Councils are to be given discretion to make direct payment of Housing Benefit to landlords as an incentive to reduce rents. Changes in Housing Benefit arrangements will be delayed to limit disruption to tenants.

Ministers have reaffirmed their determination to drive private sector rents for Housing Benefit recipients down by announcing discretionary powers for local authorities to make direct payments to landlords in return for reducing their rents. The announcement comes as Housing Benefit Regulations are laid in Parliament.

The reduction in Housing Benefit entitlement will be deferred for nine months and in practice this means that most claimants will not be affected until after January 2012. This will allow tenants more time to make alternative arrangements.

To avoid families being disrupted twice, first by the Caps in April 2011 and then by the reduction in Local Housing Allowance to the 30th percentile in October 2011, they will now both come into force in April 2011 for new claimants.

Minister for Welfare Reform, Lord Freud said: “The direct payment incentive will bring an overall downward pressure on rents in the private sector. As these rents come down, more properties will become available to claimants and landlords will have certainty that their income will be protected.”

Other measures being introduced through the Housing Benefit Regulations include the withdrawal of Local Housing Allowance so that it will no longer be paid for 5 bedroom plus homes and the capping of the Local Housing Allowance. The caps will be £400 for a 4 bed home, £340 for a three bed home, £290 for a two bed home and £250 for a one bed home.