Sunday, 26 April 2015

Tenants will soon be able to keep their benefits and rent from lodgers

Lodger rules to ease impact of bedroom tax

Tenants will be able to keep rental income from lodgers without it affecting their benefit entitlement under proposed rule changes.

The major impact of the move, which the Department for Work and Pensions described as a ‘positive side effect’, is that it will help under-occupying tenants pay the bedroom tax. The change was made possible because the government has amended what counts as income in its draft regulations for universal credit.

Currently, claimants must declare income from lodgers. This can affect their entitlement to housing benefit, jobseekers’ allowance and income support.

Under the new regulations, from October 2013 tenants will be able to keep income from lodgers and retain full entitlement to benefit. The room let to a lodger will, however, be classed as a spare room and fall under the bedroom tax, which will be £14 per week on average.

Lord David Freud, welfare reform minister, has said taking in lodgers could be a solution for tenants hit by the tax, which affects social housing tenants of working age from next April. Between April and October, when universal credit begins, tenants’ entitlement will continue to be affected if they take in lodgers, but they will be temporarily exempt from the tax during this period.

Lord Richard Best, a crossbench peer, said the change provides a ‘real incentive’ to take in lodgers. He said: ‘I think David Freud deserves congratulations on removing barriers to this way of boosting incomes and getting at least some people housed at this mostly so depressing time for housing.’

However, Lord Best added that in lots of areas there is little demand for lodgers, some tenants do not want strangers in their homes, while some housing associations may seek to block it because of concerns about strangers in tenants’ homes.

Sam Lister, policy and practice officer at the Chartered Institute of Housing, welcomed the move but said the number taking in lodgers is unlikely to be high. He said: ‘The whole thing [the bedroom tax] is designed to make savings so if they thought everyone would take in lodgers they would not allow it.’

Council tenants have the right to take in lodgers as long as they don’t breach overcrowding rules. Under their tenancy agreements housing association tenants can usually take in lodgers with the landlords’ consent.

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