Responding to the under-occupation penalty/bedroom tax

There were three key ways discussed to minimise the impact of the ‘bedroom tax’ on residents, namely; reclassifying properties that residents deemed to be under-occupying reside in; assisting these residents to move to smaller properties; or; subsidise the under-occupation penalty.

In some areas, some authorities and RSLs have been able to reclassify homes in to ‘smaller’ properties. For example, in Knowsley, the housing trust reclassified 566 properties into smaller homes, which, in part, helped some tenants avoid the under occupation penalty. Redesignating around 4 per cent of its total stock, from three and two bedrooms to two and one bedrooms respectively will cost the Knowlsey Housing Trust around £250,000 per annum. The trust has said the redesignation would have occurred even without welfare reforms however.1 Leeds Council has also redesignated 856 homes, including 341 five bedroom properties downsized to four bedroom, 398 three bedroom to two bedroom and 126 two bedroom to one bedroom homes.2 Many of these reclassifications were intended to take place regardless of the bedroom tax however.

However, reclassifying bedrooms is not a sustainable solution for many local authorities or RSLs, as it decreases rent levels and therefore long term ability to borrow and develop. The government has also warned local authorities against reclassifying houses to avoid the bedroom tax, suggesting that local authorities found to be inappropriately re-designating properties may face a restriction on, or non payment of, their housing benefit subsidy.

Alternatively, most housing providers were looking to downsize families as much as possible. However, the key problem with this approach was a lack of housing stock. There simply were not enough smaller properties in many local authorities to accommodate every affected household.

To somewhat mitigate the lack of housing stock, a range of practices are being adopted to enable as much downsizing as possible. This often involved developing joined-up approached between local authorities and RSLs, to enable people to both find and move in to smaller stock as soon as it becomes available through any local provider. For example, in the West Midlands many RSLs have established a “best use of stock” group, which is designed to allow RSLs to ‘pool’ smaller housing stock. This group is also holding events for affected households such as housing swap days to enable and encourage households to move as much as possible.

A third option was for local authorities to ‘cover’ the costs of the under-occupation penalty using their discretionary housing budget. This was widely seen as economically unaffordable, given the high pressures on the budget. However, some ‘exemptions’ were being made to specific target groups. For example, foster parents with two or more rooms were a common exemption target. However, it was general felt that there is not enough discretionary housing budget to allow every region to exempt everyone, so choices will need to be made.