In April 2013, the “bedroom tax” will come in to force.
The change to the housing benefit rules will see a cut in the housing benefit of claimants with a spare room. The government will use it’s “size criteria” to determine the number of bedrooms that a family actually needs, and make housing benefit payments accordingly.
Dubbed the “bedroom tax”, it is in fact not a tax, but simply a reform of housing benefit payments which forms part of the new universal credit scheme which will see payments amended according to how many bedrooms claimants actually require.
Housing benefit costs currently stand at £23bn, and the government argue that this reform will help to cut this bill, free up more living space for overcrowded families, and encourage people to get jobs.
Housing charities are warning that the reduction in housing benefits will result in higher levels of rent arrears, and greater homelessness.
Government estimates show that over half a million tenants will be affected by the new rules. It says that taxpayers will save £505m in 2012-13, and £540m the following year.
Who will be affected?
This change will affects council tenants, and those who rent from housing associations. Private sector tenants will not be affected. The government estimates that roughly a third of social sector claimants, approximately 660,000 households, will have their benefit cut. Only working age tenants will receive reduced payments.
How much will the reduction be?
Tenants with one spare room will see a reduction in their housing benefit of 14%. If they have two or more spare rooms, the reduction will be 25%. According to the government, this will mean an average loss of about £14 a week for council tenants. Those who rent from housing associations are facing an average loss of about £16 a week.
How many bedrooms are you allowed?
The new rules allow a maximum of one bedroom for each adult or couple. Children aged 16 or under are expected to share if they are the same gender. Those under 10 are expected to share whatever their gender. Disabled tenants will be allowed a bedroom for full-time carers. The number of bedrooms in the property will be determined by the landlord’s tenancy agreement, so you cannot claim a bedroom is actually a living room.
Can you keep a spare bedroom?
You can keep a spare bedroom but you will lose benefit. Parents who are separated are not allowed to keep a vacant bedroom for a child who visits. Foster children are not counted as permanent members of a household.
What about students?
From April, parents will not be penalised if a student is away, as long as they sleep at home for a minimum of two weeks a year. When universal credit comes in (autumn), students will need to be at home for at least six months to avoid a benefit cut.
What about lodgers?
Claimants with a paying lodger will be allowed to keep the first £20 of weekly rent, but housing benefit will then be cut, pound for pound, on the rest of the rent they receive. When universal credit is established, housing benefit will be cut, but tenants will be allowed to keep all the rental income (although only the first £4,250 of annual rent is free of income tax).
What about pensioners?
If either half of a couple are of pensionable age, they will not get a reduction to their housing benefit. When universal credit is established, both will need to be over pensionable age, or one will need to be in receipt of pension credit, in order to qualify for the maximum benefit.