Knock-on effect of bedroom tax on the housing market, landlords and tenants

When the media-christened ‘Bedroom Tax’ was implemented in April 2013, it was supposed to incentivise movement of social housing tenants from larger to smaller homes, by cutting the ‘spare room subsidy’ – part of their housing benefit if they had an extra room.

The idea was that tenants who were in social housing that was too big for their needs would down-size, thus freeing up larger properties for families who did need the extra rooms.

But in the last two years, reputedly only around 5% of the almost half a million social tenants in oversized houses have moved, or been able to move. The main obstacle is typically cited as the availability of (or rather lack of) suitable smaller housing to move into. Once again, the housing shortage rears its ugly head.

So the unfortunate result is that tenants’ income is cut (by an average of £15.24 per week according to research by Inside Housing), alongside other benefit cuts, such as the Incapacity Benefit moving under the umbrella of the Universal Credit. But the stated aim, to increase mobility between house sizes, is seemingly not being achieved.

Under these circumstances, critics of the scheme claim that tenants will likely pay for food and heating before rent – sustenance and heat being their immediate concerns. If the rent isn’t paid, court proceedings are taken, and eventually bailiffs are sent in – with the possibility of eviction. Many tenants are reputedly being pushed towards pay-day loans and stuck in a spiral of debt.

In an effort to alleviate the situation, councils have been given funds to help those in most need, e.g. disabled people and their carers. The cost perhaps reflects the unexpectedly serious impact the bedroom tax has had, however, with £40m extra allocated to an already substantial budget of £60m.

Landlords have complained that their rent isn’t being paid, so in a pilot scheme in Oldham they have been permitted to apply for the housing benefit part of the Universal Credit to be paid directly to them (rather than to the tenant) if the tenant is 8 weeks in arrears. This is called an APA (Alternative Payment Agreement) with a landlord who is of Trusted Partner Status.

Further to this, landlords who are Trusted can get the DWP to apply an APA to any tenant that the landlord has identified as possibly unable to handle money, even before the tenant is in arrears. There is no guarantee it will be granted, of course.

We await to see whether this pilot will be rolled out across the country.

The media is awash with stories of hardship endured by tenants hit by the ‘bedroom tax’ and the big question being asked of the present Tory Government is why continue? The argument goes that the burden on the NHS, homelessness costs and discretionary housing payments is balancing the savings projected in the first place. If that is indeed so, then perhaps the bedroom tax has served its course.

www.PropertySurveying.co.uk

PP / SRJ                                                                                                                                      17/8/15

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