A WARNING has gone out that housing benefit tenants are set to lose out on private rented homes due to the impact of last year’s Budget.

According to the latest research from the National Landlords Association (NLA), 60 per cent of landlords report that Chancellor George Osborne’s decision to remove mortgage interest relief from 2017 will reduce their profitability.

To recover costs 20 per cent of those landlords say they will need to prioritise other tenant types over those perceived to be ‘riskier’.

Tenants on housing benefit are typically viewed as riskier because of high incidences of missing rental payments, caused in part by the widening gap between market rents and benefits. In the last year, two-thirds of landlords with tenants receiving housing benefit experienced rent arrears.

Over the past four years the proportion of landlords who let to tenants who receive housing benefit has almost halved.

Richard Lambert, NLA chief executive, said: “Many of those who once would have expected to live in social housing now have to compete for private homes with other types of tenants. It’s a real concern because a significant proportion of landlords already choose not to let to tenants who receive benefits because the perception is they are too risky."