HB deductions for under-occupying social housing | CPAG

HB deductions for under-occupying social housing

20 February 2013
Issue 232 (February 2013)

David Simmons examines new rules which restrict the housing benefit (HB) entitlement of social housing tenants with excess bedrooms.

Note: this article was edited on 21/03/2013 to correct an error- see note at end of article.


From 1 April 2013, working-age tenants in the social rented sector will have their eligible rent for the purposes of calculating HB reduced by 14 per cent if they have one excess bedroom, or by 25 per cent if they have two or more excess bedrooms.

This article examines the legislative detail of the new rules, and then considers their potential impact on claimants and providers of social housing.


Amendments to the HB Regulations from 1 April 2013 introduce a new ‘maximum rent (social sector)’, which determines the amount of rent which can be covered by HB for tenants in social housing, after deductions for claimants with excess bedrooms.1

Who is affected?

The new rules only apply to HB claimants who are not:

  • over state pension credit age (or whose partners are not over state pension credit age);
  • subject to the ‘local housing allowance’ rules;
  • subject to the ‘local reference rent’ rules;
  • shared ownership tenants;
  • liable for houseboat mooring charges or mobile home site fees;
  • in temporary accommodation – ie, accommodation provided by a local authority or registered housing association under homelessness legislation;
  • in supported ‘exempt accommodation’.2

In practice, this means the rules apply to working age;

  • local authority (LA) tenants;
  • ‘registered housing association’ tenants in social housing (unless the LA considers the rent payable is unreasonably high, in which case the local reference rent rules apply). The definition covers ‘registered providers of social housing’ in England and registered ‘housing associations’ and’ social landlords’ in Scotland and Wales.3
What are the deductions?

Claimants are entitled to one bedroom for each of the following categories of people who occupy their dwelling as a home (each occupier falls into the first category which is applicable to them):

  • a couple;
  • a person aged 16 or over;
  • two children of the same sex;
  • two children under 10;
  • a child,

plus one additional bedroom if the claimant or partner ‘requires overnight care’ – ie, is getting a specified rate of a disability benefit and has an overnight carer.4

This is effectively the ‘size criteria’ which applies to claimants in privately rented accommodation who are subject to the local housing allowance or local reference rent rules. Note that there is no statutory definition of what constitutes a ‘bedroom’ and that a person can continue to occupy a dwelling as a home during a period of temporary absence.5

Note also that following the Court of Appeal’s decision in the cases of Burnip, Trengrove and Gorry [2012] EWCA Civ 629 (see p4, Bulletin 228), it is unlawful to not allow an additional bedroom where two children are unable to share a bedroom because of disability. The Secretary of State is appealing against the decision to the Supreme Court and has issued guidance to LAs instructing them to allow an additional bedroom in appropriate cases but to consider suspending payment pending the appeal.6

Claimants with bedrooms in excess of the above entitlement have their HB reduced by 14 per cent (if they have one excess bedroom), or by 25 per cent (if they have two or more excess bedrooms).7 The LA also retains the discretion to reduce HB further if it considers the amount payable is greater than is ‘reasonable’.8


The deductions do not apply:

  • for up to 13 weeks where the LA is satisfied that the claimant (or family member or relative who occupies the dwelling) could afford the rent when assuming liability, but only if s/he (or her/his partner) was not entitled to HB within the previous 52 weeks;
  • for up to 12 months if a member of the claimant’s family or a relative who occupied the dwelling dies.9
When do the rules take effect?

The rules apply from 1 April 2013.10 There is no transitional protection, so the deductions are calculated from that date and will be reflected in payments made from the first pay day following 1 April.

Will the rules apply to universal credit?

The restrictions will be imported into universal credit (UC), which will replace HB on a phased basis from October 2013, but the UC size criteria are applied in relation to members of the claimant’s ‘extended benefit unit’, rather than to ‘occupiers’.11 This will have the effect of excluding some current categories of occupiers including lodgers, sub-tenants and foster children.

