Millions of pounds wasted on housing benefit reforms

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The National Landlords Association (NLA) has claimed that millions of pounds of taxpayers' money is being wasted by a new method of paying housing benefit, the Local Housing Allowance (LHA).

LHA was introduced last year for new tenancies when it replaced the old housing benefit system. Under the new rules, instead of rent being paid directly to private landlords to cover housing costs, it now goes straight to tenants who are expected to pass on the rent money to their landlord. In practice, many tenants choose not to do so and this is causing major problems.

In the most serious cases, landlords are facing repossession because rent money which they rely on for mortgage payments does not arrive. LHA is now contributing to a shrinking of housing supply for benefit claimants, and more pressure is being placed on social housing. As always, this will affect the most vulnerable tenants and increase homelessness. With a forecast £2.6 billion being spent on LHA during 2009-10, the NLA is calling for immediate action.

Richard Price, NLA Director of Operations, commenting on the LHA campaign, said: “Landlords up and down the country need to join forces and demonstrate to Government just how much this new system is not working. If something isn't done then landlords who currently operate in this market will be leaving in their droves and it will be the most vulnerable tenants who will be left out in the cold.”

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