The RLA is calling for a stop to Government plans to pay housing benefit direct to private tenants.

It says that landlords are pulling out of the sector because tenants are not handing over their rent and that safeguards are not working.

After Pathfinder trials, the Government is planning to introduce Local Housing Allowance (LHA) nationally in 2008. LHA is a flat-rate allowance towards rent calculated on the basis of the circumstances of the tenant (such as household size) and where they live. LHA is paid to the tenant, rather than the landlord, except where tenants are unlikely to be able to manage their financial affairs, or have fallen into arrears.

In a joint briefing with the British Property Federation, the RLA says the Government should consider warning signs from its own evaluation of the new measures.

It points out that last summer, on the day that Housing Benefit minister James Plaskitt claimed that landlords’ fears were being allayed by encouraging results of the trials in the nine Pathfinder pilot areas, the Department for Work and Pensions reported that one landlord in ten had decided to no longer let to people on housing benefit.

The report also found that the number of big landlords letting to such low-income tenants had gone down by a quarter; that nearly a quarter of landlords had decided not to renew the tenancies of people getting LHA; and that more than three-quarters of landlords with tenants on LHA had experienced rent arrears.

Overall, 58% of landlords reported problems with the methods of collecting rent from LHA tenants.

By November, the Department of Work and Pensions was admitting to continuing difficulties with rent arrears and said there was a marked withdrawal of corporate landlords in the sector.

The RLA says that rule changes in 1996 drove thousands of landlords out of renting to people on housing benefit: the numbers in the private sector went down by 39% between 1995 and 2002. The RLA says there will now be a further reduction, resulting in fewer homes available to tenants on low incomes outside the social housing sector.

But in spite of the Government’s own concerns, says the RLA, it is going ahead with a second wave of pilots.

The RLA also says that safeguards – by which councils can pay the landlord direct if, for example, they deem the tenant ‘vulnerable’ or if there are large arrears – are not working. The RLA says too much bureaucracy is involved.

The RLA conducted a survey among its Blackpool members, which found:

■ 86% thought that the scheme was bad for landlords, and 58% thought it bad for tenants

■ 78% said the scheme had caused them financial loss

■ 90% said the scheme was taking up more of their time

■ 88% would not choose to continue with the scheme

■ 84% thought the scheme would not benefit Blackpool.

One landlord had evicted four long-standing tenants because they could not manage their allowances.