Rent arrear increases follow introduction of bedroom tax

5th June 2013

The introduction of the “bedroom tax” has resulted in an increase in arrears and the level of debt of tenants affected.

Members of The Highland Council’s Finance Housing and Resources Committee were told that the number of tenants affected by the “bedroom tax” and in arrears had risen from 724 before it was introduced on 1 April to 1,144 on 18 May and the total of arrears had risen from £173,491 to £197,795 in the same period. This compared with a net decrease in arrears levels for all Council tenancies of £79,900 in the same period.

The Council also anticipates an increase in demand for transfers to smaller properties as a result of the “bedroom tax” . At present there are 768 transfer applicants who need a smaller property, 417 of whom are affected by the “bedroom tax” . Since 1 April, there has been an increase of 173 transfer applicants needing one or two bedroom properties. The Council expects to see the number of transfer applicants needing smaller houses increasing as the financial implications of the “bedroom tax” begin to affect more households.

Tenants assessed as living in a property that has 1 bedroom more than they need have their housing benefit reduced by 14% of eligible rent and where they have 2 or more “spare” bedrooms, benefit is reduced by 25%.

There are currently 2,857 tenants in Highland affected by the “bedroom tax” , of whom 1,847 (65%) are Highland Council tenants and 1,010 (35%) are housing association tenants. In total 2,336 are subject to a 14% reduction in housing benefit and 521 are subject to a 25% reduction.

A joint exercise was undertaken by staff within Finance and Housing and Property Services during March and early April this year to contact tenants affected by these DWP changes. Contact was made with 1,047 (47%) tenants. Where contact was not made following at least 3 attempts, letters were issued containing advice on the change and contact details for help and advice.

Where personal contact was made high numbers of tenants (984 or 94%) were aware of the new rules, and 565 (54%) indicated that they intended to re-budget in a way that enabled them to pay the shortfall between their rent and housing benefit entitlement rather than move house. However 377 (36%) indicated that they were likely to seek a transfer to a smaller house.

Committee Chairman, Councillor Dave Fallows, said: “We are closely monitoring trends and there is clear early evidence that the UK Government’s change to welfare benefits is having a significant impact on our tenants ability to pay their rent. There is a huge issue for the Highland community and we will be doing everything we can to help our tenants and press for change.”