Areas of Britain most affected by ‘bedroom tax’ are hardest to downsize in, research finds

Research commissioned by the Department of Work and Pensions (DWP) on the implementation and effects of housing benefit cuts for those working-age tenants judged to have ‘spare’ bedrooms in social housing has been released today.

Part of the Welfare Reform Act of 2012, the cuts in housing benefit – termed the Removal of Spare Room Subsidy (RSRS) by the DWP, and dubbed by some as the ‘Bedroom Tax’ – has proved divisive, leading to public protests throughout the country. The policy impacts on around half a million households in the UK.

The latest report is the second and final piece of research into the impact of the RSRS by Cambridge University’s Centre for Housing and Planning Research, in association with Ipsos Mori. Commissioning the research was a condition imposed by the House of Lords for passing the Welfare Reform bill. An interim report of Cambridge research was published by the DWP in July 2014.

The new report, which brings the analyses up to November 2014 to cover the first twenty months of RSRS implementation, shows a drop in affected households of 14.2% during that time – from 547,000 to 465,000 – with the greatest reduction in London.

Landlord surveys suggest that between policy enactment in April 2013 and autumn last year up to 45,000 had downsized within the social sector – no more than 8% of those affected by RSRS. A further 87,000 affected claimants were still seeking to downsize in November 2014.

‘High pressure’ areas such as London and the South East, where overcrowding is a major issue and space is a premium, have the lowest number of tenants affected by the RSRS and the highest rates of successful downsized rehousing.

Researchers say this is mainly down to the types of housing stock prevalent in these areas: more one-bed properties within local authorities, and more tenants available to swap with overcrowded families, which may ultimately have a ‘positive knock-on effect’ in such areas.

However, in much of the rest of the UK, particularly areas such as Wales and the North East of England where overcrowding is not such a problem, there is a gulf between the size of households and that of available social housing stock: a dearth of much needed one-bed properties and a surplus of three-bed properties, the hardest to let under the RSRS.

“While research found similar rates of registration for downsizing, it’s much harder for some tenants to downsize than for others,” said Anna Clarke, co-author of the report from Cambridge’s Department of Land Economy.

Under the RSRS, children under the age of ten are expected to share a room. Those of the same gender under 16 are also expected to share. Pensioners, however, the group most likely to ‘under-occupy’ according to research, are exempt from the cuts.

Clarke points out that to be correctly occupying a three-bed property, for example, a family would need three children or two different gendered children over ten. 

“Rehousing would normally be within a local authority, so the problem is compounded in areas with limited types of property. Some areas have stock consisting largely of suburban council estates full of three-bed houses. Yet most people at the point of applying for housing are single, or young families with one or two small children, and so would be considered to be under-occupying a property that size,” Clarke said.

Many local authorities told researchers there are not enough one-bed properties for single people and childless couples who need a home, particularly now they are competing with downsizers since the RSRS. The research found that social landlords are often reluctant to put people into shared housing, seeing it as a retrograde step.

“There is not much hope of finding a smaller property,” one local advice agency told researchers. “This week there is one one-bedroom flat available on the CBL system, and there are 120 bids on it.”

Young people – particularly single young people – will struggle the most to access social housing as a result, says Clarke. She recently completed research for the charity Centrepoint showing that a quarter of 16-24 year olds in the UK have experienced ‘unsafe homelessness’, sleeping in cars and sofa-surfing as a result of having nowhere to go.

“Access to homes for young people is getting harder in every direction: the cost of owning, demands on private renting. The RSRS restrictions are another barrier,” said Clarke.   

While the majority of households prioritise their rent and have budgeted for the RSRS, and the report suggests landlords have been largely successful in transitioning tenants, the evidence shows that many of those affected are struggling.

The research found that 76% of those still affected by the RSRS in 2014 reported cutting back on food, and 46% cutting back on energy use, in order to pay the shortfall. “That £60 a month I have to pay (RSRS) would cover food for two weeks or it would mean I could keep the house warm. It just feels like I’ve had two weeks of money taken off of me,” one affected tenant told researchers.

A quarter said they had to borrow money, mostly from friends and family, but at least 7% cited lenders such as payday loans. Around 40% of claimants reported currently being in arrears on their rent.

Some parents were forced to cut back on activities with their children, which they found upsetting. “I panic about struggling to pay for things… We don’t spend any money at Christmas,” said an affected claimant.  

“The RSRS affects a third of working-age tenants on housing benefit – a tenth of the whole social sector. This is a huge amount of people affected compared to other welfare reforms such as the benefit cap, which – thus far – has been tiny in comparison,” said Clarke. 

Local authorities have a resource to help those most in need, often in the form of one-off payments known as Discretionary Housing Payments (DHP). The Government made substantial increases to funding allocation to local authorities for DHP, and the researchers found that this mitigated some of the initial hardship during implementation of the RSRS, with 23% of those still affected in 2014 having received some form of DHP.     

However, the future allocation of DHP beyond April 2016 is uncertain as yet, and many local authorities were concerned that, with pressure on finances, it would be reduced.

In Scotland, it’s a very different picture. The Scottish Parliament is strongly opposed to the RSRS, but currently lacks the power to opt out, so has topped up DHP funding to completely ameliorate the effects of the policy – indicating clearly to landlords that all tenant shortfalls are to be subsidised using DHPs.      

Consequently, to all intents and purposes, the RSRS is not practically in effect in Scotland, says Clarke, although Scottish landlords still have to ensure that all tenants have the correct DHP paperwork.  

One of the Government aims was to incentivise people to work through the RSRS, but researchers found no evidence of this. While a tiny percent – three percent overall – had found work, an almost equal amount had lost it. “Many said they were actively seeking work in response to the RSRS, but they don’t seem to be finding it,” said Clarke. 

The researchers didn’t find much evidence of empty housing stock, as some had feared. While 42% of landlords reported difficulties in letting some properties because of the RSRS, Clarke says this would appear to translate to landlords looking harder for tenants – allocating larger properties to those in less urgent need of housing, or through websites and letting agents – as the overall proportion of vacant properties appears to have changed little.

Overall the research concludes that landlords have also been largely successful in transitioning people to the RSRS, the impact has been manageable and people prioritise their rent, says Clarke. But this comes at a cost to tenants.

“Landlords aren’t going bust. There aren’t great swathes of empty houses across England, or enormous rent arrears causing mass evictions. But that’s not the same as saying the impact for individual tenants is manageable, and the evidence is that many people are really struggling as a result of this policy,” said Clarke.

“Most people can’t downsize, or move away from families and schools, or suddenly find work after years of looking. So they just have to keep cutting back their spending. And people on benefits don’t have a lot of spare cash beyond paying for the essentials in life.”

Read the full report on the DWP's website here.