Obstacle race

It was the disaster that wasn’t. When the bedroom tax was introduced in April 2013, warnings spread that the number of empty social homes would swell as larger properties became nearly impossible to let. By December 2013, Wigan and Leigh Housing said it might have to demolish a number of its two-bedroom properties because it was difficult to find anyone who wanted to rent them.

Two years later, all of the arm’s-length management organisation’s (ALMO) homes are still standing. And research by benchmarking firm Housemark, seen exclusively by Inside Housing, has shown that the number of days social landlords are taking to re-let empty homes is actually falling, despite the introduction of the bedroom tax – which reduces benefit for social tenants deemed to have a spare bedroom.

Nationwide, reports of the death of large social properties have been greatly exaggerated. But further cuts to welfare payments, including the reduction of the benefit cap to £20,000 (£23,000 in London), loom around the corner. Research by Dartford-based Moat, published last December, found all of its three-bedroom social rented homes would no longer be affordable under a £23,000 cap.

Responding to changes

So far, landlords appear to have successfully moderated against the impact of welfare reform in terms of voids. But will the reduction to the benefit cap undo their efforts and will landlords be able to stop re-let times climbing?

Housemark’s survey of 178 housing associations, councils and ALMOs reveals that average void turnaround times dropped by two days in 2014/15 compared to 2013/14, equalling the 25.7-day average recorded in the year before the bedroom tax came into effect.

The findings back up Inside Housing research last summer showing that, despite an initial worsening in performance after the bedroom tax came into effect in 2013, landlords are successfully putting in place measures to reduce re-let times and minimise reductions in rental income. A total of 98 landlords also reported that the percentage of their overall social housing stock lying vacant declined from 0.58% in 2013/14 to 0.55% in 2014/15.

But social landlords say the government’s lowering of the benefit cap could reverse this success. Housing associations including Sovereign, Great Places and Westward Housing tell Inside Housing they were forecasting for higher re-let times following the lowering of the benefit cap next year. When the welfare cut was confirmed in July, Ian Munro, chief executive of New Charter Group, said the cap would make large properties “less viable” and Ruth Cooke, chief executive of Midland Heart, said: “Most organisations with four and five-bedroom homes will experience some difficulty.”

On the other hand, past evidence shows that regardless of the actions of social landlords, the impact of welfare reform has not caused an exodus of social tenants out of bigger properties. Tenants are choosing to stick with their tenancy and pay the extra rent, or are accessing Discretionary Housing Payments (DHP).

An evaluation of the bedroom tax commissioned by the Department for Work and Pensions (DWP) in July 2014 found that just 4.5% of a sample of 187,943 social tenants hit by the bedroom tax had downsized because of it. The report said: “It was evident that there were manifold barriers to downsizing, which were both attitudinal and practical. Attachment to area and home was an important barrier for many participants especially because of support networks, dependence on local schools, and health services and employment.”

This is important because less downsizing means less tenant turnover and fewer voids for social landlords. Guy Cresswell, director of housing at Great Places, says while a minority of welfare reform-affected tenants downsized, the housing association tried to reduce turnover. “Where households are affected by welfare reform, we are giving advice and support to help them stay in their home and we’ve maximised take-up of Discretionary Housing Payments.” He says it made more financial sense to encourage applications for DHP than to increase turnover by getting the majority of people to downsize.

Still difficulties

Yet the DWP study did show that landlords still faced difficulty in letting larger properties when they came up to let, even if the effect was not as great as expected. Out of 269 social landlords, 41% had experienced difficulties in letting properties as a result of the bedroom tax and the benefit cap, the DWP study showed. The difficulty was most concentrated in the north of England, with the vast majority of landlords in London finding no problems letting properties as a result of the reforms.

But while accepting void times will probably lengthen over the next two years, social landlords say they will stem the increase. Social landlords have already geared in the last two years to mitigate against an increase in voids. Mark Rogers, head of property services at Spire Homes, says: “We saw that welfare reform was coming, and when we embarked on this project [to reduce void loss] two years ago, that put us in a really strong position.”

He says the landlord implemented a policy of starting the ‘moving in’ process earlier to reduce the amount of time properties lie empty before they are re-let. “We arrange viewings for incoming tenants while the old tenants are still there… to line up tenants so they can move in when the keys become available,” he says. He adds that the landlord worked closely with its contractor Keepmoat to reduce repair times. It now completes significant repairs after the tenant moves in, instead of before.

Sarah Wigmore, assistant director of operations at Westward Housing, says the landlord has also sought to bring down repair times on voids in order to get properties let quicker. The housing association has brought in mobile technology so that when inspecting voids, housing officers can order repairs onsite when they spot a defect in the property.

One of the problems for landlords with the reduced benefit cap is that larger properties might be more difficult to let. This is because the higher rent for a larger property from next April might not now be covered by tenants’ benefits as a result of the reduced cap. In some instances, landlords sometimes tackle this by changing the type of people they house in certain properties. Mr Cresswell from Great Places says it has adopted a “much broader marketing of our stock where we need to”. “Where choice-based lettings and nomination arrangements aren’t working for us, we work beyond that and seek… direct applications.”

Heather Bowman, housing and communities director at Sovereign Housing, has said the biggest impact on voids has been focusing on harder-to-let properties. Occasionally, this might mean asking a local authority with nomination rights to change their rules over what kind of household can rent a house. “It’s about having that conversation before the local team is sat with a property that has been lying empty for a month because,” she says.

Shifting difficult-to-let voids can sometimes mean competing on the open market, says Gary Moreton, head of social housing at consultancy Baker Tilly, particularly in areas where there is less demand for social housing. Inside Housing reported in April that Stoke Council was advertising a number of properties on the outside of its housing waiting list. Julie Griffin, head of co-operative working at Stoke, claimed the move was “a limited, short-term response to the impact of welfare reforms, involving a small number of properties which experienced very low demand”.

Eamon McGoldrick, managing director of the National Federation of ALMOs, points to one unnamed ALMO that is competing with properties on the open market by offering furnished properties. “I know of one ALMO that is actually having to match [the private sector] by letting properties with washing machines and fridge freezers, carpeting and basic furniture. If they didn’t do this, that property would sit un-let for a longer period.”

Landlords are agreed. Voids will probably go up next year and they are forecasting this in their business plans. But two things point to landlords being able to manage the additional benefit cuts. First, the impact of previous welfare reforms has not had as large an impact as expected. Second, landlords say they have already re-trained teams and brought in new processes for previous welfare reforms that will help them to manage the impact of the additional cuts.

Ms Wigmore says that welfare reform “has hit and been a shock to the system”. But she adds: “A bit like when you’re running hurdles, when you hit a hurdle for the first time it hurts, but the next time you learn to jump over it. I like to think we’ve learned to jump over it and we’ve got everybody fit enough to do the next hurdle when it arrives.”