Tuesday, 21 October 2014

Fears for housing associations’ income streams as tenants fail to make up shortfall

Tenants fail to pay the bedroom tax

A large proportion of tenants hit by the bedroom tax have so far failed to pay the resulting shortfall in their rent.

Several of the UK’s largest housing associations have this week revealed thousands of tenants have not covered their rent since the controversial policy was introduced on 1 April.

The bedroom tax cuts the benefit payment of working-age social housing tenants with spare bedrooms. In some parts of the country, up to half of affected tenants have not paid anything at all to cover the average £14-a-week shortfall.

This has sparked fears that landlords’ income streams and ability to borrow cheaply to build new homes could be hit if the trend continues.

Liverpool-based Riverside Group said around half of its 6,193 affected households receiving full housing benefit have not paid anything at all to cover the shortfall, while a quarter contributed something but did not pay their rent in full. Just one in four affected tenants paid the full amount.

James Tickell, director of consultancy Campbell Tickell, said: ‘These are the first signs of a significant threat to housing associations’ income streams.’

Hugh Owen, director of policy and communications at 54,000-home Riverside, said: ‘Such a significant amount of people paying nothing proves there is a real issue of affordability.’

He added that some of the non-payment may be due to delays in setting up direct debits or to tenants awaiting decisions on discretionary housing payments and that a clearer picture will emerge after several months.

Guinness Partnership said a third of 3,000 affected tenants have not met the shortfall. Simon Dow, chief executive, said: ‘If a third of our residents are not able to pay the whole of their rent, then obviously there would be a significant increase in arrears… as well as a crisis for the household.’

Yorkshire-based, 25,000-home Incommunities said 601 of 2,414 affected households had not paid anything to cover the shortfall. Wakefield and District said 42 per cent of 5,000 affected households have not paid their rent, while two-thirds of the 7,350 tenants of Glasgow and Cube housing associations had underpaid.

Spectrum Housing Group said 259 of 1,151 affected households failed to pay any of the shortfall at a cost of £17,000 in income - a result it described as ‘better than expected’.

Yesterday the government announced it is extending six pilot schemes examining the impact of direct payment of housing benefit to tenants under universal credit. This will give the pilots an extra six months to assess how the bedroom tax and other welfare reforms are influencing rent arrears.

Readers' comments (62)

  • michael barratt

    They will probably sacrifice a small number of tenants (put them in court) to encourage the others to pay. I wonder how those that do pay the are managing, are relying on family and family. As I have previously mentioned, the bedroom tax has been combined with other cuts to benefits that disabled people have had to suffer.


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  • "landlords’ income streams and ability to borrow cheaply to build new homes could be hit if the trend continues" so not only will this boost homelessness in the short term when tenants are evicted for arrears, but there is an even more serious long term issue here.

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  • Eric Blair

    You can't 'encourage' people to part with what they don't have.

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  • Alex Brown

    Why does anyone appear to be surprised at this news? People are being forced into making difficult choices, eat, keep warm or pay extra rent, if there was sufficient smaller properties for them to downsize to then I would expect them to move or pay. But there is no alternative accommadation in most cases, a reasonable policy would have brought in the extra charge once someone had refused a suitable offer not when one was not available.

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  • Colin McCulloch

    Mr Coventry nails it on the head here - the bedroom tax and direct payments have the potential to cripple social housing in the long term.

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  • Bend over to help the can't pays. Take severe action on the won't pay protesters. A simple income and expenditure can distinguish between the two types!!!

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  • There is one alternative not been looked into… that is a reduction in rent! Traditionally, RP’s set their rent in relation to local private sector rents; example: private rent of £150 per week for a 2 bed would be set at 80% (£120) or 70% (£105). By reducing down 70% to 60% RP’s would become what they are set up for to provide and be a non-profit provider of social housing.

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  • P Righteousness, going to have to bend over for all of them then, there is no getting blood out of a stone, a lot of them are paying the best they can a pound a week, that avoids eviction but just increases the debt, SCAMeron has said so many times "I am not reducing benefits." Yet on the one hand the BT was declared a tax, then no a subsidy, well subsidies are paid TO people not BY people, now he is saying it is a reduction in benefits, the EXACT same thing he swore NEVER to do, so reduce benefits? then reduce rent in accordance, can't pay what you have not got to pay with.

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  • not so AJM - most rsl rents are set at social which is well below 80% " affordable " levels. also reducing rents would undermine viability not only of new development but existing services and repair programmes. this is the governments cock up which no rsl wanted. to further undermine rsls helps noone

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  • This was a forgone conclusion,what did the government expect ?
    Benefit cuts and bedroom tax,not enough housing stock.
    Will the government put sleeping bags around the streets for tenants that are left homeless.
    How well thought out !

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