Purpose and potential impact

Official line

The government set out the policy objectives of the new rules in its impact assessment (IA) in June 2012.12 They are:

  • to contain HB expenditure in the social rented sector;
  • to encourage greater mobility and make better use of the housing stock within the social rented sector;
  • to improve work incentives for working-age HB claimants.

The IA states that as at December 2011, the 3.3 million HB claimants in the social rented sector made up around 68 per cent of all HB claimants (approximately 63 per cent of social tenants were getting HB), and that it was ‘unfair to allow HB to pay for more rooms for claimants in the social rented sector than...in the private rented sector’. The restrictions will save around £980 million in the first two years, before taking into account the ‘behavioural impacts’ on claimants. These relate to the fact that the changes may incentivise claimants to move to smaller properties, freeing up their properties for tenants on LA waiting lists or in overcrowded accommodation, or offer spare rooms to a lodger or family member. They may also incentivise claimants to move into work or increase their hours to better afford their rent. The IA accepts, however, that these behavioural effects are uncertain and there is little current research which indicates what the likely impacts will be.

The IA states that the changes will affect an estimated 660,000 claimants in April 2013 (ie, around 31 per cent of all working-age claimants in social housing), who will lose an average of £14 a week. Most (around 81 per cent) are under-occupying by one bedroom.

The changes will have different regional effects, so that, for example, around 20 per cent of claimants in social housing in London will be affected, losing an average of £21 a week, whereas the figures for the North of England and Wales are more than 40 per cent and £12–£14 a week.

The government is providing an additional £30 million per year to the discretionary housing payment fund as a ‘safety net’ for some claimants affected by the changes (see below).


Critics are concerned that these measures will cause sudden and significant hardship for many claimants, including a disproportionate number of vulnerable claimants who tend to be in social housing, which was why it always exempted HB from restrictions in the past. Many claimants will not be in a position to make up the shortfall between their rent and HB, or to move to smaller accommodation quickly or at all, raising the spectre of increasing rent arrears and repossessions in the social rented sector. This, together with the cessation of most direct payments to landlords under universal credit, could pose great difficulties for providers of social housing and even threaten the financial viability of some schemes. A recent report commissioned by the National Housing Federation, based on a survey of 232 housing associations, found that more than three in five believed they would be significantly affected by the changes and that 90 per cent of those were expecting increased rent arrears.13

The restrictions will undoubtedly result in significant savings for the exchequer, but there is little evidence that they will act as a work incentive, or enhance mobility and better use of the housing stock within the social rented sector. The government’s IA shows that there is generally a mismatch between the needs and availability of social accommodation, with a surplus of three-bedroom properties and a shortage of one-bedroom properties. This means that, in many areas, there are insufficient properties for tenants to ‘downsize’ to, forcing them to move further afield or into the private sector. There are also regional variations, with the highest rates of overcrowding generally occurring in areas (such as London) with the lowest rates of under-occupation, reducing the potential impact of the changes on the problems of mobility and overcrowding.

The restrictions are likely to affect many tenants whose children have grown up and left home. They may have been living in their accommodation for many years and moving could uproot them from family, friends and support services. A large proportion of social tenants are disabled or have long-term health problems, and many homes are adapted for people with disabilities. An estimated 108,000 working-age tenants in social housing live in adapted homes with one or more spare rooms.14 Many will find it difficult to find suitable smaller accommodation and those that manage to do so may be uprooted from support services. The changes could also affect some foster carers with spare bedrooms who are between or awaiting placements.

Options for affected claimants

The most important safety net for affected claimants is discretionary housing payments, which can be paid by LAs to meet shortfalls between HB and rent. The problem is that payments are, by definition, discretionary, local authority funding is cash limited, and there has been a big increase in demand for payments from private tenants because of all the HB cuts. LAs are likely to prioritise vulnerable groups such as disabled claimants and may only make payments for a limited period while claimants arrange longer term solutions - eg, finding alternative accommodation. There is no right of appeal against the refusal of a payment, but claimants can request a review and decisions are ultimately challengeable by judicial review.

