Vulnerable tenants are being put at more risk through the newly-introduced Local Housing Allowance (LHA), it is claimed.
According to the National Landlords Association (NLA), 52 per cent of landlords would be less likely to rent out their properties to LHA tenants due to uncertainty over rent payments.
"Empowerment is about giving people the right to choose. The current situation is not sustainable and the government must act to ensure that LHA tenants are not further disadvantaged," says Richard Price, director of the NLA.
The NLA states that, in more serious circumstances, landlords face repossession because their rent money does not arrive, which may lead them to consider the services of a debt management company.
Immediate action is needed, the organisation warns, especially as £2.6 billion is expected to be spent on LHA over the coming year.
According to statistics from the Council of Mortgage Lenders, there were 5,000 fewer repossessions than forecast in 2008.
It also found there were 10,400 repossessions in the fourth quarter, equating to one in 1,100 mortgages.