Rent Arrears Rise May Be Due To Bedroom Tax

7th February 2014

Housing Regulator publishes research on rent arrears six months into Welfare Reform.

The Scottish Housing Regulator today published the findings of the second phase of its research on the early impact of Welfare Reform on social landlords. The research covers the period to September 2013, six months into the removal of the Housing Benefit Spare Room Subsidy (commonly known as the ‘bedroom tax’).

The Regulator’s research found that total rent arrears for all responding social landlords was £73 million at the end of September 2013, which is 4.43% of the total rental income due for 2013-14, up from 3.89% in September 2011 and 3.82% in September 2012.

The Regulator’s research, based on feedback from more than 80% of social landlords in Scotland, follows its earlier report which examined the position to June 2013.

Iain Muirhead, the Regulator’s Director of Strategy and Communications, said “Our role is to protect tenants’ interests. To be successful and deliver for their tenants, social landlords need to be financially healthy. This research helps us to understand the challenges landlords face. The picture is complex, and some of the emerging patterns are subtle rather than stark. Arrears fluctuate seasonally, and other evidence suggests an increased use of Discretionary Housing Payments to mitigate arrears. Nevertheless, our research indicates that many landlords believe that Welfare Reform is beginning to have a significant impact on their arrears levels.”

The research examined landlords’ perceptions of the impact of the Welfare Reform changes. Almost half of responding local authority landlords and almost a fifth of RSLs estimated that more than 10% of their arrears at September 2013 were attributable directly to the housing benefit reductions introduced in April 2013.

Just over three quarters of responding landlords told the Regulator they could identify the monetary value of arrears at September 2013 arising directly from the reductions. The total cash value of these arrears reported by this group is £4.86 million.

The research found a small increase in the level of rent arrears as a percentage of rental income due to registered social landlords (RSLs) between March and September 2013. This increase contrasts with a slight decrease in RSL arrears over the same period in each of the previous two financial years.

The research also looked at changes at individual RSL level. Just over half of responding RSLs saw an improvement in their percentage arrears position in the three months to September, whereas one third saw an improvement between March and June.

The Regulator is now launching the third survey, which will seek feedback from landlords on the position to the end of December 2013.

Read the second research report on the Early impacts of Welfare Reform on rent arrears at - http://www.scottishhousingregulator.gov.uk/publications/early-impacts-welfare-reform-rent-arrears-research-report-2