There is a right of appeal against the imposition of the deductions, but the circumstances and percentages are prescribed in the regulations and cannot be varied by a tribunal. The only matters which can therefore practically be pursued via appeal are likely to be whether a particular room should be classed as a bedroom, whether a person is occupying the dwelling (eg, during a period of temporary absence), and whether children are entitled to separate rooms because of disability (see above). There may be scope for further test cases relating to the needs of disabled claimants for additional rooms (this is partly dependent on the final outcome of the Burnip, Trengrove and Gorry cases – see above).

In practice, many claimants subject to the deductions will be faced with the stark choice of having to make up the shortfall between their rent and HB from other resources, or moving home. Letting a spare room to a subtenant or lodger may be an option in some cases (permission may be needed from the landlord to do this), but the rules about how payments are treated and whether non-dependant deductions apply can be complex (see pp266 and 924 of CPAG’s Welfare Benefits and Tax Credits Handbook 2012/13) and claimants should seek advice before proceeding. The rules will also be different under UC (see above) as lodgers and sub-tenants will no longer count when applying the size criteria, but neither will the income received in most cases.15

Claimants who start to accrue rent arrears should discuss the situation with their landlord and seek independent advice at an early stage.

Correction post publication:

Note: This article as originally published stated that HB would be reduced by 14% or 25% under these rules. That is only true for someone who was receiving maximum HB. The 14% or 25% reduction is in fact applied to the eligible rent (ie the amount of rent which would be covered if a person was receiving maximum HB). For someone whose income is above their applicable amount, the percentage loss may in fact be much higher than 14% or 25% as the following example makes clear:

Jane is aged 33 and lives alone in a 2 bedroom housing associaton flat.

Her rent (excluding ineligible amounts is £90 per week).

She works part time and earns £156.70 per week after tax etc.

Before the application of the size criteria her HB is therefore worked out as follows:

Income = £151.70 after £5 disregard

Applicable amount = £71.70

Income which exceeds applicable amount = £80

65% of this £80 (£52) is deducted from her maximum HB

HB = £90 - £52 = £38 per week

After the 14% reduction is applied her eligible rent is reduced by 14% to £77.40.

Her HB is therefore now = £77.40 - £52 = £25.40

Although her eligible rent has been reduced by 14% the effect on her HB is a reduction from £38 to £25.40 per week (or about 33%)

Please be aware that welfare rights law and guidance change frequently. Therefore older Bulletin articles may be out of date. Use keywords or the search function to find more recent material on this topic.

  • 1. Reg 5 HB (Amendment) Regulations 2012 (SI No.3040), which inserts new regs 12BA, A13 and B13 into the HB Regulations 2006
  • 2. Reg A13 HB Regulations
  • 3. Reg 2(1) and para 3(1A) Sch 2 HB Regulations
  • 4. Reg B13(5) and 2(1) HB Regulations
  • 5. See reg 7 HB Regulations and associated caselaw
  • 6. HB/CTB Circular A6/2012
  • 7. Reg B13(3) HB Regulations
  • 8. Reg B13(4) HB Regulations
  • 9. Reg 12BA HB Regulations
  • 10. Reg 1(3) HB (Amendment) Regulations 2012
  • 11. paras 8–12 Sch 4 Draft Universal Credit Regulations 2013
  • 12. Housing Benefit: under occupation of social housing, Impact Assessment, 28 June 2012
  • 13. Impact of Welfare Reform on Housing Associations – 2012 baseline report, Ipsos MORI for the National Housing Federation, January 2013
  • 14. ‘New rules could price thousands of disabled people out of their homes’, National Housing Federation, 23 March 2011
  • 15. Up to £4,250 per annum is not taxable and therefore not counted as income under the UC Regulations