Bedroom tax: why social tenants will soon be taxed on their spare bedrooms

Cliff D'Arcy
by Lovemoney Staff Cliff D'Arcy on 31 January 2013  |  Comments 24 comments

Tenants in social housing with extra bedrooms face big cuts to housing benefit from April. The changes have been dubbed the 'bedroom tax'!

Bedroom tax: why social tenants will soon be taxed on their spare bedrooms

There are over 26 million households in the UK, of which nearly 3.8 million are classified as 'social housing'. These rented homes are owned by local authorities or non-profit housing associations and usually occupied by low-income tenants.

There is a massive waiting list for social housing, with 1.8 million households trying to find shelter in state-sponsored housing. As a result, the Government is under huge pressure to reduce waiting lists while cutting public spending on social housing.

Taxing extra rooms

One way the Government aims to curb the bill for social housing is by imposing a yearly cap on total state benefits paid to working-age households. This limit has initially been set at £26,000 and is already affecting thousands of households, particularly in high-priced London.

However, with effect from April, new restrictions introduced by the Welfare Reform Act 2012 will come into force for council tenants claiming housing benefits. While these will not affect pensioner households, they will have a profound impact on working-age households.

In what's being already called the 'bedroom tax', housing benefit will be cut from April for those tenants who have one or more spare bedrooms in their homes. One extra bedroom triggers a cut in housing benefit of a seventh (14%). Two or more spare bedrooms produce a cut of a quarter (25%).

For example, a family of two adults and two children living in a five-bedroom council house could see their housing benefit cut by 14% with effect from April. This family either have to find the money to cope with this cut or move to a four-bedroom home.

In total, it's estimated that 660,000 households will be hit by the bedroom tax. Of these, perhaps two-thirds contain one or more people with a disability, so these cuts will hit some of the most vulnerable people living in Britain today.

Furthermore, most of the pain from the bedroom tax will be concentrated in the north, Wales and Scotland, rather than southern England. This is because of the larger numbers of one-bedroom and two-bedroom council properties in London and the south east, versus larger council homes in less densely populated (and less affluent) areas of the UK.

What will be the consequences?

For a family receiving, say £100 a week in housing benefit, a 14% cut equates to a loss of £14 a week from April (£728 a year). Likewise, a 25% cut to the same benefit would mean losing £25 a week (£1,300 a year). For many council tenants, this shortfall could mean the difference between heating and eating.

Of course, this coming cut to housing benefit is intended to encourage council tenants to 'downsize' by moving from larger, under-occupied homes to smaller, more affordable social housing.

But people living in social housing (notably those that rely solely or mainly on state benefits for their income, such as the unemployed, disabled and low-paid) are not renowned for living the high life. Many struggle to make ends meet already, particularly when big bills suddenly hit the doormat.

So these cuts are sure to send many thousands more council tenants into rent arrears. With yearly rises in other working-age benefits capped at a below-inflation 1% from 2013 to 2016, the household budgets of welfare claimants will be placed under even greater pressure.

Another problem is that households faced with losing weekly benefits or a spare room could simply expand their family by having another child. While this would enable them to hang onto so-called under-occupied homes, it would raise the bill for Child Benefit and other benefits paid to families with young children.

What's more, families that do agree to move to smaller homes may find that such housing stock simply isn't available in their area. So while being physically unable to move to smaller accommodation, they must carry on paying the bedroom tax. How absurd is that?

Some bizarre examples

Already, the spare-bedroom tax is being criticised as one of the most arbitrary, subjective and ill-thought-out reforms in the history of British social welfare. Here are five ridiculous examples of those social tenants about to be hit:

1. Divorced parents sharing childcare

Divorced or separated parents sharing childcare will be hit. From April, only one parent will be allowed spare rooms. If the other keeps one or more rooms spare for overnight stays from their children, then that parent will be hit by the new bedroom tax.

2. Families with children under 16

Families with two children of the same sex both aged under 16 will also be hit, as both sons (or daughters) must share the same room. A recipe for teenage strife!

3. Families with children under ten

If both children are under ten, then they must share a room, even if they are not the same gender. In other words, under the new rules, little girls and boys living in social housing no longer deserve their own personal living space.

4. Foster carers

Families who usually or occasionally take in foster children will not be given credit for any extra rooms they set aside for children not yet arrived in their care. This seems a horribly cruel way to penalise those selflessly helping society's neediest youngsters.

5. Bereaved families

On Monday, I read of one couple whose beloved seven-year-old daughter died of brain cancer a year ago. For the past 12 months, her grieving parents have kept her room as a 'shrine', exactly as she left it.

Were they to continue to do so from April, their housing benefit would be slashed by £650 a year. In effect, having lost their daughter, they now risk losing the home in which they raised her by being 'financially evicted' to a smaller property.

Will you lose out when housing benefit changes from April? How much do you stand to lose? Please tell us your story in the comments box below!

More on tax:

Middle-income tax dodgers face CPS crackdown

HMRC crackdown on tax-dodging top earners

2012's biggest tax cheats named and shamed

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Comments (24)

  • tuttogallo
    Love rating 99
    tuttogallo said

    Look at the national accounts. Social Justice is an admirable goal, but all of the Social Security payments cost a huge amount of money and the economy cannot support it. This is why there are all these cuts.

    The cuts are nowhere near enough to balance the budget and eliminate the deficit. This is because the government has safeguarded areas of expenditure form cuts (e.g. NHS) causing the axe to fall more heavily on other areas (defence and Social Security). All areas should be candidates for cuts (this is how they succeeded in Canada).

    We all have to understand that there is no money. The whole rotten structure is only kept from collapse by constantly borrowing money. This cannot and must not continue.

    By the way it's no good just going after rich individuals, there aren't enough of them to make much difference, although they must of course pay more, up to about 50% of income. After that they just relocate.

    Report on 17 February 2013  |  Love thisLove  0 loves
  • dksanders
    Love rating 2
    dksanders said

    It was officially calculated earlier this year, that being in the EU costs us per year £1,500 Billion! That is the net loss, not how much we put in but get some back, but the net loss.

    If that money was spent on our own hospitals, schools, road repairs, to reduce fuel tax, to house the needy (not EU immigrants); just think how much better off this country would be and then we wouldn't need such cruel and unjust taxes like this one.

    It's about time the people in this country were told the truth about our being part of the EU and did something about it. And before anyone says "yes, but we need the EU to do business" remember, the foreign companies we buy from will still want and need, to sell us their goods, just as the foreign companies we sell to will still need our goods; we will just be able to negotiate trade deals that are in our benefit and not benefit some corrupt and inefficient system and countries.

    Report on 22 February 2013  |  Love thisLove  0 loves

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