On the day of the Cabinet reshuffle, a day when news has been concentrated on who’s in and who’s out – a report was published by the Department of Work & Pensions on the effect of the ‘Bedroom tax’.
Known officially as the ‘Removal of the Spare Room Subsidy’.
Its an interesting report. I was alerted to it by Nearly Legal who have summarised its findings here.
The report itself can be found here.
Some figures
As reported by Nearly Legal:
- Social landlord rent arrears rose by 16% between April – November 2013 (not a time traditionally, when arrears rise)
- The percentage of tenants able to downsize (the main aim of the exercise) – 4.5%
- The number of tenants moving to the more expensive PRS – 1.4%
- The number of tenants in arrears because of the bedroom tax – 59%
There is a lot more, but as you can see, this does not make happy reading.
Well over half of tenants affected by the tax have gone into arrears but only a very small proposition have been able to ‘downsize’.
The main reasons for this are:
- Lack of suitable properties available, and
- Tenants unwilling to move because they do not want to move away from family, schools, support services etc
The effect of all this
Moving home is not something to be done lightly. It is one of those big stressful events in peoples lives, up there with divorce, death in the family, changing jobs etc.
It is not something that vulnerable people will be able to tackle easily I suspect, even if the process of finding somewhere else to live was easier. But it isn’t.
The demand for small properties has rocketed. For example, people who before would have been housed in two bedroom properties are now only eligible for one bedroom properties.
This has had an inevitable knock on effect on all the single people looking for this type of home (whose numbers are increasing anyway). There simply are not enough suitable homes for everyone.
Conversely it seems its now much easier for larger families to find homes – indeed apparently some of the larger properties are proving difficult to let.
Problems for social landlords
It may be that landlords will be able to adapt the larger properties in due course to split them up or turn them into HMOs. However this will take time and money. Building work is not cheap.
This is another thing that bothers me. That big increase in rent arrears is going to impact seriously on the social landlords’ ability to build new homes and adapt the ones they have for smaller households.
The report says that lenders are not worried about social landlords defaulting on loans (so they won’t go bust), but that does not mean they will have funds available to restructure their housing stock to adapt to the new demands.
The final report
This report is just an interim report, and apparently a final report is to be published in 2015. It will be interesting to see what it says.
Although no doubt it will be slipped out quietly, on a day when there is a lot of other news. Like this one.
You can read the full report here.
This whole fiasco is just another example of either how little this government grasps the complex web of housing issues or how cynical and dismissive they are of ordinary people.
Before they brought bedroom tax in, everyone involved in the business yelled at them with the same advice – there werent enough smaller properties for people to downsize too, so rent arrears would rise.
They ignored warning flares and nailed their flag to the mast of outrage at people being over-accommodated. The general public not involved in social housing issues didnt see anything wrong with the principle of 1 person occupying a 3 bed house and the ruling sailed in on a wave of ill informed sympathy.
Now the human and financial cost is being made evident. You can bet that the 2015 report wont be published pre-election.
I believe the high level of arrears is because a lot of social landlord said they would take no action against any tenant that is in arrears due to the “bedroom tax”.
Maybe if social landlord put their rents up to the same level as the private sector, letting the housing benefit system protect people that are on low incomes, there would not be a excess of demand for properties in the social sector.
If someone has an unused bedroom there is nothing stopping them taking in a lodger to help make up the rent.
Ian, dont you think that social landlords charging market rents kind of defeats the object of social housing?
Also it isnt true that a lot of social landlords said they wouldnt take action on arrears. There are 300 councils in the uk and twice as many housing associations and nobody agreed on the way to deal with it.
Some said just that but others said they would separate bedroom tax arrears from normal rent arrears….god knows how they would work that one out, let alone mount an argument in court and some said they would evict regardless.
Some organisations completely re-jigged their bedroom allocation system to get around it.
The problem for these large organisations is that 1% doesnt sound like much in everyday terms but when you are talking about 10,000 properties it represents millions in lost revenue that they cant afford.
As Tessa points out here, a major route out of the housing crisis relies on building new properties which in itself relies on revenue from tenants and the failings in the bedroom tax compounds that.
Danny Alexander said this morning that a possible re-working of the hated penalty would be not to penalise people who couldnt down-size, only those that had been made a suitable offer and refused it.
To my mind that seems a more sensible solution.
Ben, I see the point of social housing is to provide types of housing, e.g. wheel chair accessible, that the private sector will not provide, alone with housing for people that due to no fault of their own need a high and ongoing level of support.
We don’t expect the government to provide cheap tins of bake beans to people on low income; we have benefits set at a level that lets these people buy the bake beans from a normal supermarket. (We then have a legal setup that enables supermarkets to complete on prices so as to keep the cost down.)
There a lots of people in social housing that earn more than other people that operate their life’s in a way that allows them to afford private sector rents, or a mortgage payments. By not making these people pay market rents you are reducing the revenue that could be used to build new homes.
The only issue I have with the “bed room tax” is some disabled people that have a good reason to need an additional room – however this is also an issue with the same people in the private sector as housing benefit does not pay for additional rooms, or more space for wheelchair access etc. So maybe it should be covered by increased disability benefits rather than housing benefits.
I have been prevented from create 3 one bedroom flats as local council demand lots of payments for open spaces etc as part of the planning system, along with building regulations requiring a much higher level of sound insulation then most current properties have. If it was make easier to create 1 bedroom flats, then the private sector would be able to provide somewhere for people that are hit with the “bed room tax” to move to.
Most council just seem to have their heads in the sand only creating large homes for people at the top of the waiting list, rather than creating 1 bedroom flats to free up the large properties they already have. This has been going on for many years; at last a government has done something about it!
Well I suppose the crux of the matter here is an understanding of what social housing was created for.
Going way back to the days of Octavia Hill it was created to provide safe, clean affordable housing in response to the slum conditions of Victorian Britain.
It expanded through the 20th century for the same reasons, compounded by families bombed out by the fiendish Hun, so after 100 years the notion became embedded in the British psyche, in much the same way as the NHS has and like the NHS it is under political attack and in danger of being killed off altogether.
It wasn’t just for the old or the disabled, it was also for young families starting out in life and shock of shocks, people who not only didn’t want to own their own home but who actually believed it was immoral.
I can remember back when the right to buy came in meeting many people who refused to do it because they believed in the ethos of social housing as a way of providing homes for the poorest that would forever be affordable.
Last year was the 25th anniversary of the RTB and a survey was carried out which showed far from creating Thatcher’s (originally proposed by Labour) mythical property owning democracy something like 74% of them, if my memory serves me well, are now in the hands of private landlords, so what happened there?
Ian I will never subscribe to the simile of baked beans and homes. It arises in so many arguments and nothing will persuade me that there is any comparator there.
Homes are so much more than investment opportunities.