The coalition say one option to the social tenant hit by bedroom tax is to take in a lodger. Sod that is a typical first reaction as stranger danger immediately springs to mind, yet that is a stupid and superficial association as I explain below.
When we look at taking in a lodger we find that it is in the tenants best interest, in the social landlords best interest yet would cost the government up to £3.43 billion more in housing benefit.
The bedroom tax would then be negated for the social tenant and social landlord and the coalition would be well and truly f -UC-ked.
Below I explain how you can have friends or family as a lodger and severely blow apart the bedroom tax and all the stress and grief that goes with it for the social tenant and the financial loss it means to the social landlord. It really is a case of taking in a lodger, from October when Universal Credit starts, will destroy the pernicious bedroom tax and reveal that the coalition does not know what it is doing.
If a social tenant does take in a lodger the social tenant becomes a private landlord and the lodger is a private tenant. Yes it sounds bizarre that a social tenant is also a private landlord but that is the legal effect of taking in a lodger.
The lodger by being a private tenant can claim Local Housing Allowance and so if all social tenants took in lodgers the HB bill would rocket – by £2.27 billion per year if all 660,000 bedroom tax affected households took in 1 lodger, and if you believe the coalition that there are 1 million spare bedrooms in social housing paid for by HB then the HB bill would increase by £3.43 billion per year
The above figures are based on the national average LHA rate for a single room of £65.79 per week which is set out in the 2013/14 LHA rates figures published by DWP
The rules now and until Universal Credit begins make a lodger in financial terms unworthwhile as the first £20 per week is disregarded but after that each £1 charged in rent sees £0.86p taken off the benefit claimant meaning if £65.79 was charged for a single person then taking in a lodger now would see the tenant better off by £26.41 per week.
YET under Universal Credit regulations the social tenant can charge the lodger a million pounds per night and there is no effect on their existing welfare benefits.
An extreme example obviously but lets keep this at £65.79 as an average which would also mean no income tax implications either as you are allowed to charge £4250 per year or about £81.50 per week for renting out a room in your property tax free.
Here is how friends and family can be moved in and not fall foul of the HB regulations and thus claim housing benefit (LHA) of £65.79 per week which more than compensates for the bedroom tax average deduction of £14 per week.
Housing Benefit Regulations (HBR) have a definition of a “close relative” which in simple terms means that if you live at the property some close relatives are unable to claim HB such as brother or sister or son or daughter or step son or half brother but no more than that. So for example a cousin, a niece or nephew or grandchild can be a lodger in your property and legitimately claim and receive housing benefit. So could a non-relative and someone you know such as your friends son or daughter and the issue here is that the lodger is not a stranger, it is someone you know. Also the legal arrangement can be a week by week basis and ended by a simple notice to quit – in other words if it doesn’t work out the arrangement can be ended very quickly indeed.
Let me really dumb this down.
A tenant, Mary, has an 18 year old son who is not working and has a non-dependant deduction from Housing Benefit. Her friend Joan who lives 2 streets away is in the same situation. Mary and Joan’s kids grew up together, went to the same school and have been best friends since the age of 4. They are always in one another’s houses and have been for 14 years when frequently Mary has picked up Joan’s son from school and vice versa. Not a far-fetched scenario and one of many I could use.
Mary takes in Joan’s son and Joan takes in Mary’s son as lodgers. The two sons are eligible to claim housing benefit and so (a) Mary and Joan are happy as their income increases by more than the bedroom tax, (b) Mary and Joan’s social landlord is happy as the rent is paid, and (c) the HB bill goes through the bloody roof as here we have 2 new HB claims which will have to be paid.
The above WILL happen of that I have no doubt whatsoever and it IS in the interests of social tenant and social landlord for it to happen.
The savvy tenant affected by the bedroom tax should now be looking at someone they know, a friend, a friends son or daughter or a non ‘close relative’ who can become their lodger from October and negate and mitigate the pernicious bedroom tax.
- The above may appear contrived yet is not contrivance (ie fraud) under HB regulations.
- Adult children often fall out with parents and go and live with their mates (and with NDDs and the bedroom tax and other austerity issues many adult children are being kicked out by their parents too.)
- Do local councils have the resources to check 660,000 new additional claims – No!
- Do local council HB forms ask anything other then are you a relative of the landlord? No they do not ask whether it is your mates mum as in the Mary and Joan scenario above
- What is to stop adult children being ‘sent’ to live with gran and grandad so they can claim LHA in their own right as a lodger? Nothing
- What is stop your niece or nephew who lives with your owner occupier brother from living with a social tenant and thus claiming LHA – Nothing see HBR definition of a close relative below and if they are not on the list then they are able to claim LHA as a lodger
- What is to stop a friend’s son or daughter from becoming the social tenants lodger and thus claiming and receiving LHA? Nothing!
The HBR definition of a “close relative” from the Housing Benefit Guidance Manual
‘Close relative’ is defined in the regulations as
• a parent,step-parent or parent-in-law
• son,step-son or son-in-law
• daughter,step-daughter or daughter-in-law
• a spouse or partner of any of the preceding people
HB Reg 2 & (SPC) 2