Underoccupation, Housing Benefit and the ‘Bedroom Tax’

1. Underoccupation, Housing Benefit and the ‘Bedroom Tax’ The Impact of the Social Sector Size Criteria

2. The Social Sector Size Criteria • Currently Housing Benefit paid for tenants in social housing takes no account of the size of property required • In contrast to payment of LHA to private sector tenants • Control on access to larger homes in social sector has been via allocation/letting policy • Welfare Reform Act 2012 introduces SSSC • reduction in HB entitlement if discrepancy between size of home occupied and size of home required • 14% reduction for 1 ‘spare’ bedroom, 25% for 2+ bedrooms • 670,000 affected

3. Why introduce the SSSC? • According to DWP: • “to contain growing Housing Benefit expenditure; encourage mobility within the social rented sector; strengthen work-incentives and make better use of available social housing” • However… • HB expenditure will only reduce if people don’t move • Better use of stock depends on people moving …so it’s critical to understand: • how people will behave • the capacity to meet need/demand

4. Predicting behaviour: existing knowledge • “there is little research that provides any indication about the possible behavioural impacts” (DWP) • No direct precedent for policy • Models based on ‘extremes’ unlikely • Most research on downsizing focused on older tenants/owner occupiers • Existing evidence: • Housing moves/downsizing linked to ‘correcting disequilibrium’ • Most underoccupying tenants think their homes are the ‘right size’** • Strong inertia – most would not move even if rents were up to £10pw higher than if they moved*** * DWP Impact Assessment, 2011 ** Department of the Environment, 1992 *** Walker et al, 2000/2002

5. Tenant behaviour: the research • Aim: understand how those affected by the SSSC might respond • Survey of tenants who would be affected by SSSC to understand current circumstances and likely response to loss of benefit • Telephone survey in summer 2011 • Sample of 452 tenants of 3 housing associations • Not fully nationally representative, but key demographics broadly reflective of population affected by SSSC

6. Our research: current circumstances • Tenants and their home: • Average length of tenancy 11 years • Underoccupation often result of ‘empty nests’ but 41% underoccupying from outset of tenancy • 79% had only one bedroom in excess of the SSSC standard • 27% claimed not to have any ‘spare’ bedrooms • May occur if people expected to share are not doing so • One in five had home adaptations for disability

7. Desire to move • Most (82%) happy with size of current home • Desire to move mostly linked to external factors eg dissatisfaction with neighbourhood, rather than with the home • Desire to downsize limited (7%) but related factors (eg stairs, unsuitable for living with disability) given by further 15% • Financial factors practically never mentioned (1%)

8. Benefits and Finances • Majority claiming out-of-work benefits, but only 16% claiming JSA • 19% of household include someone in employment • 43% having some difficulty getting by financially • 72% ‘never’ or ‘hardly ever’ have money left over at the end of the week/month • 41% run out of money before the end of week/month always or most of the time • Difficult to predict who is most likely to be struggling financially • Not correlated with household composition, employment or receipt of benefits

9. Impact of the SSSC • Average loss of £13pw – most will lose less than £15pw • 52% state will be ‘very difficult’, 31% ‘fairly difficult’ to pay this extra towards rent

10. Response to the SSSC

11. Likelihood of downsizing due to SSSC • Relationship between desire to move in general and willingness to downsize • No clear relationship with financial impact of SSSC and willingness to downsize

12. Implication for landlords - Allocations • Survey findings on underoccupancy since start of tenancy backed up by allocations data (CORE) • 36% of singles/couples allocated 2 bed+ property* • Shortage of one bedroomed properties, relative the demand from single person/couple households. • Two bedroomed bungalows best suited to the needs of the elderly – mostly singles/couples • Small bedrooms only suitable for one occupant each, but large numbers of families with young children to accommodate • To try to reduce child densities on a problematic estate. • To support a household to accommodate part-time children (such as those who visit at weekends) or to foster children. • In anticipation of an increase in family size or needs • To incentivise downsizing by offering a property that still allows one spare bedroom • Decants offered a like for like swap for their current home. *CORE 2009/10

13. Implications for Social Landlords - Rent arrears *Estimated from survey data

14. Case Studies – Local Impact • Local mismatches between demand and supply are likely • Up to 8 years of relets required to accommodate those who may wish to downsize

15. Case Studies – Local Impact • In many areas supply of smaller properties will be greatly less than required • Either for potential demand for those affected by SSSC wishing to downsize • Or to meet need from HB-dependent households waiting for social housing • This cannot be redressed in the short-term

16. Case Studies – Local Impact • Alternative accommodation in the Private Rented Sector liable to higher rents

17. Case Studies – Local Impact • Focus groups identified potential impact on households and communities: • Those unable to move required to live on below benefit-level income • Risk of increase in doorstep lending and severe financial difficulties • Loss of flexibility in living arrangements • Disruption to settled communities and support networks

18. Conclusions Policy outcomes will be heavily dependent on constraints on exercising choice Financial impacts significant: For tenants - but difficult to predict who will be hardest hit For social landlords – especially in areas of high underoccupation and low supply of smaller properties Extreme pressures on available 1 bed properties Wider impact beyond 670,000 directly hit – on allocations, older people etc.