I previously discussed the social housing rental of a 2.9 bed house and here I add something to that in light of comments received to clarify for the avoidance of doubt some issues and also in light of developments such as KHT reclassifying some properties downwards - ie from a 3 bed to a 2 bed.
The 2.9 bed house
If a current 3 ‘bed’ house has the smallest bedroom measuring 9ft x 7ft it measures 63 square feet and as regulation and housing law states a single bedroom – that is a 1.0 bedroom – has to be 70 square feet (see below for legal opinion on this) then a 9 x 7 ‘room’ is accurately 0.9 of a bedroom. Hence the 2.9 bed house..
The ‘accurately’ bit is important as the A4/2012 says social landlords should describe the property ‘accurately’ for bedroom tax purposes and in terms of rent charged. So if the social landlord tells the local council a property is a 2.9 bed house and not a 3 then the bedroom tax could be avoided as the regulations say it has to be one (1.0) bedroom above the occupancy and not 1.0 room.
What that leaves out is the ‘accurate’ description for rent charged which I now address.
Knowsley Housing Trust (KHT) a social landlord recently announced it has reclassified 566 properties down – say from 3 bed to 2 bed or 3.0 bed to 2.0 bed properties – and as a result is reducing and taking a hit of £250k per year in rent. If you divide £250k per year by 566 properties this become £8.47 per week. What this means is the rent difference between a 2 bed and a 3 bed is £8.47 per week but here to make the numbers easier I will assume a £10 per week difference to make the argument easier. So, for example a 2 bed rent is £80pw and a 3 bed is £90pw
NB – in the KHT example the £8.47 per week loss of rent by downgrading the property size is less of a reduction that the 14% bedroom tax deduction of £11 – 12 yet as it takes the 566 tenants out of the bedroom tax can be seen as reducing the financial risk to arrears.
2 bed @ £80 pw and 3 bed @ £90pw example
If the social landlord accurately describes the now ‘3 bed’ house as a 2.9 bed house then the existing rent of £90pw reduces to £89 per week so the rent charged accurately reflects the size.
- The tenant sees a £1 per week reduction in rent and avoids the bedroom tax of £12.60 per week (14% of £90)
- The landlord reduces its income by £1 per week – a 1.1% reduction from £90 to £89pw.
- The landlord by taking £1 per week less avoids a potential £12.60 per week arrear
- The landlord can in monetary terms easily get back this £1 per week loss by maximising its rent increase, which in any case it has to do because of the increased risk to arrears the bedroom tax (and other welfare reforms) pose to arrears.
The above makes perfect financial sense for both the social tenant and the social landlord. We know 81% of likely bedroom tax recipients under occupy by 1 bedroom and so is ALL smallest bedrooms were 63 square feet then 535.000 or so of the 660,000 bedroom tax affected would no longer be affected and the arrears risk the bedroom tax poses to social tenant and social landlord would dramatically reduce.
Yet of course this can only happen IF the smallest room is less than 70 square feet.
That is what we don’t know – Just how many of the smallest bedrooms are less than 70 square feet? Yet that is easily sorted by the tenant measuring the smallest ‘bedroom’ and informing the landlord and then the rent is recalculated to reflect this and in the above example becoming £89 pw rather than £90 pw. Similarly if the bedroom is 67.2 square feet (0.96) then the rent becomes £89.60 per week a £0.40p per week reduction yet still avoids the bedroom tax.
Yes this will involve some admin cost for the landlord but it is a much lower cost than potentially losing 14% or 25% through the bedroom tax deductions. Even if the tenancy agreement needs to be varied by a deed of variation to go from a 3 bed property to a 2.9 bed property the added cost of this is still going to be less than the bedroom tax deduction risk to arrears.
in the KHT example as I stated instead of the rent reduction per property being £8.47 per property per week it would have been 84.7 pence per property per week if the 2.9 bedroom option was taken.
Yes – The above very accurately describes each property. Why should a social tenant with 2 large bedrooms pay the same as another who has 2 small ones? Why in the KHT example should a tenant with 2 bedrooms and a boxroom pay the same rent as another tenant with 2 bedrooms only? The rent level should accurately reflect that in all terms of fairness.
NB – The above can also reduce a 25% bedroom tax reduction to a 14% reduction .
More importantly, a proposal like the above would conform to the bedroom tax guidance as it would accurately describe both the property size and accurately readjust the rent level charged on a much fairer basis.
It would allow the social tenant and the social landlord to have surety that the bedroom tax does not massively disrupt the business and family life and all the other pernicious consequences we now all know through the awareness of the human interest stories that have been all over the TV and other media.
Ironically, it would also conform to Lord Freud’s assertion that social landlords will reclassify smartly. It would also satisfy financial investors in social housing who would see that the social landlord has acted smartly and I can’t see financial covenants being put at risk with this proposal. It would avoid legal costs for social landlords too as I can envisage there being drawn into legal actions for their role in saying a property is a 3 bed and not a 2.9 bed.
