The study also reveals that 82 per cent of landlords believe Local Housing Allowance (LHA) tenants do not care for the property in the same way as private tenants and 80 per cent believe that LHA tenants are much more unreliable than private tenants, when it comes to rent arrears.
Eleanor Carroll, director of the Online Letting Agents suggested that growing numbers of the 1.4 million private landlords in Britain are increasingly refusing to let property to tenants on benefits. Mortgage lenders and insurers are also growing wary.
"Their main reason for landlords turning away housing benefits tenants is the government’s welfare reforms. Many landlords have adjusted to LHA after its introduction in 2008.
However, recent limits on housing-related benefits and the introduction of universal credit have caused concerned for many landlords and pose too much risk for some."
She pointed out that another influencing factor is that LHA is set at a local level through a formula where, in theory, the payable benefit compares with the rent of the cheapest third of properties available in the wider market that have the same number of bedrooms.
"In practice, open market rents in some regions have outstripped the LHA calculations. It’s very much regional. In some areas of high demand there is a large and widening gap. In other areas like the North East there is not much difference between the LHA and market values," said Carroll.
According to the National Landlords’ Association (NLA), the proportion of landlords prepared to accept tenants receiving LHA has more than halved in three years. In the middle of 2010 some 46 per cent of the NLA’s members let to tenants who received the benefit. By the end of 2012, this had dropped to 22 per cent, and the decline steepened throughout 2013.
"In spite of all this, the fact remains that benefit claimants remain more profitable than many types of tenants. According to the latest data on landlord returns, letting property to those on benefits delivers excellent returns," said Carroll, adding that approximately 100,000 landlords deliberately
