Landlords are looking to house tenants less likely to miss rental payments in order to minimise the impact of a number of tax changes to the Private Rented Sector (PRS).
According to a survey by the National Landlords Association (NLA), this means that tenants on benefits could miss out on rental homes as they are typically viewed as 'riskier'.
Some 60% of landlords surveyed by the trade body said that the Chancellor's decision to restrict buy-to-let mortgage interest to the basic rate of income tax from 2017 will reduce their profitability.
In order to make sure all costs are covered, 20% of those landlords who'll be affected told the NLA that they feel they'll need to prioritise other tenant types over perceived 'riskier' tenants.
In the last year, 64% of landlords with tenants in receipt of housing benefit experienced rent arrears, according to the NLA.
It also claims that just 20% of landlords let to benefits tenants in the first quarter of 2016, down from 36% in Q1 2012.
“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," says Richard Lambert, chief executive of the NLA.
"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. Rightly or wrongly, young professionals or working families are seen as more likely to be better payers and less hassle to manage."
He says a perfect storm of tax changes and the diminishing availability of social housing could mean some tenants struggle to find any housing at all.