DWP: 'no plans' to increase bedroom tax reductions

Published by 24publishing for 24dash.com in Housing and also in Central Government, Communities, Local Government

The Department for Work and Pensions (DWP) says it currently has "no plans" to amend the percentage reduction rates for the so-called 'bedroom tax' that will hit social housing tenants next April.

From that date, some 660,000 working age social tenants across Britain will face cuts to their housing benefit for having spare rooms. Deductions of 14% and 25% will be made for one and two or more spare bedrooms respectively.

The move is part of the Government's plan to reduce the benefit bill, bring the social sector more inline with the private rented sector and free up larger homes for families on the waiting list.

The clarification on reduction rates was in response to the Council of Mortgage Lenders' (CML) concerns expressed in its response to the draft Universal Credit regulations.

The CML - whose members have lent some £60bn to UK housing associations - said it would "welcome clarification and commitment from government that these rates will not be increased and will be reassessed in light of the findings of the government’s forthcoming review of the operation of the size criteria".

In response, a DWP spokesperson said: "We currently have no plans to amend the percentage reduction rates.  The independent research will review the effects of the introduction of the size criteria but any changes will be dependent on the fiscal position of the time."

The CML said it feared that the combined effect of the welfare changes could be to "destabilise landlords’ income streams" with consequential impacts on lender and investor confidence in the sector as a whole, particularly the smaller to medium-sized housing associations.

This, despite public commitments from Lord Freud that changes heralded by the Welfare Reform Act should not be implemented in a way that would undermine the financial viability of the sector and lender/investor confidence in it.

The CML also added concerns it has around tenants taking in lodgers - who would still be treated as under-occupying even when an otherwise unused room is being let.

It said: "Although the Universal Credit regime would disregard 100% of the lodger’s rent payment, the lodger would not be treated as occupying any rooms for the purposes of the size criteria and so taking a lodger would not enable a tenant to avoid the under-occupation deduction.

"While the rental income disregard from the lodger is welcomed on the basis that it can support a tenant to remain in their home, it is slightly perverse that the claiming tenant should still be treated as under-occupying when an otherwise unused room is being let."

The DWP spokesperson added: "Universal Credit will be a much simpler system. For example under Universal Credit the details of a lodger or their income does not have to be established and they will not be counted as part of the household for benefit purposes. Any rent they pay is ignored - which most cases will be of benefit to the claimant."