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

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 likelyQuite likelyUnsureQuite unlikely Very unlikely Fall into rent arrears18%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 member3%8%11%8%70% Take in a lodger2%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

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

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

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

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.