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DWP sneaks out official bedroom tax report

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DWP sneaks out official bedroom tax report

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Published by Jon Land for 24dash.com in Housing and also in Central Government, Local Government

DWP sneaks out official bedroom tax report DWP sneaks out official bedroom tax report

An official report into the early months of the bedroom tax has revealed the impact the controversial policy had on social housing landlords and their tenants.

Published by the Department for Work and Pensions on the day of a Cabinet reshuffle, the 'Evaluation of Removal of the Spare Room Subsidy Interim report' shows that despite the best efforts of housing providers the bedroom tax led to a dramatic rise in rent arrears but very few people downsizing - one of the policy's key objectives.

The report also showed that five months in, 20% of affected tenants had failed to make up any of the shortfall in the rent they owed to their landlord.

Key findings from the report for the first six months of the policy show:

  • Total arrears (for all reasons) held by social landlords increased by 16% between April and October 2013
  • A total of 4.5% of affected claimants were reported by landlords to have downsized within the social sector during the first six months of implementation.
  • 1.4% of affected claimants had moved to the PRS. This was more common for the tenants of landlords based in the north of England and much less common in London.
  • Very few affected claimants have taken a lodger. 
  • Around 19% of affected tenants have registered for downsizing
  • There was widespread concern about the impact of potential future evictions on local services, and on landlord finances as well as on the lives of vulnerable people

Here are more details from today's report:

Preparedness and implementation

Most social landlords felt that their staff were very well prepared for the implementation of the Removal of the Spare Room Subsidy (RSRS) and the long run-in period was appreciated.

Overall 87% of landlords surveyed were confident they knew which tenants were affected by RSRS in at least 95% of cases, and a further ten per cent knew most. Landlords working across many areas were more likely to be having difficulties in knowing which tenants were affected.

Systems for communicating changes of circumstance to landlords were not so welldeveloped with only around half of landlords surveyed reporting to be regularly informed by the LA about tenants starting to be affected.

Reclassification of the homes (in terms of number of bedrooms) has been very small scale, under 0.1% of stock, with fewer still physically altered.

Communication with claimants

Good joint working practices were reported between local authorities and social landlords in most areas, with examples of good practice such as producing joint letters sent to tenants and agreeing who will visit.

Just over half (53%) of landlords report having visited at least 90% of affected tenants, and 70% had had telephone contact with over 90%. Claimants, however, recall lower levels of contact: 86% of those affected remember receiving notification of changes, but of those who do, most recall a letter (75%) while only 13% recall a visit.

Discretionary housing payments (DHPs)

DHPs have helped some households to meet their rental shortfall. Some local authorities struggle to make long-term plans for this resource and suggested that this was because of uncertainties around both future demand and the size/availability of the fund. The 2014-15 allocation was only announced in January 2014, after the fieldwork for this phase of the research had taken place. There was some variation in who was assisted, even within a local authority, in this early phase of implementation.

A key concern raised by landlords and local agencies is that disabled people in adapted homes have not always been awarded DHP because disability benefits, which are intended to help with some of the extra costs of having a long-term disability or health condition, can cause them to fail means tests based on their income. Local agencies are also concerned about some groups who fail to apply for DHP, or fail to adequately evidence their application, especially those with mental health difficulties. More than half (56 per cent) of RSRS claimants surveyed who have not applied for DHP said they were not aware of it. The claimants who were unaware of DHP were similarly likely to other claimants to report having difficulties paying rent and similarly likely to be in arrears.

Early impact on claimants

A total of 4.5% of affected claimants were reported by landlords to have downsized within the social sector within the first six months of implementation, which was a key aim of the policy. Landlords with the lowest proportion of affected tenants have downsizing rates of almost 16%, four times higher than those with the highest proportion affected, despite similar proportions of affected tenants registering for downsizing. This suggests that landlords with the highest proportion of affected tenants will have more difficulties in meeting the demand for downsizing. Overall, landlords report that around 19% of affected tenants have now registered for downsizing, compared to previous rates of downsizing which were typically under 0.5% of all tenants downsizing in a year, although they had not yet been able to accommodate most of those who wanted to move to a smaller home.

A further 1.4% of affected claimants had moved to the PRS. This was more common for the tenants of landlords based in the north of England and much less common in London.

Finding work and increasing earnings

18% of affected claimants say they have looked to earn more through employment related income as a result of the RSRS, rising to 50% of those who said they were unemployed and seeking work.

Both local authorities and landlords had encouraged tenants to find work, although they were concerned about the long-term barriers faced by tenants. Claimants also reported difficulties finding work because of disability, having been out of the workplace for a long period and having young children (and being their sole carer). Some had asked employers for additional hours in their current jobs, although employers were sometimes unable to accommodate this.

Taking lodgers

Very few affected claimants have taken a lodger. A frequently given reason was concerns around sharing their home with someone they did not know. This was a particular concern if claimants had children or if they felt themselves to be vulnerable. Some had made enquiries about taking in a family member.

Paying the shortfall

Landlords reported that, five months into the RSRS, 41% of tenants have paid the full RSRS shortfall, 39% have paid some and 20% have paid none.

There was widespread concern that those who were paying were making cuts to other household essentials or incurring other debts in order to pay the rent. 57% of claimants reported cutting back on what they deemed household essentials and 35% on non-essentials in order to pay their shortfall.

A quarter of claimants (26%) said they had borrowed money, mostly from family and friends (21% of all claimants); 3% had borrowed on a credit card and 3% taken payday loans.

In addition, 10% had used savings and nine per cent been given money from family.

Early impact on social landlords

Nationally, 11.1% of all social tenancies are affected by the RSRS5. The landlords’ survey found that this varies between landlords with the proportion of landlords’ tenants affected varying from under 5% to more than a quarter.

Arrears

Total arrears (for all reasons) held by social landlords increased by 16% between April and October, although it must be emphasised that the cause of this is uncertain and cannot be directly attributed to the RSRS. Landlords state that they will eventually evict RSRS-affected non-payers, though at the time of the research most were currently only in the early stages of this process.

Many landlords expressed concern that collecting rent from people who can’t afford to pay whilst in their current circumstances is damaging relations between landlords and tenants.

Allocations and development

Difficulties in letting larger properties were reported by 41% of landlords who participated in this research – primarily of three bedroom homes. However, it should be noted that national voids figures show no statistically significant increase. Around a third of developing landlords have altered their build plans as a result of RSRS or the Benefit Cap in order to build more one bedroom homes and/or fewer larger homes.

Early impact on local authorities

Most local authorities and landlords have changed the size of homes they consider applicants to be eligible for, and are now in line with the DWP’s rules. They suggest that this has contributed to increased waiting times for smaller homes for those on the waiting list, while making larger properties available for other families on the waiting list.

Here is the report's conclusion: "At the time of the research, four out of five claimants affected by the RSRS were reported by landlords to be paying some or all of their shortfall, although half of these had failed to pay in full.

"There was widespread concern about the impact of potential future evictions on local services, and on landlord finances as well as on the lives of vulnerable people. At the time of writing, few tenants have found work or taken in lodgers.

"However, demand for downsizing has been greater than anticipated, although, in many areas, this demand has thus far been difficult to meet. At the time of this research, there had been very few evictions
solely due to the RSRS.

"The evaluation will continue to monitor this situation and any resultant impact on landlords, local authority services or on the lives of claimants themselves, in its next round of fieldwork later in 2014."

The research carried out by the Cambridge Centre for Housing and Planning Research and Ipsos MORI on behalf of the Department for Work and Pensions.

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