Landlords have criticised the Chancellor for cutting the amount tenants relying on benefits will be able to claim to pay their rent.

According to a report by the Office for Budget Responsibility published alongside the Spending Review today the Local Housing Allowance will be frozen in cash terms from next year. This means that the rate will fall below the current level which is set to cover the lowest 30 per cent of rents in any given area.

The NRLA is warning that the announcement represents a kick in the teeth for those renters and landlords struggling with the consequence of rent arrears through no fault of their own.

The current rate was set in April to help renters whose incomes had been affected by the pandemic to meet the cost of their rents. A recent analysis by the Joseph Rowntree Foundation suggests that five per cent (200,000) households in the private rented sector are in arrears. 30 per cent of all private rented households are worried about paying their rent in the next three months, compared to 19 per cent immediately pre-COVID-19.

The vast majority of private landlords have done everything they can to support struggling tenants. However, given that most landlords are individuals and not property tycoons, it will become increasingly difficult to keep affected tenancies going without adequate financial support to pay off rent arrears.

Ben Beadle, Chief Executive of the National Residential Landlords Association, said:

“Many renters and landlords are struggling with the consequence of rent arrears through no fault of their own yet the Government is failing to take the action needed to address this.

“Whilst the Chancellor has spoken about the need to support those who find themselves homeless, it would be much better to provide the funds needed to sustain tenancies in the first place.”

The chancellor’s spending plans did not include any proposals with regards to tax changes – which will be announced in the budget this spring.

In its submission ahead of the spending review the NRLA had asked for a comprehensive financial package for landlords and tenants, in the form of a tenant loan scheme.

This would allow tenants affected by Covid-19 to borrow money, interest free, to cover rent while they got back on their feet, which could then be paid back over a period of time.

Blog Post from NRLA

See details of our Guaranteed Rent Scheme here