Landlords just don’t get the bedroom tax…even when they try!

Magenta Living sent out a two-page flyer today entitled “Pay Your Rent First Please” which appears on first look that social landlords maybe finally getting the bedroom tax as they say they will reclassify rooms that are too small. Unfortunately this is just more stupidity from social landlords.

On first glance this leaflet appears encouraging when it says: –

“If the room is too small to be used as a bedroom contact Magenta Living’s Income Team to discuss this. If we agree, after checking that the room is too small, we will reclassify your home to reflect this and inform the Housing Benefit Service that your home is one bedroom smaller than previously stated.”

Read that again and we see:

  1. It doesn’t say what is a minimum bedroom size.
  2. It says you have to contact Magenta to do this
  3. It says Magenta will come out and check your room size (clearly they don’t know!)
  4. It says Magenta will reclassify
  5. It says they have told Housing Benefit that your property has ‘x’ number of bedrooms yet clearly Magenta did not and do not KNOW what number of bedrooms your property has!
  6. It also means Wirral Council HB department acted on this guessed ‘data’ and simply imposed the bedroom tax on a guess

1. So what is a minimum bedroom size?

I was ready to be scornful of this very carefully worded flyer however having started to draft this I received a phone call from South Wirral against the bedroom tax to say Magenta Living have been out to measure a property and the room measured 104″ by 76″ or 54.88 square feet.

The response from Magenta to this property, and note well on an estate all built at same time so we must assume all properties have same room size, was to reclassify the former 3 bed property to a 2 bed property.  This suggests Magenta Living are working to the minimum 70 square feet of floor space and not the lower 50 square feet issue.

Far more interesting is that Magenta Living have reduced the rent from a 3 bed rent to a 2 bed rent and this takes the tenant out of the bedroom tax as she had a 14% bedroom tax reduction.  The rent has fallen by the princely sum of £1.95 per week!

The 3 bed rent was around £93 per week giving a bedroom tax hit of £13.00 or so per week.  That’s £13.00 for the tenant to make up and £13.00 per week financial risk to Magenta.  So Magenta has taken out the risk altogether by taking a £1.95 per week hit.  Note that as 2014/15 is the last year of the old rent setting formula of [RPI + 0.5%] PLUS £2 then Magenta can recoup this from next April.

There is a huge element of economic sense and practicality to this decision that mitigates the bedroom tax for landlord and tenant. A few weeks ago I reported on the HCA report which said the national average rent differential between a 3 bed and a 2 bed property was £5.97 per week.  In Wirral it appears to be just £1.95 per week (and other areas have informed it is as little as £1.80 per week too.)  Given the national average bedroom tax is purportedly £14 or so per week it doesn’t take a genius to see a very pragmatic solution though I still think this is wrong.  Surely a 2 bed with a boxroom is worth £1.95 per week more in rent and HB than a simple 2 bed property and I fail to see how Wirral HB department could suggest the rent is ‘unreasonably’ high at this differential. Note too I also reported that in some areas of Merseyside we see a 2 bed social property having a higher rent than a 3 bed property in the same street!

Yet this is the wrong reaction from Magenta Living and frankly a stupid one.  Magenta Living by reducing the rent is making a rod for its own back in the same way KHT (also in Merseyside) did when they reclassified a number of its difficult to let properties a few months back and started this ‘reclassification’ nonsense.  It should be the council that deems 70 square feet too small to be a bedroom for bedroom tax purposes and not the landlords and as I have argued previously landlords should be lobbying councils to do just that which is within their powers to do.

If Magenta Living were to confirm that 70 square feet is their minimum size for a bedroom then please let me know and I will give that decision the applause it deserves.  I would also rightfully applaud if Magenta then notify all other residents on the same estate who will have the same room size that they too are to have their properties accurately reclassified as they should have been in the first place, and that they too are to have a £1.95 per week reduction in rent and backdated to 1 April 2013.  Yet that is only half of it and you begin to see how stupid this decision is.

Further the precise room size of 104″ by 76″ is exactly the same as many tenants on the Woodward estate in New Ferry in Wirral who have been lobbying Magenta and Wirral Borough Council since day one that this is not a bedroom.  The campaign there is also led by South Wirral against the bedroom tax group and many appeals have been launched against rooms of just this size.  Will Magenta Living now inform the council of this and also reclassify these properties resulting in many appeals on this ground alone being unnecessary?

