The number of landlords letting to people on benefits has halved in the last three years, according to data from the National Landlords’ Association.
The figure has fallen from 46% to just one in five (22%).
Seven out of 10 landlords who do let properties to people benefits said they have experienced problems with rent arrears.
And 52% of landlords say they would not even consider letting to someone on benefits over fears about non-payment of rent.
The data was obtained as the Work and Pensions Secretary, Iain Duncan Smith, admitted the 2017 target for the full introduction of Universal Credit was to be missed – with around 700,000 claimants facing a longer wait.
Universal Credit combines six means-tested benefits into one monthly payment designed to ensure people are better off working than on benefits.
Mr Duncan Smith admitted more than £40m spent on IT for the project had been written off but insists it has not turned into a “debacle”.
He said: “This has been one of the most complex and detailed assessments that has taken place either in the public or private sector.”
Prime Minister David Cameron’s official spokesman said: “The Secretary of State is leading this very important programme of welfare reform which is so important to the economy and is the right thing to do on the grounds of fairness as well.
“The roll-out of Universal Credit was designed to be a gradual process, which enables the project to take on board findings from pilots. That’s absolutely the right thing to be doing.”