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Housing welfare scheme failing

Housing welfare scheme failing

Category: Mortgages

Updated: 07/04/2009
First Published: 07/04/2009

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Government has been told that, despite changes it made to they way housing benefit is paid, the system is failing.

The call has come from the National Landlords Association (NLA), which has lambasted the scheme, saying it has wasted million of pounds and increased homelessness.

Local Housing Allowance (LHA) was introduced a year ago, replacing the previous housing benefit system which saw rent paid directly to private landlords to cover housing costs.

Under the new system, funds go to tenants, giving them the choice to pass it on to their landlord. Many are choosing not to, however, and the NLA says it is causing major problems, most notably landlords facing repossession as rent fails to arrive.

Research by the association reveals that over half (52 per cent) of landlords have decided they would now not let or would be less likely to rent to LHA tenants.

Forty-three per cent said who have already tried the new system they would be leaving what they judge to be a failing and uncertain market.

Currently, a landlord has to wait until rent is eight weeks in arrears before a local authority can take action, triggering automatic payment. However, some landlords claim it can take as long as three months to receive their first payment.

The NLA is calling for that period to be cut to four weeks.

"It is clear that LHA is not improving access to housing and has actually reduced tenant choice," said Richard Price, director. "This was not the Government's intention but the new system is simply not working."

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