Nationwide highlights changes to rental payments for landlords

Nationwide Specialist Lending has sounded a note of caution as changes to housing benefit for low-income individuals come into effect.

From today individuals eligible for housing benefit will receive a local housing allowance (LHA) to pay their rent. This allowance will replace the current scheme, whereby local authorities pay a tenant's rent direct to the landlord.

Andy McQueen, managing director of The Mortgage Works and UCB Home Loans, said while he welcomed the Government's desire to increase financial capability among local authority tenants, the scheme could have some negative implications for landlords.

He commented: "This scheme is a significant change from the existing procedure and relies on the ability of individuals who are unused to managing rent payments to budget effectively. Additionally, data from the National Centre for Social Research showed fewer problems occurred with rent payments when it was paid directly to landlords by local authorities, which suggests there may be some issues with this new scheme. Landlords provide a crucial function within communities, but any abuse of this system by a small minority could lead to landlords having to tighten their policies on renting accommodation to LHA tenants."