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Bedroom Tax Could Reconfigure Social Housing Market

News Posted On: 01 March 2013

property in England

Changes to housing benefit which come into force on April 1 2013 will mean that tenants with one or more spare rooms will have to cover the rent for those rooms out of their other benefits, or face being forced to move to smaller accommodation.

The ‘under-occupancy rule,’ popularly known as the ‘bedroom tax,’ is due to come into force on April 1 this year, but the change has received little publicity and so is likely to take many tenants by surprise. The new rules will mean that tenants will have to pay 14% extra if they have one extra bedroom, or 25% extra if they have two or more extra bedrooms.

This will come as an additional blow to families who are already facing the introduction of the benefits cap on April15 2013. Benefits will be capped at £500 per week for families with children and £350 per week for individuals.

The Department for Work and Pensions’ leaflet gives details on how the new rules will calculate occupancy. One bedroom will be allocated for each adult couple, for any other adult aged 16 or over, for any two children of the same sex aged under 16, or any 2 children of whichever sex aged 10 or under. Any other child who lives at the address, or a carer who visits for the night but does not live ion, will also be provided for.

There has been outcry over the new rules, as some areas are massively underequipped with housing stock that reflects new social realities in the terms laid out by the DWP. In Yorkshire and the Humber there are relatively few social houses with fewer – or more – than three bedrooms, for instance, and it’s unknown what the effects of the new rules will be there.

The Chief Executive of Barnsley’s Berneslai Homes housing association said, ‘we’ve got 3, 000 households who are going to be affected by these changes and the majority of them are actually under-occupying by one bedroom so from April… they’re going to lose about £11 [per week] from their benefits.’

There’s the suggestion that adherence to regulations could end up pushing more housing association and council tenants into temporary accommodation and thus cost more than it saves. The shortage of one and two bedroom properties is also nationwide, and Cleveland’s Coast and Country housing association said it had 1,800 tenants who were under-occupying and only two one-bedroom homes to rent.

The changes will mean a more fluid market for social housing and will come at the same time as the cap on benefits prices many claimants out of the private rental market altogether. However, the benefits cap will not relieve councils of their obligations to house local residents, so they could find themselves footing the bills for bed and breakfast, hotel accommodation or private renting.

Property advice site PropertyQuoteDirect.co.uk suggests to landlords that their options are to accept a lower rent, to ask the tenants to move or to insist that they find the money, and offers the case for keeping good tenants during economically difficult times if possible, despite a short-term cut to revenues, but says this might not be possible ‘depending on your mortgage, landlords insurance and other costs.’

Housing charities are warning that the bill will result in greater levels of rent arrears and homelessness.

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