The proposed cuts to local housing allowance (LHA) will leave many landlords with reduced rental income according to the National Landlords Association (NLA)

A recent NLA survey of landlords with tenants receiving LHA shows that as many as 90% of private landlords could be less likely to take on a tenant receiving benefits, if the proposed cuts announced in the Budget go ahead.

Over one million tenants receive housing benefits and the Department for Work and Pensions estimates that the impact of the proposed cuts will be an average reduction of £12 per week.

Yet almost half of respondents to the NLA survey said they could not afford to accommodate these cuts and reduce their rent in order to keep an LHA tenant, while two-thirds of landlords surveyed were unsure about what the reforms will mean to the future of their lettings business.

The government is proposing to cut the maximum LHA available from the 50th percentile to the lower 30th percentile of market rents. A cap would also be introduced, based on the number of bedrooms in a rental property and future LHA increases would be linked to the Consumer Price Index.

David Salusbury, Chairman, NLA said: “While we understand cuts need to be made to bring the burgeoning LHA budget under control, the extent of the planned cuts could lead to serious reductions in the supply of affordable accommodation.”

“Landlords are already struggling to deal with rental arrears and this will only worsen if benefits paid to tenants are reduced. Many landlords are unaware of the implications these cuts will have on their rental income, with many indicating they want more information on the proposed cuts.

“We call on the government to re-assess the impact of the planned changes on the private-rented sector. As a first step, they should reconsider restoring the right of the benefit claimant to have their rent paid direct to their landlord instead of to the claimant. This change would at least give the landlord more certainty that rent will be paid and go some way towards cushioning the impact of the forthcoming cuts”.