Overall such a simple idea minimises the massive financial risks social landlords face with the bedroom tax. Adopting such a plan would be warmly welcomed by their tenants and I need not state the risk social landlords face from disaffected tenants when direct payment of HB comes in
The 70 square feet issue?
Govan Law Centre sought a barrister opinion on what is a bedroom and that can be accessed here. It said: -
“It is relevant, also, that the space standard of the Housing(Scotland) Act 1987, section 137 (3) and the Housing Act 1985, section 326 (3), excludes from consideration rooms of less than 50 square feet (which is 4.64 square metres) and classes rooms between that and 70 square feet (6.5 square metres) as only, in effect, half a bedroom.“
The 1985 Housing Act section 326 (see here) says: -
Floor area of room Number of persons
110 sq. ft. or more = 2 persons
90 sq. ft. or more but less than 110 sq. ft. = 1.5 persons
70 sq. ft. or more but less than 90 sq. ft. = 1 person
50 sq. ft. or more but less than 70 sq. ft. = 0.5 a person
One of the counterarguments to my view has been said there is no statutory notion of a percentage room and so this is all semantics. The above section 326 of the 1985 Housing Act disproves that as it says a room 50 – 69 square feet is for 0.5 of a person. 0.5 is a percentage not that there is half a person in any lay semblance of that term of course.
So if the 2.9 bed house is in fact and can only be a 2.5 bed house as 0.5 is the ONLY percentage allowable in statute (which I don’t accept) then my point about the bedroom tax only being applicable where it is under occupied by one – that is 1.0 – bedroom, and not one ‘room’ – which is precisely what the A4/2012 says – means that the tenant is NOT subject to the bedroom tax.
The A4/2012 importantly does not say a claimant is underoccupying by a number of persons, either whole or a percentage or fraction the half or 0.5 of a person, its says by one BEDROOM and that is the only guidance local HB officers can use in determining whether the bedroom tax applies.
Has the claimant got more than one bedroom is the ONLY guidance that HB decision-makers have to follow and the definition of a bedroom the A4/2012 guidance says at 12 is “up to the landlord” to define.
Hence is a landlord says the property is 2.9 bedrooms then the HB officer has three choices. They can (a) simply accept the social landlords word as they do now, or (b) they can send out a Rent Officer to determine as they do with private sector LHA cases; or (c) they can ignore.
If (a) they do exactly what the current situation is.
If (b) they incur cost yet do treat social tenancies for HB purposes in the same way they treat private sector claimants for LHA purposes which is the stated intention of the coalition
If (c) they ignore the social landlord definition are they (i) breaching the guidance and so (ii) acting in an ultra vires capacity and (iii) guilty of maladministration? In my view all three and so this option is NOT available.
Hence they either accept the revised definition of the landlord who is after all only following the official guidance in accurately defining the property as a 2.9 bed or they incur cost and get the independent VOA rent officer out to make a determination.
Yet I have hears tha the VOA Rent Officers are being disbanded. So if this is the case the HB officer can only choose option (a) and accept the social landlords definition.
This is not a case of semantics at all and I am confident a housing lawyer or even a tenant at a HB appeal can articulate this same argument much better than I have simplified this above.
Of course this is just my opinion and one comment today was lets just agree to disagree and see what happens in 6 weeks time. I understand those sentiments but strongly suggest a social landlord cannot do this else they may be viewed as being complicit in the bedroom tax. Briefly it such a challenge does go ahead, which it undoubtedly will, and the tenant wins and the concept of the 2.9 bedroom is upheld then tenants will perhaps rightly say why the hell didn’t my landlord look at this? They have had 18 months to look at this and did nothing!
Even the fact that social landlords can’t do anything until a bedroom tax decision lands on the tenant mat is no excuse in my view. Given the huge potential arrears loss the bedroom tax holds for social landlords just why havent they considered such a challenge to date becomes the question. Why are they not ready to hit the ground running with this in April, just 6 weeks time? The consequences of not being ready to hit the ground running WILL be tenants will feel disaffected and will pay less of their rent when direct payment hits – the social landlord cannot afford to say lets wait and see.
In summary, when I first raised the 2.9 bedroom argument it was a tiny argument in my view and I too was under the impression – a lazy assumption – that you can’t have 0.9 of a bedroom and despite being aware that statute does allow the concept of half a person which is even more ridiculous. Yet a 10 minute consideration of it reveals it is much more than a throwaway argument AND is in the best interests of social landlord and social tenant. Every legal person I have spoken with or read is anticipating a huge challenge in terms of bedroom size and what is a bedroom. The fact it could mitigate the impact of the bedroom tax so greatly for both landlord and tenant deserves a hell of a lot more than let’s wait and see!
PS – and just to put my criticisms of social landlords apparent tardiness in challenging the bedroom tax into context I see the Labour Party set up an anti bedroom tax campaign…. yesterday! Yes 19 February 2013! Presumably they have spent 18 months discussing the health and safety aspects of jumping on a bandwagon?