The government’s contentious ‘bedroom tax’ on under-occupying tenants is set to become law this month. Alex Turner looks at the disproportionate effect it’s likely to have in the north
Among a thicket of deeply controversial measures, it’s proved to be one of the most bitterly divisive. The government’s ‘bedroom tax’ will make social housing tenants aged under 62 pay an average £13 extra per week for occupying homes deemed too large for their needs.
Proposals for the tax are contained in the Welfare Reform Bill, which is expected to receive royal assent later this month making the tax law in England, Wales and Scotland.
The motive behind the penalty is to incentivise downsizing and free up much-needed family accommodation - but critics argue it will heap financial pressure on those least able to bear it, and takes no account of circumstances beyond statistical under-occupation.
Inside Housing’s What’s the Benefit? campaign calls for fairer welfare reform. The impact of this particular piece of legislation looks set to be most severe across the north of England, where a combination of factors, including large proportions of family homes, mean that in many areas there are above-average rates of housing benefit claimants under-occupying social rented properties.
The size of it
Around 32 per cent of all working age housing benefit claimants are likely to be affected by the introduction of the bedroom tax across Britain, according to an impact assessment carried out by the Department for Work and Pensions in February 2011. The worst affected area will be England’s north east, where 46 per cent of claimants will be hit by the tax. In the north west 43 per cent will have to pay for spare rooms.
‘This country built for families - especially in the north,’ explains Ashley Crumbley, chief executive of arm’s-length management organisation Wigan & Leigh Housing, which manages mostly two and three-bedroom homes - just 4,000 of its 22,700 homes are one-bedroom properties, excluding accommodation specifically for older tenants.
Northern landlords are investigating how the bedroom tax will impact their tenants when it comes into force, which is likely to be in April 2013. They’re also searching for ways to make suitably sized properties available for tenants to move to.
Housing association Bolton At Home, for example, has appointed a movement options officer to assist tenants, and ALMO Stockport Homes, is examining ways to help younger residents pair up and obtain joint tenancies.
Many organisations are already conducting awareness-raising campaigns and offering incentives to downsize.
Moving to a smaller property will not always be an easy option for tenants, though. Wigan & Leigh Housing’s Mr Crumbley lists common situations in which families rely on having spare rooms, such as when looking after grandchildren.
‘We typically house families: the kids grow up and parents remain. Those homes provide support networks in our deprived communities that help keep them stable,’ he says.
Meanwhile, Helen McHale, chief executive of Stockport Homes, which manages 11,700 homes including 4,900 flats, explains that under-occupation can benefit neighbourhoods.
The ALMO has ‘lots of properties we deliberately under-occupy. For example, two and three-bedroom high-rise flats,’ she says. ‘In very deprived areas with high concentrations of people, [full occupation] may well make situations worse, creating difficult environments for people to live sustainable lives in.’
But as Paul Andrews, chair of membership body the North West Housing Forum, argues, for many the only alternative to moving will be to take the financial hit and struggle to get by.
‘Many will attempt to adapt by juggling finances for a period - but ultimately defaulting on rent, or other obligations, and finding themselves in a debt crisis,’ he says.
Everyone Inside Housing spoke to for this article raised the prospect of widespread rent arrears. As well as creating additional misery for those slipping into debt and facing the possibility of losing their homes, high arrears could have consequences for their landlords, as Mr Crumbley points out.
‘We may have to go into our capital programme [to offset rent loss],’ he says. ‘We have to keep our existing stock decent, so the likely impact would be a further reduction in our affordable new build [programme].’
With housing providers looking at estimates of up to a decade, at current turnover levels, to re-house all tenants affected by the bedroom tax, tenants will be left with no option but to try to cope by themselves.
‘Landlords will only be able to make a modest contribution towards providing suitable properties,’ warns Mr Andrews. ‘The demand will not be satisfied by the supply available as re-lets and via mutual exchange schemes and transfers,’ he concludes.
‘There simply isn’t the capacity available to help tens of thousands of households across the north of England move at short notice.’
Preparing for the bedroom tax
Liverpool Mutual Homes manages 15,000 properties of which nearly three quarters have two, three or four bedrooms. A significant proportion of these are under-occupied.
‘The choice-based lettings system we’re involved in permits under-occupation by one room, allowing for family growth,’ explains LMH chief executive Steve Coffey. ‘Last year we made 1,200 lets and almost 25 per cent of those were under-occupied.’
An investigation by LMH identified 5,200 potentially under-occupied tenancies, with follow-up consultation suggesting 2,000 ‘definites’. Mr Coffey advises this could jeopardise £1.3m of rent from some of the UK’s most deprived wards, and says that government’s proposals ignore personal circumstances.
‘A big unmentioned area is divorced men who have kids at weekends - how can they cope in a one-bed?
Tenants over the age of 62 who are under-occupying homes and are unaffected by the bedroom tax are being offered relocation incentives to release family accommodation. But the scheme, which has been running since December has gleaned little interest from people happy in long-term homes.
‘We’ve put lots of info out to flag the changes up to tenants,’ says Mr Coffey. We’ve got a small affordable homes programme [100 units in 2012/13], so we’ll look at the makeup of that to help facilitate moves, perhaps to those who need to downsize. We’ll be carrying out option appraisals on our existing stock to see if we can tailor investment to get better use out of those properties.’