Magenta have to apply this across the board and it would not surprise if 25% of so-called bedrooms are in fact less than 70 square feet.  Magenta have about 3000 or so households affected by the bedroom tax and so that is 750 bedroom tax properties alone to reduce rents upon which sees a rental reduction of £78k per annum.  That is great if in isolation and a wise business decision, yet the landlord cannot discriminate between a bedroom tax household, a HB household and a self-paying household and so using this 25% figure again with Magenta’s 12000+ properties would see a £320k or so rent fall per annum.

When we start to look at figures of that magnitude it will alert funders who may want to renegotiate loans to Magenta and also ask for a new asset value of their entire stock as they now admit they own 3000 or so properties which have been overvalued.

2. So why does the tenant have to contact Magenta over this?  In light of the high probability that many properties have been incorrectly and inaccurately notified to the Council as being 3 beds when in fact they are 2 bed properties, then the mistake is by Magenta and it should be for Magenta to correct that mistake which has caused untold misery and stress to many of their customers.  Then we see 3. Magenta will come out and measure and then 4 reclassify.

The cost of this being borne by the landlord deserves more consideration.  Yes there is an implicit case of error being admitted by Magenta Living in the ‘data’ they gave to Wirral Council but it is NOT the job of the landlord to go to the expense of measuring bedroom sizes.  It is the job of the Council and not the landlord.

Wirral MBC should be the ones going to the expense of measuring rooms and like all councils they should have done this before imposing a decision based on a mere guess and not based on fact.  Yes the landlord did not have to provide any data to the council at all regarding the bedroom tax but did and some of that data is clearly errant, yet it is still the council as the sole decision makers who imposed the bedroom tax and errantly so.

It would be far easier and less costly if Wirral Council determined that a bedroom for the purposes of the bedroom tax HB decision has to be 70 square feet in floor size.  They are able to do this and such a determination is lawful and correct and Wirral like all councils decides for example whether a property is ‘sheltered housing’ on a daily basis and ‘sheltered housing’ like ‘bedroom’ has no legal definition. Councils stating we can’t do that as there is no legal definition of ‘bedroom’ are either lazy in their thinking or simply avoiding making such a decision which they are lawfully able to do and is in their interests.

The critical issue here is that the landlord gave the council data but it was the council who chose to act on that data and impose the bedroom tax decision. Wirral Council is at fault here and they could have chosen not to take the landlord data as fact yet they did not.

Magenta in seeking to help the tenant and their own finances have made a stupid decision and should have lobbied the council to rule on 70 square feet as the minimum room size.  Yet in choosing to reclassify themselves, which amounts to the same thing, Magenta has opened itself up to a huge exposure of financial risk, and unnecessary risk.

The landlord did not KNOW! – This is not unusual that social landlords do not have room size information on their properties.  It is remiss of them and they should have it, yet it remains that most landlords like Magenta Living do not hold room size data.  This demonstrates an issue I have regularly commented upon, that the decision making process was a sham and provides just cause and grounds for all 660,000 bedroom tax households to appeal.  Councils imposed the bedroom tax yet did not and could not KNOW those decisions were correct – they were at best a guess!  Given the major life-changing impacts the bedroom tax imposition gives that is a national scandal and disgrace that about 1.6 million men women and children have faced massive upheaval and life change all predicated on a guess and not on fact.

Yet as my point 6 makes out Councils were lazy and complicit in a sham decision making process and simply took the word of the landlord; the landlord who has a vested interest and the councils operated a blanket policy by fettering their discretion.

So why is the landlord having to pay the cost of what the council should have done in the first place? That is simply wrong despite the landlords minor part in the complicity of the bedroom tax decision and the landlords should not have to take the financial hit either.  It cannot be right that a 2 bed plus a boxroom is rented at the same rate as a straight 2 bed property.  It cannot be right that the tenant of such a property who enjoys the added boxroom pays the same as a tenant who does not.  It cannot be right that the rent and HB paid is “unreasonably” high by being £1.95 more than a straight 2 bed property.

Magenta Living has been practical or at least it would appear so in this .yet when Wirral council does the right thing as all councils should, and rule that 70 square feet is a minimum bedroom size these financial risks and costs are taken away from the landlord and rightfully so.

