The government has been urged to delay its housing benefit reform after official research from pilot areas found the initiative made landlords less likely to let to benefit claimants.
Half of the landlords surveyed said the new local housing allowance, which is paid directly to tenants and is based on the average cost of housing in each area, had deterred them from taking benefit claimants. In addition, almost a quarter had decided not to renew existing tenancies because of the scheme.
The independent evaluation of the first nine pathfinders, commissioned by the Department for Work and Pensions, finds a 10 per cent drop in the number of landlords renting to claimants. However, it says some landlords may have been less aware of the benefit status of their tenants under LHA.
Nine LHA pathfinders were launched in November 2003, followed by a further nine in February 2004. The DWP intends to introduce legislation by the end of the year to roll out the allowance.
The study suggests landlords’ negative attitude is often explained by rent arrears or the fear of arrears, but finds the scheme’s difficulties do not appear to have been offset by expected advantages, such as speeding up benefit processing times.
A second report on the pathfinders, released this week by Shelter, finds that the proportion of landlords denying access to claimants was higher in the pathfinder areas. Benefit processing times have not improved but there is no evidence of increased homelessness or arrears, it reports.
Citizens Advice social policy officer Liz Phelps said a 10 per cent drop in the number of landlords renting to benefit claimants would be “horrendous” if repeated across the country.
A DWP spokesperson said there was widespread opposition from landlords before LHA was introduced but most of their fears had not been realised, with only 2 per cent reducing their property portfolios.
She said only 3 per cent of tenants had activated the allowance’s safety mechanism by falling eight weeks into arrears and having their benefit paid directly to the landlord.