Housing benefits will increase by £143m with Bedroom Tax

  • The National Housing Federation (NHF) have published research that shows the annual housing benefit bill will increase by £143 million a year.

    The research shows the effects of what would happen if tenants who were affected by bedroom tax downsize to avoid the charge, which is what the government have said is the intention of the cut.

     The bedroom tax, that comes in to effect from 1st April next week, is being brought in by the government because they say there are too many people with spare bedrooms that need to downsize, partly because it is too expensive, and partly because there are too many people in overcrowded homes that need the rooms that are unused.

    They have accepted that there are not enough houses in social housing that are available for downsizing, particularly one bedroom properties, and have said that tenants may need to move to the private sector.

    The NHF says there are around 180,000 households under-occupying two bedroom homes, but only 85,000 one-bedroom homes became available last year. This means that 95,000 households would have to either accept the benefit cut, or move into more expensive private rented accomodation.

    If they moved into the private sector, NHF have calculated that this will increase the housing benefit bill by £143 million, just for those moving from 2 bed to 1 bed properties.

    There would also be other households out of the remaining 480,000 who may choose to move to the private sector if there is no other accomodation suitable, which would increase it even further.

    The secondary priority for the government is that the housing bill is costing to much, and they are expecting to save around £500 million a year through the policy. This is unlikely, if the tenants follow the expected plan given, and to move to smaller accomodation.

    David Orr, chief executive of the NHF, called on the government to repeal the bedroom tax:

    The government's assumed savings are questionable and this policy could ultimately cost the taxpayer more in the long term.

    It takes no account of the fact that there are not enough smaller homes in the social sector available for people who are under-occupying to move into.

    For them, the only options will be to take the financial hit or to move into a smaller home in the private sector, which could lead to higher housing benefit claims.

    Read more on bedroom tax here.

     


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