When the Chancellor stands up to deliver his Pre-Budget speech on Wednesday, reform of Local Housing Allowance is unlikely to be on the list of ‘things to do.’ Dealing with government debt will be his top priority. But with unemployment at 2.7 million and still rising, reform of LHA is hugely important to both landlords and tenants.

Recent changes introduced in April 2008 mean that Local Housing Allowance is now paid directly to the tenant. Before that date tenants and landlords could agree that benefit was paid direct to the landlord – very important since it avoided the tenant getting into arrears.

The National Landlords Association wants to see the recent changes reversed as soon as possible as an increasing number of tenants are claiming Local Housing Allowance but are not passing it on to their landlords and arrears have been rising.

The latest research carried out by the NLA shows that total rent arrears across the UK relating to LHA could be as high as £220 million and this is causing ‘major problems’.

This is affecting tenants as well as landing landlords in financial difficulties because landlords are increasingly reluctant to let to tenants who receive Housing Benefit. ‘If ministers are serious about the importance of the contribution the private rented sector makes to the housing mix, then tenants’ right to choose to have their housing benefit paid direct to their landlords must be reinstated immediately,’ said David Salusbury, NLA chairman.

He emphasized that both tenants and landlords are losing out under the current rules. ‘The NLA is hearing about more and more landlords who are refusing to let to LHA tenants. We need more affordable housing in the UK, not less – action is needed and it is needed now.’