The Bedroom Tax and WHY the government won’t define what a bedroom is!
The coalition government are adamant that they will not define what a bedroom is and they say so clearly in all bedroom tax regulations and correspondence. The official guidance they have issued to local council is the A4/2012 Housing Benefit circular and this makes the point very clear. There are many previous and subsequent examples of government ministers saying the same – they will not define what a bedroom is.
A flippant answer is because the government are a bunch of (insert expletives) yet that is not enough.
A second answer is that as they leave this to local councils to decide (after having it confirmed by a social landlord) then the blame for this does not lie with central government as each local council is making the decision. There is some validity in this as a general point as we see with local councils and even social landlords being blamed for the bedroom tax.
Yet the real answer is that it would totally fuck-up the entire housing sector and by that I mean rented property and property for sale. Totally fuck-up, and please excuse the expression but it is apt, estate agents and mortgage givers and other financial services providers as well as landlords.
IF the government did define a bedroom – as say needing to be 70 square feet in size – then how many houses have been bought purporting to be 3 bedrooms when in fact they are 2 bedrooms and a boxroom? Probably hundreds of thousands if not millions is the answer. So if the government did define in law a minimum size would there be millions of disgruntled owners who, at a stroke, would see their largest asset devalued overnight.
Would these owners / mortgage-payers have a claim in law against the estate agent who sold them the property?
How many tenants have been renting a property which says it is 3 bedrooms on the tenancy agreement and been paying a 3 bedroom rent when in fact they should have been paying a lower rent on a 2 bed or a 2.5 or 2.9 bed? Again there would be millions of social and private tenants in this boat.
Would these renters then have a claim against their landlords for misrepresentation?
I could see potential cause for a claim here as I am sure many if not all people could, at least in lay terms. Yet I can also see a court refusing to define what a bedroom is for the same reason. Just why have the courts not decided what a bedroom is in the past?
There has to be a reason similar to this as to why the government have not defined a bedroom and why they are so adamant they will not define a bedroom in the bedroom tax regulations. Yet our governments are elected and paid to take such difficult decisions and we expect them to do precisely that and not adopt the Ostrich syndrome of burying their heads in the sand or pass the buck to local councils. That is just not acceptable and the government is shafting local councils.
Yet that is precisely what owner-occupiers do as well. You buy a ‘3 bed’ and pay for a ‘3 bed’ that is in reality a 2 bed plus boxroom. When you come to sell it you want the buyer to pay a ‘3 bed’ price and not a lower ‘2 bed plus boxroom’ price! The owner is thus shafting the new prospective owner.
However, pick up any brochure of a new housing estate and you will see the housebuilder has a range of alleged 3 bed properties. Some may come with an extra downstairs loo; others may have a garage; others may have 3 double bedrooms and all with different pricing. You may more for each added feature when you buy and that applies to new or old houses.
So why doesn’t the same apply to rented housing?
It does in part of course yet when I proposed that a property could be accurately described as a 2.9 bed property (or any other such fractional basis) some said that (a) the social landlord rent-setting regime only allows an integer such as 2 or 3 but not a fractional figure such as 2.9; and/or (b) there is nothing in housing law which allows a fractional basis as a concept?
IF the rent-setting regime is so rigid, and there is nothing to say it is, then simply change it, or test it by changing it. That would prevent KHT from losing a whole bedroom’s worth of rent as they have done in downsizing 566 of their properties. It would mean taking on a loss of 0.1 of a property’s rental value if they ‘accurately’ classified it as 2.9 bedrooms and not 1.0 if they downsized it from a 3 to a 2 bed.
In financial terms KHT would take a hit of 85p per property per week instead of £8.47 per week AND the tenants would be taken out of the bedroom tax as they only under occupy by 0.9 of a bedroom and not by 1.0 bedroom. KHT would also take away the risk of arrears from such properties too. Moreover, the same financial loss of £250k per year would apply to 5660 properties which is 40% of their stock and not just to the meagre 4% which 566 properties equates to.
There is huge financial benefit to the social landlord and to the social tenant is they did use the 2.9 bedroom argument.
There is nothing in housing law which allows a fractional basis? Utter nonsense! The 1985 Housing Act sections 325 and 326 which deal with bedroom size and occupancy have a notion of 0.5 of a person!! Half a bedroom is much less of a concept than half of a person!! Does that mean the top half sleeps in one room and the bottom half sleep in another!! The notion of housing law not allowing the concept of a fractional basis is utter tripe!