I argued months ago that social landlords should be lobbying councils to do precisely that and not reclassify or ‘cave in’ as Magenta Living has one here.  In caving in Magenta Living does open up the risk of funders seeking to renegotiate loans to them which are negated if the council rules on the room size issue.

This, in summary, is a poor decision by Magenta Living and one that could and should have been avoided by lobbying the council and councillors to rule on minimum room size rather than reclassifying properties themselves.  Magenta like all landlords should also be helping tenants to appeal and advocating that openly and strongly and not just on room size. While I applaud Magenta in appearing to help the tenant with the room size issue I have explained why this is the wrong decision and a poor and a risky one.

It is way overdue for landlords to get off the fence (or even from hiding behind it) and start to advocate loud and clear that tenants should appeal the bedroom tax decisions; time to stop faffing about and time to challenge this hated policy which is extremely damaging to landlords as well as tenants and to social housing itself.

It is time social landlords grew a set of balls.

Yet it is also time for landlords to think, which to date they have not done at least clearly.

Hindsight is a marvellous thing yet social landlords have cocked up badly with the bedroom tax and principally by not thinking and by not acting professionally.

Social landlords were not just heavily swayed with the CIH and NHF position that room size does not apply to the bedroom tax, they believed it hook, line and sinker and that was naive.  Yes I too read many barrister opinions which said the 1985 Housing Act would not apply, the majority said this yet some did not.  However social landlords not only wanted to believe the overcrowding room size issues wouldn’t apply they did not plan for the fact that they might and that is negligent and foolish as it would be in any business.  Social landlords had no contingency plans and this is a case of not thinking and acting extremely naively.

Social landlords knew that the bedroom tax was highly flaky in ts decision making processes yet again they failed to plan for this and instead believed this is here to stay we have to go along with it.  In this and in many ways social landlords were a consensus, yes the lazy one that Shapps accused them of being and as much as it pains me to say it, Shapps was right and social landlords are a lazy consensus.

Radical to a social landlord is painting a door blue instead of red and the sector is notoriously conservative and mostly complicit with whatever new government deal (and of course funding) is on offer.  The woeful and highly damaging ‘affordable’ (sic) rent being the latest hare-brained scheme they have got involved with.  Social landlords utterly failed to respond to the radical nature of welfare reforms and most of them, about 80% no less, have yet to become operational.  The old cliché of needing to fight fire with fire is very much at play with the welfare reforms, yet social landlords have been merely waving paper at that fire, and arguably paper soaked in petrol too.

Having worked in housing for 20 years in the little understood real world of supported housing I am used to radical and repeated change which has hitherto not existed in the 95% of housing that is general needs or your common or garden council and HA properties.  General needs housing is slow to change and always has been and is all about bricks and mortar as opposed to supported housing which is all about people (and their interaction with the welfare system).  Mainstream general needs social landlords should have looked to supported housing professionals to deal with the welfare reforms as they are all about people and the interaction with the welfare benefit system.  Yet they did not take the opportunity to do so as (general needs) housing professional do not understand supported housing and have little in the way of people skills either.

No chief executive of a housing association ever got there via a supported housing route and very very few directors of social landlords got there by working in supported housing.  I know of about half a dozen or so that did yet we have about 1200 social landlords in the UK so go figure!  The skill set that supported housing brings to senior management within social landlords is huge yet few ever get there and it is that skill set that social landlords need to deal with the welfare reforms which I restate deal with people and not with bricks and mortar.

The welfare reforms move social housing from being about bricks and mortar to being all about people.

Many (general needs) housing professionals will be affronted at this.  The ‘how dare you say we don’t understand people’ line will be trotted out and once again social housing professionals will apply another coat of Teflon to themselves.  I am sure many will say it is wrong for me to criticise Magenta Living as they are (a) doing more than most and (b) bloody hell Joe you want blood out of a stone.  I don’t I simply want social housing to work and it can’t do that if the professionals that run it fail to think and fail to see just how radical the welfare reforms are as they apply yet another cot of Teflon and go off in a huff.

I am still convinced 90%+ of social housing professionals stay in the profession because they (rightly) see social housing as a vocation and not a mere job.  Yet to stand idly by and say there is nothing we can do or to not openly and overtly challenge the welfare reforms by thinking first before acting (and how many examples could I give of that) or by being immune to criticism however constructive or by remaining in the conservative mindset that pervades in social housing is just not good enough.

