Bedroom size reclassification = HB reduction? Absolute tosh!!..in detail

This post uses official statistics to demonstrate the most significant issue in the bedroom tax – the bedroom size issue that if now (purported) 3 bed properties were ‘reclassified’ as 2 bed plus boxroom properties that social landlords would NOT see a reduction in HB payments.

The detail and explanation

The HCA – the Homes and Communities Agency that regulates social housing has released its yearly report that contains all the official statistics for social housing today. This is a mine of information is the official and primary source data and cannot be disputed and page 18 has a table reproduced below which shows national average SRS rent levels by bedroom size.

Table 15: Average general needs rents by unit size, 31 March 2013 Large PRPs £ per week
Unit size

Net rent

Service charge

Gross rent1

Target rent

Non-self-contained

68.08

20.82

84.56

68.83

Bedsit

68.64

8.87

76.12

69.57

1 Bedroom

76.42

7.38

81.91

77.34

2 Bedroom

86.94

6.39

90.64

87.69

3 Bedroom

95.16

3.71

96.61

96.79

4 Bedroom

110.90

4.72

113.17

112.91

5 Bedroom

122.81

5.03

125.32

127.93

6+ Bedroom

132.19

4.50

134.51

137.57

All self-contained

88.41

5.98

91.67

89.58

All stock sizes

88.40

5.99

91.67

89.56

What particularly interests me and is highly significant in this table is the average gross rent of 2 and 3 bedroomed properties that I have highlighted at £90.64 and £96.61.

  • The national average difference between a 2 and 3 bed SRS property is £5.97 per week or in much simpler terms it costs the tenant £5.97 per week more to rent a 3 bed rather than a 2 bed.
  • This also means for the tenant claiming housing benefit that the public purse pays out £5.97 per week more for a 3 bed than a 2 bed.
  • It also means the national average 3 bed SRS rent is 6.6% higher than a 2 bed

“Reclassification” – As I explained here the reclassification debate contains 2 separate issues.

  • Firstly we have a landlord reclassification which a landlord does on a voluntary basis and to date with an economic rationale only for difficult to let properties; and
  • Secondly there is a council ‘reclassification’ or more correctly a local council ruling such as Welwyn rules that any room under 50 square feet is NOT a bedroom.  This latter council ruling means ALL properties in the council area by ALL landlords are affected by this and this bedroom size ruling has a legal underpinning in the 1985 Housing Act.

I argued yesterday that social landlords should be lobbying local councils to make such universal rulings along 1985 Housing Act room and space standards and CRITICALLY this would mean that a SRS 3 bed property that becomes a 2 bedroom plus boxroom property would NOT see its housing benefit level reduced.

Hence if social landlords don’t lose HB income or asset value then social landlord have nothing at all to be worried about with the bedroom size issue.

The simple yet accurate argument I posited was that the decision maker who is the HB officer at the local council can only reduce HB payment level under HB regulations by restricting it if the rent is unreasonably high. That is the only option open and in making that argument yesterday I used estimated or example figures that suggested a rent difference of £8 or so per week between a 2 and 3 bed SRS property.

Yet now we have official figures above which show it is only £5.97 per week and the difference is just 6.6% and this is highly significant and strengthens my posit that council officers would have no grounds to reduce the HB levels.

A rental difference of 6.6% or £5.97 per week can NEVER be deemed to be unreasonably high per se.  When we look at figures this becomes clear as if the former 3 bed property at £96.61 becomes a 2 bed + boxroom at £96.61 and has to be compared to a 2 bed only SRS property at £90.64 then that 2 bed + boxroom rent level of £96.61 is patently not unreasonably high!

I further argued that the council could not reduce HB levels because the former 3 bed that becomes the 2 bed + boxroom needs to be compared to the “affordable rent” (AR) model properties social landlords are now using and charging much higher rents for and receiving much higher HB for.  The same official figures in the HCA report show that the average 2 bed ONLY AR property received £113.97 in HB! (see table at end)

So if the same council is paying £113.97 per week in HB for a 2 bed social housing property how can it argue that £96.61 for a 2 bed + boxroom is unreasonably high!

No council can do this and so if a local council decides to rule that the 1985 Housing Act space and room size standards apply then existing 3 bed properties that become 2 bed + boxroom CANNOT face a HB reduction!

The same reason applies to any size of “reclassified” social housing property with a 1 ‘bedroom’ reduction due to bedroom size.

A 5 bed to 4+ boxroom is £127.93 compared to an AR 4 bed HB rate of £136.48

A 4 bed to 3+ boxroom is £112.91 compared to an AR 3 bed HB rate of £116.43

A 3 bed to 2+ boxroom is £96.79 compared to an AR 2 bed HB rate of £113.97

A 2 bed to 1+ boxroom is £90.64 compared to an AR 1 bed rate of £111.42

In every case we see local councils already paying out more in housing benefit for the “affordable (sic) rent” model that has one fewer bedroom.  Hence the same councils could NOT argue that the HB level staying the same is unreasonably high as it is not even HIGH let alone being UNREASONABLY high as it is lower than they already pay!!

Local councils could NOT restrict the HB payment under HB regulations so the HB payment level would remain the same!

As I argued yesterday social landlords have nothing to fear from local councils ruling that the bedroom size issues contained in legislation in the 1985 Act will apply to the bedroom tax.  In fact today’s official figures strengthen my additional point that social landlords should be lobbying local councils to do precisely that as it takes away a huge financial risk from social landlords as well as helping tenant and local council budgets AND more importantly it has a LEGAL underpinning unlike the reclassifications that some landlords have been doing for some difficult to let properties

Social landlords and councils have now run out excuses not to implement the bedroom size standards of the 1985 Housing Act and the councils ruling on bedroom size would NOT REDUCE HOUSING BENEFIT PAYMENTS TO SOCIAL LANDLORDS.

Here are the official rent levels for AR from the official HCA data just in case you are a social landlord and still stupidly believe HB levels would fall!

Table 23: Average Affordable Rent general needs rents by unit size, 31 March 2013 Large PRPs £ per week
Unit size

Net rent

Service charge1 2

Gross rent1

Non-self-contained

61.57

23.37

80.69

Bedsit

110.22

5.99

114.02

1 Bedroom

107.97

6.84

111.42

2 Bedroom

111.37

5.93

113.97

3 Bedroom

115.36

3.13

116.43

4 Bedroom

135.32

3.16

136.48

5 Bedroom

131.47

3.62

132.68

6+ Bedroom

235.73

1.91

235.97

All self-contained

112.63

5.40

114.90

All stock sizes

112.61

5.41

114.89

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