Over three-quarters of private landlords who currently accept LHA sector tenants are set to be forced out of the market, unable to afford to continue letting to those on lower rates of Local Housing Allowance.
A new survey of 528 landlords in October by the National Landlords Association has found that Government caps being rolled out on housing benefit payments will have a serious effect on tenants reliant on LHA.
The first cuts, affecting new tenants, came in last April, and the second round, affecting existing tenants on LHA, are due to be implemented in the New Year.
The survey found that 77% of landlords who have LHA tenants are either considering or already taking steps to reduce their involvement in the LHA market.
A quarter of respondents say they are already reducing the number of tenants they have on housing benefit payments, while half plan to do so in the future.
NLA research has found that the LHA cuts will have a varied impact on families across the country, with some losing very little but others losing hundreds of pounds.
Government figures show that nearly 1.3 million households currently claim LHA across the UK.
Some examples of how the caps will reduce LHA payments, based on rates from March 2011 before the cuts began in April, are:
• A one-bedroom flat in Willesden, north-west London: before the cap, the rate was £275 per week, now it is £250 per week – a £25 cut per week.
• A five-bedroom house in Guildford, Surrey: before the cap, a family would have received £691.15 per week, now it is capped at the four-bedroom rate of £400 per week – a £291.15 cut.
David Salusbury, NLA chairman, said: “The shortage of housing across the UK is putting even greater pressure on the private rented sector. Capping housing benefit payments at this time will only lead to more people struggling to pay their rent.
“The Government must monitor the impact of the roll-out of LHA caps. It is essential that tenants are not left at risk and that landlords can continue to provide this accommodation for the more vulnerable in society.
“The number of people claiming benefits continues to rise, and these caps could result in fewer affordable rental properties for benefit claimants.”