Now it is time to look at the official guidance in the A4/2012 HB circular and this says:
10. Those that are considered to be under-occupying their accommodation will see a reduction in their housing benefit calculated by a reduction of:
- 14% of the total eligible rent for under-occupation by one bedroom; and
- 25% of the total eligible rent for under-occupation by two bedrooms or more.
This change will come into force for all existing and new claimants to Housing Benefit from 1 April 2013.
Note well a point I have said many times before but needs re-stating (this being a euphemism for shouting from the bloody rooftops!) that the official guidance says under-occupation by one BEDROOM and not by one room.
A 2.9 bedroom property becomes the same as a 2 bed property for bedroom tax purposes as if it was left as a 3 bed the household would be caught be the bedroom tax as they have ONE (that is 1.0) bedrooms more than ‘needed.’ Yet the 2.9 bed property would be 0.9 bedrooms over the ‘need’ and therefore not be hit by the bedroom tax.
This is more than being contrived however and we need to look at section 12 of the same official HB guidance which local councils MUST follow:
“We will not be defining what we mean by a bedroom in legislation and there is no definition of a minimum bedroom size set out in regulations. It will be up to the landlord to accurately describe the property in line with the actual rent charged. “
It will be UP TO the landlord to ACCURATELY describe the property is a key phrase.
UP TO? If KHT can decide that 566 of their properties they rented as 3 bed properties were in fact really only 2 bed properties then this allows the subjectivity of the landlord as being permissible the up to the landlord bit of the above guidance.
ACCURATELY? My view is that KHT have NOT done this accurately and a 2 bed plus boxroom is not the same as a 2 bed property yet KHT are charging a 2 bed rent on the 2 bed plus boxroom properties. It I was a KHT tenant renting a 2 bed I would be pissed off that my neighbour with an additional boxroom was charged the same rent as me and that deserves further consideration and I have yet to see that point discussed anywhere
Whereas if that boxroom was 9 ft x 7 ft and 63 sq/ft making it 0.9 of a bedroom and a rent based on 2.9 bedrooms I would have no problem with that AND the property would be described ACCURATELY.
So what is stopping all other landlords from re-classifying? The answer is money and the potential devaluing of their assets in the eyes of the finance world in simple terms as 10,000 2 bed properties are worth a lot less than 10,000 3 bed properties and possibly 33% less (as a 3 bed to a 2 bed is a 33% reduction.) So we see that large scale reclassification along the KHT lines simply cannot happen. Yet a 2.9 bed property will have an asset value and a rental value very close indeed to a 3.0 bed property and is only a 3.33% reduction from 3.0 down to 2.9. And in allowing that 3.33% reduction the landlord takes away a 14% risk to arrears and this is significant.
A typical social landlord will collect about 97-98% of the rent each year so has a 2-3% arrears level. Yet the direct payment pilots (another welfare reform to be introduced this year) and in the pilots obviously BEFORE the added risk of the bedroom tax deductions, that arrears levels have increased significantly. In Torfaen for example the arrears level increased from 2% to 8% and quadrupled and the pilots across the country have typically excluded those unlikely to pay rent an so they underestimate the actual position. Add in the 14% or 25% bedroom tax arrears potential and it is no wonder that many social landlords are expecting double if not triple the level of current arrears.
In summary, if it is UP TO the social landlord which appears to be the case, then the social landlord should re-classify ALL properties and do so ACCURATELY. Apart from being a one-off exercise that uses a logical and consistent basis for the accurate description, it prevents the tenant of a 2 bed being dissatisfied and potentially challenging KHT – an aspect few seem to have seen. It also makes huge financial sense to the tenant, to the social landlord and to the social landlord’s financial backers.
It of course would only apply where a now currently designated ‘bedroom’ was less than 70 square feet, yet this is surprisingly common across social housing as any housing professional will tell you and if you look on any social media site such as Facebook.
One final point: How can it be the case that in a private rental the independent Rent Officer will go out and physically inspect a private property for the number of ‘bedrooms’ and has clear guidance on what is and is not a bedroom, yet that independent verification is being denied to the social tenant in the bedroom tax process? That is blatant discrimination and indeed if the social tenant asked for a Rent Officer determination the social landlord could block that independent assessment! That is also wrong and cannot be allowed to happen.