The majority of private tenants currently in receipt of benefits are either unaware (37%) or unsure (48%) about the implications of planned changes to the welfare system in the UK, according to recent research from the National Landlords Association (NLA).
The changes are led by the implementation of Universal Credit, to be rolled out in October 2013, which will combine all benefit entitlements into one monthly payment and will cap the benefit amount paid to each household at £26,000 per year.
The research findings, which come shortly after the Department for Work and Pensions (DWP) Select Committee published its own recommendations on the implementation of Universal Credit, also show that 86% of tenants are also concerned about the impact of the Government’s plans to cut a further £10bn from the welfare budget.
The current level of Local Housing Allowance (LHA) entitlement varies in accordance with the rental costs of each area and also makes provisions for direct payments of benefits in regard of rent to the landlord.
At present 39% of landlords receive direct payments of rent but the new system will only permit direct payments to landlords in specific circumstances, such as following a pattern of arrears.
David Salusbury, Chairman of the National Landlords Association, said: “The implementation of Universal Credit and future planned cuts to the benefit system are clearly causing concern among tenants and landlords alike.
“The introduction of the benefits cap could leave many tenants and especially families unable to meet rental costs in some places, meaning no option but migration to other areas of the country or – in the worst case – leaving them homeless.
“Private landlords play an essential role in providing good quality affordable housing for benefit recipients. However, if they do not have the confidence that rent will be paid to them, and cannot be certain of direct payments where necessary, many landlords will conclude that it is simply too risky to continue letting to tenants on benefits.”