The Department for Work and Pensions is being challenged by the Residential Landlords Association (RLA) over an issue that they believe is threatening the number of houses rented to housing benefit claimants.

The association claims that many of their landlord members are withdrawing rental properties from this market segment because of the problems caused by paying local housing allowances direct to claimants. They point out that the rent allowances are too often spent on other things and the due rent never reaches the landlords, who then end up with substantial rent arrears.

The RLA now fear the DWP might be back peddling on changing the system until an announcement is made on an overall review of benefits.

Alan Ward the RLA chairman, said: “Those organisations representing tenants and homeless people have agreed with us and are also calling for direct payment to landlords where the tenant agrees.”

“The present system does no favours to tenants who usually need help to manage their money. The last thing they need is the added temptation to spend it on something else.

“We have campaigned on this matter since 2003. Already we have evidence that a lot of landlords have stopped renting their properties to housing benefit claimants. If something isn’t done then many more landlords are planning to withdraw their properties from this market - because it’s too risky and they can’t guarantee that rent will ever be received.

“And that would damage a very useful stock of low cost housing that is in everyone’s interest to preserve for people who desperately need it.”

The association is also worried that the latest housing benefit proposals, announced in the budget in June, will mean that even more landlords will get out of the housing benefit market. Existing problems resulting from direct payments to tenants will make this even worse.

“We would like the present policy revised so tenants can elect for payments to be made direct to landlords – and in advance rather than arrear,” adds Alan Ward. “Or at least to automatically revert to direct payment after tenants have fallen into one month’s arrears.

“Before the general election both Conservatives and Liberal Democrats favoured giving tenants the choice but, since then, the coalition government has been noticeably silent on the subject.”