I have yet to see one social landlords website, which are littered with welfare reforms pages, advising a tenant how to appeal the bedroom tax.  Some landlords such as LMH do have links to how to appeal and that is very much the exception.  That typifies social landlords conservatism as not only do they not advocate that tenants should or even can appeal they don’t even tell them about it!!  Just how lazy and naive is that?

Housing professionals will see the Magenta leaflet as radical, after all here we have a social landlord admitting that room size does matter and in a ‘sector’ that sees such an admission as anathema and despite my criticism of Magenta reclassifying which landlords should not do, the numbers stack up and would do across the country given the average £5.97 rent differential being far less than the 14% bedroom tax.  Social landlords need to act forcefully and radically and lobby their councils to rule on minimum room sizes and need to openly advise their tenants to appeal and need to support those tenants in appealing the bedroom tax decisions. In doing so they minimise financial risk to themselves and will not have to reduce rents as HB departments do not have the powers to restrict them as £1.95 per week in the Magenta case above or the national average £5.97 per week difference cannot be said to be ‘unreasonably’ high which is the only way HB departments can reduce the HB.

Why oh why does the social landlord have to take an age to see what is staring them in the face and what the correct courses of action are?  If social landlords continue to act as slowly as dinosaurs then they surely will suffer the same fate.  For those 90%+ of housing professionals that do see social housing as a vocation are you really prepared to sit back and let your profession die?

Carry on in the same way and that is what will happen.

Finally, on Saturday I was speaking at Wirral SOS (Save Our Services) conference and in attendance were 5 councillors from Wirral.  Not one of them was aware of any bedroom tax appeal successes such as those in Fife and elsewhere.  Not one of them was aware that their council could lawfully determine that a bedroom has to be 70 square feet.  Not one of them was aware of the 20 or so councils which have ruled on minimum bedroom size across the country.  I am sure that same level of ignorance is present in many councils.  The same Wirral council CEO, Graham Burgess said in response to being informed of these a month or so ago said dismissively that it was a 17th Century property and a one-off, that is following the errant CIH line which social landlords followed like sheep. Yet it also shows just how inept social landlords are of lobbying councils and councillors and informing them and that has to change.

Can any social landlord look me in the eye and say we have done all we can?

Magenta Living BT p1-page-001  Magenta Living BT p2-page-001

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4 thoughts on “Landlords just don’t get the bedroom tax…even when they try!

  1. Joe, if those five councillors were saying they knew nothing of Fife or Croydon, they were lying. They have all received the copy of the Open Letter we sent to Graham Burgess (Wirral CEO) and Phil Davies (Labour leader). They received our response to the reply we got from Davies and Burgess. They received a further email – all of them – following the subsequent judgements. Those five councillors were lying through their teeth,

  2. I wonder if Magenta have not also made an even worse case for themselves by re-valuing the rent?

    That is, if they are now saying that the “house” is no longer a 3 bed but a 2 bed and because of this we are reducing the rent… surely its now possible for the tenant paying full rent to argue that “my house is the same type, I want my rent reduced as well”. (which I believe you also argue)

    Not only that but both full paying and HB “customer” could also argue… You have now stated that my rent should be reduced as you had “oversize’ed” my home and as such you are reducing the rent… well what about the 15 years I’ve lived here? You’ve been overcharging me for the past 15 years and as such I want my money back!

    I’m guessing the 5(?) year rule might apply, but still… by saying they have overcharged since APR means they have overcharged for longer.

    Had they just re-designated the property (your arguments that it should be the council aside) and kept the rent the same they would not have opened themselves up to the charge (pun not intended) of overcharging for many years.

    One wonders if they legal bods have thought through the myriad possible side affects instead of just focusing on loss of rent/arrears for BT affected tenants in a knee jerk way.

    1. Yes they have made the issue worse for themselves. Magenta issued an email late yesterday clarifying their position which makes this even worse and also revealed that they are trying to cover up their actions and embarking on a damage limitation exercise. I have put this in a separate post as this applies to all landlords and tenants and it is here – https://speye.wordpress.com/2013/10/30/time-for-tenants-to-unleash-their-real-power-and-sue-landlords-over-the-bedroom-tax/

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