Page last updated at 23:04 GMT, Wednesday, 15 July 2009 00:04 UK

Benefit tenants 'rip off' landlords

By Sukhi Hayer
BBC Asian Network

When the government started paying housing benefit to new private tenants rather than straight to their landlords last year, it was meant to give tenants more choice and help develop their budgeting skills - but instead it just means rents are not being paid, say some landlords.

Landlord Shazli Ahmed
Landlords are facing repossession because rent money does not arrive

"I've lost more than £56,000 and already had four houses repossessed because I've not been able to keep up with repayments." says Shazli Ahmed.

Mrs Ahmed, 56, from Birmingham, is just one of a number of landlords struggling to make ends meet thanks to rent-dodgers.

She rents properties to tenants who claim housing benefit and is finding it increasingly difficult to collect rent that's owed to her since a new system was introduced.

"I was sitting in my car outside my rented house when I spotted my tenant coming towards me with what looked like a walking stick, so I lowered my window and that's when he began hitting me.

"I rely on this money, this is my business. I've already started to market my properties to private tenants, I just don't want any more hassle," she said.

'Losing out'

In April 2008 the government changed the way it made payments to private landlords.

Instead of paying landlords directly it started to pay tenants, who then assumed the responsibility of paying their own rent.

The Local Housing Allowance (LHA) was introduced so people could manage their own lives and their budgets.

Estate agent James Smith and landlord Assan Khan
Research has found half of landlords will no longer let to LHA tenants

However some unscrupulous tenants have absconded without paying rent and that's prompted James Smith, from JCS Estates in Birmingham, to start a campaign for change.

"I feel that we're being ripped off by these people and they don't have any morals.

"I would be prepared to go to the government if I got enough landlords together who were going through the same problems as I am.

"I'm losing out every day - just this morning a tenant ran off with £500."

The Department for Work and Pensions has said: "The LHA is a fairer, simpler way of calculating housing benefit with safeguards to protect the interests of landlords.

"If a customer cannot manage their rent payments, the local authority pays the landlord directly."

Physical attacks

But in practice the safeguards have not worked to reassure landlords such as Assan Khan.

He has also been attacked by tenants.

"I'm very frustrated, stressed and depressed.

It's too tempting to spend the cash, especially if you're on a low income and you've never seen that amount of money
Anonymous tenant

"I'm on medication now, I've got a family and kids to support and it just gets you down. I've thought about giving it all up. I've been beaten up so many times.

Pointing to a scar on his forehead, he said: "Some people have injured me so badly; if they had an opportunity, they would have killed me."

The National Landlords Association warned that homelessness would increase if the LHA was introduced.

Its research has found that 52% of landlords will no longer let to LHA tenants because they often fall into arrears.

Councils across the country rely on private landlords to bridge a gap left by a shortage of council properties.

Spending risks

Kelly Kaur from Midland Housing said Birmingham City Council was in regular touch with her asking her to rent to vulnerable people, but she had been stung by rent-dodgers before.

"It's making me sick to think why have I set up an organisation to help vulnerable people - because they're not vulnerable, they're very clever.

"They know the system and they know how to use the system to their advantage."

She has refused to take on any more LHA tenants unless their rent gets paid directly to her by the council.

There are some tenants on housing benefits who would rather the rent was paid directly to them but they are all too aware of the spending risks.

One, who preferred to remain anonymous, told the BBC: "It's when people see this amount of money and think, 'Oh yeah, that's mine,' but it's not, it's the landlord's."

Another said: "It's too tempting to spend the cash, especially if you're on a low income and you've never seen that amount of money."

The government has said it will review the system in two years, but for some landlords, that may be too late.

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