The government intends to introduce local housing allowance in April 2008, with the aim of giving financial responsibility to tenants. However, the NLA, along with other organisations including Shelter, has urged the government to give tenants an opt-out clause to allow this benefit to go directly to landlords.
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Simon Gordon, head of public affairs for the NLA, said: “In the real world, some people may find it difficult to balance their finances and, through no fault of their own, be tempted to miss paying their rent for a month or two. It will get tenants into a financial mix and landlords may well find themselves short of money. If landlords have a number of local housing tenants who are this restyled benefit they could well be out of pocket.”
Gordon also pointed out that the reform in benefit could actually backfire on the government in that landlords will become wary of taking local housing benefit tenants if they cannot rely on getting their rents through on time. He said: “This could mean there will actually be fewer places available for housing benefit tenants.”
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Kim Bascombe, director of Mortgage Options, commented: “Some of the lenders are quite bullish on BTL business, but a few of the major players are starting to tighten up on their rental values. This could just be a further problem for the BTL market.”
