Knock-on effect of bedroom tax on the housing market, landlords and tenants
When bedroom tax was brought in, April 2013, it was meant 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 being that tenants in social housing which was too big for their needs would down-size therefore making larger properties available for families who need the extra rooms.
However, in the last couple of years, we are led to believe that only around 5% of the almost half a million social residents in oversized houses have moved, or have been able to move. The main difficulty is availability of (or lack of) suitable smaller houses to move into. Once again, housing shortages rears its ugly head!
The unfortunate outcome is that tenants’ income is reduced, alongside other benefits cuts. Under these circumstances, it is claimed that tenants are more likely to pay for food and heating before rent as these are an immediate concern for them. If the payments for rent are missed then court proceedings take place and eventually in worse case scenarios bailiffs are ordered with the possibility of eviction. Many social residents are being pushed towards pay-day loans causing them to become stuck in a vicious circle of debt.
Councils have been given extra funds in hope to alleviate the situation by helping those in need the most, 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 rent isn’t being paid to them on time, or at all, so in Oldham they have start to run a pilot scheme which permits them to apply for the housing benefit part of the Universal Credit to be paid directly to them, instead of the tenant, if the tenant is 8 weeks in arrears. This is called the Alternative Payment Agreement (APA) and is only available to landlords who are members of the Trusted Partners Status.
Futher to this, landlord who are part of the Trust can get the DWP to apply for an APA to any tenant where the landlord believes there is the possibility the tenant will fall behind on payments and be unable to handle money before they are in arrears. We await to see if this pilot is introduced to the rest of the country.