'Pathfinder' areas - Leeds, Brighton, Cardiff, Conway, Coventry, Edinburgh, Leeds, Lewisham, North East Lincolnshire, Teignbridge, Wakefield and Wolverhampton.

"Good, professional landlords will be discouraged from the sector, better quality accommodation will become more difficult to find and housing benefit tenants will be driven into the unprofessional sector where decent standards are rare.

"All this helps nobody and the already difficult circumstances in which housing benefit tenants find themselves will just get worse.

"Experience suggests that they get back into employment faster from private sector housing than from alternatives forms of social housing. But the new payment system is increasing the administrative costs for private landlords - who have to spend time chasing defaulting tenants for rent that they never receive - and it's making them think twice about renting to future housing benefit tenants.

"The result is that properties are already being withdrawn from that market. And more will follow."

The Residential Landlords Association (tel: 0845 666 5000) is a leading national organisation for professional landlords, residential property investors and self-managers - with members owning over 100,000 properties in the UK private rented sector. The range of members' services - on www.rla.org.uk - includes legal advice, insurance, financial services, credit referencing and training. For tenants there is www.tenantdocs.co.uk - where tips include a free download of the RLA's award-winning Plain English tenancy agreement. The RLA operates a web-based property search on www.homes2rent.net and publishes the bi-monthly Residential Property Investor magazine.

For further press information and interviews please contact

Brian Johnson at Powell Communications - tel: 0161 834 9836, fax: 0161 839 2660; brian.johnson@powell-pr.co.uk