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Underoccupation, Housing Benefit and the ‘Bedroom Tax’

The Impact of the Social Sector Size Criteria

http://www.cchpr.landecon.cam.ac.uk/


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


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


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


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


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


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%)


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


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


Response to the SSSC

Very likely Quite likely Unsure Quite unlikely

Very unlikely

Fall into rent arrears 18% 17% 16% 37% 35%

Seek to move to a smaller property

13% 12% 15% 10% 50%

Earn money through work to pay rent

15% 14% 11% 6% 53%

Ask for support from someone else in household to pay rent

4% 6% 4% 2% 84%

Ask for support from someone else outside household to pay rent

5% 9% 5% 7% 74%

Move in a family member 3% 8% 11% 8% 70%

Take in a lodger 2% 3% 8% 5% 82%


Likelihood of downsizing due to SSSC

% quite/very likely to consider downsizing due to SSSC

All tenants (n=452) 25%

Tenants with 1 bedroom in excess of bedroom standard (n=356)

23%

Tenants with 2 or more bedrooms in excess of bedroom standard (n=96)

34%

Tenants with one or more spare bedrooms in property (n=330)

31%

Tenants without a spare bedroom (n=122) 17%

Tenants who believe home too big (n=54) 74%

Tenants who believe home the right size or too small (n=398)

18%

• Relationship between desire to move in general and willingness to downsize

• No clear relationship with financial impact of SSSC and willingness to

downsize


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


Implications for Social Landlords - Rent arrears

Average weekly shortfall £14

Estimated % tenants failing to pay*

42%

Potential weekly arrears £3,292,800

Potential annual arrears £171 million

*Estimated from survey data


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



• 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



• Alternative accommodation in the Private Rented Sector liable to higher rents



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


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.

