Tough choices for social housing providers22/07/2014

In April 2013, the Government introduced the controversial ‘under occupancy rule’ to housing benefit as part of its welfare reforms.

The ‘bedroom tax’ applies to people of working age living in council or housing association accommodation who are claiming housing benefit. Under the new rules the number of bedrooms that a tenant can claim housing benefit for is now assessed on the number of people living in the property. If it turns out that they have more bedrooms than the new rules say they need, they will be classed as ‘under occupying’ their home. As a result, the amount of housing benefit they can claim will be reduced. Claimants with one extra bedroom could lose 14% of their housing benefit whilst those with two extra bedrooms face losing 25% of their housing benefit. Before any assessment is reached the following is taken into consideration:

  • Number of children
  • Gender of the children (if they are of the same sex or not)
  • Disability (a disabled child may be allowed a room on their own regardless of gender)
  • Carers that may be required to stay overnight

The new rules do not affect pensioners claiming housing benefit but they do affect separated parents who do not live with their children on a full time basis. It’s a stark choice, the tenant either pays the shortfall or moves to a smaller property. Many people have found themselves in a position where they can’t afford to pay the shortfall, increasing the risk of rent arrears and eviction. It’s a vicious circle that could end up costing housing providers a stack of cash, which in turn will effect their cash flow.

New challenges for social housing

Many people feel that the ‘bedroom tax’ undermines the fundamental principle of social housing which is to provide an affordable housing option for individuals and families on low incomes. Around 600,000 people in the UK are affected by the bedroom tax, and as result, may be finding it hard to to pay their rent. This, along with the benefits cap, changes to council tax benefit and universal credit, has created new challenges for social landlords.

One issue that has come to light is the lack of one bedroom properties available within the social housing mix. Some registered providers have been looking at ways to overcome the problem. Glasgow Housing Association, for example, is buying 300 one and two bedroom properties which will be rented out to people specifically affected by the  ‘bedroom tax’.  Another approach used by councils and housing associations is to reclassify two bedroom properties into one bedroom properties therefore reducing the need to pay this tax or be relocated to accommodation with fewer bedrooms. A bedroom can be reclassified if:

  • It is smaller than 50 sq ft
  • It is entered through another room
  • It is used as a box room
  • It is on the ground floor and not near a bathroom

Proactive approach to problems

With registered providers busy looking at way to help struggling tenants cope with changes to the welfare system, it was a stroke of good fortune that we had a reasonably mild winter. Add cold weather to the conundrum, rising energy costs and lack of spare cash in the resident’s pocket and there could be real cause for concern.

Some tenants are left with the tough choice of heating just one room simply because they can’t afford to heat the whole property. And, once the heating is off and the temperature drops, the property becomes vulnerable to condensation and damp. Prolonged condensation leads to black mould and all sorts of problems. It’s a miserable scenario, so it is well worth taking the opportunity to be proactive during the warmer months by taking measures to ensure that your housing stock is well ventilated. Many social landlords send out regular newsletters with hints and tips of how to keep warm during winter. What’s more, many have refurbished their housing stock removing old, inefficient storage heaters and replacing them with an energy efficient alternative.

Engels House

A great example of this is Engels House, a tower block in Salford managed by City West Housing Trust. Although Engels had an extensive make-over, issues such as fuel poverty were successfully addressed through innovative materials such as thermal cladding and EcoPod heating System. Each apartment was fitted with its own MEV Spider, a continuous mechanical extract ventilation system, chosen for its eco-friendly features, energy efficiency and long term savings.

Read the full case study about the refurbishment of Engels House in Salford.

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