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Bedroom Tax: the big impact

Posted by
30 Jun 2016
Bedroom Tax (also known as the Spare Room Subsidy) is a change in housing benefit entitlement which was implemented in 2013. It means that tenants living in social housing which is deemed to have one or more spare bedrooms receive a cut in housing benefit.

How much do you lose?

The tax is applied to tenants ‘net rent’, more commonly known as ‘eligible rent’. The amount of net rent covered by housing benefit is cut by:
  • 14 per cent if you have one spare bedroom
  • 25 per cent if you have two or more spare bedrooms

 

Understandably such high percentages inflict a major impact on tenants’ financial circumstances, leaving them to find alternative arrangements to cover the benefit loss by either requesting to move to a smaller home, or finding a means to increase their current income.

Good intentions: The believed benefits

The new tax intended initially to create a reduction in housing benefit bill by 223billion as free up housing to help those living in overcrowded accommodation.

The Department for Work and Pensions set a target of 30 per cent of social housing tenants affected by the changes to move home by 2017.


Reality: the hard home truths

According to figures from the Freedom of Information Act, approximately 6 per cent of benefit claimants affected by the tax have moved as a result of the benefit changes, a far proportion away from the predicted 30 per cent.
Furthermore, according to the National Housing Federation, 66 per cent of housing association residents hit by the Bedroom Tax were in arrears by 2014, with more than 15 per cent at risk of eviction and a number that without greater thought is set to soar.

A qualitative study published in the journal of Public Health in 2015 reinforced these claims, finding that bedroom tax has ‘’increased poverty and had broad-ranging adverse effects on health, wellbeing and social relationships within communities.’’

To revoke or not to revoke?

With the evidence for the adverse effects of the bedroom tax mounting, and with this only set to become increasingly more prominent as time goes by, is it time for a rethink?

Just five months into the new tax implementation, Raquel Rolnik, the UN special investigator on housing, argued to revoke bedroom tax, after hearing "shocking" accounts of how the policy was affecting vulnerable citizens during a visit to the UK.  The same year Ed Miliband also urged future Labour government to do the same.

Did it send a clear warning that even this early on in the implementation of the tax that detrimental effects were already apparent?

The domino effect

From my own experience, the general consensus from social housing providers that I work with echoes the claims circulating in the media. The new reform is leading their tenants to have a budget more tightly based on monthly payments, placing them in a much more vulnerable position to pay their rents. What is often overlooked is that this creates a subsequent impact on them as social housing providers themselves, with the likes of rent arrears and evictions becoming an increasingly prominent issue.

On a more positive note tenants and social landlords are becoming more interdependent. However, with local housing associations and councils refocussing on greater front line, face-to-face contact and support, the proposed economic benefits of the reform on their part is proving to remain unsubstantiated.

The bottom line

Bedroom tax will not resolve the housing crisis we currently face in the UK.  With the tax hitting the most vulnerable people in society, and with little benefit being reaped for social landlords, it begs the question as to whether this is a change in housing benefit that we should see revoked.
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