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Bedroom tax will be costly disaster, says housing chief

999 replies

vivizone · 31/03/2013 06:51

I don't understand how they can implement it. When a council tenant signs the tenancy agreement, if bedroom tax is not mentioned, is it not illegal to implement it at a later date?

I don't see how it is enforceable. Let's say a tenant refuses to pay/can't pay. They then get evicted - wouldn't the council still be obliged to house them after eviction, especially if they have children?

The whole thing is a mess. Why so many changes all at the same time?!

www.guardian.co.uk/society/2013/mar/30/bedroom-tax-disaster-housing-chief

Cost-cutting policy will push up benefit bill, cause social disruption and create widespread misery, say critics

Ministers came under new fire over benefit cuts last night as the independent body representing 1,200 English housing associations described the controversial bedroom tax as bad policy and bad economics that risks pushing up the £23bn annual housing benefit bill.

David Orr, chief executive of the National Housing Federation, said the tax would harm the lives of hundreds of thousands of people. It comes into force this week alongside a range of other tax and benefit changes.

"The bedroom tax is one of these once-in-a-generation decisions that is wrong in every respect," he said. "It's bad policy, it's bad economics, it's bad for hundreds of thousands of ordinary people whose lives will be made difficult for no benefit ? and I think it's about to become profoundly bad politics."

His intervention came as opponents launched nationwide protests against the tax, which will hit 660,000 households with each losing an estimated average of £14 a week.

Crowds gathered in London's Trafalgar Square yesterday to protest against the measure, and simultaneous protests were being held in towns and cities across the UK. One protester, Sue Carter, 58, from Waltham Forest, told the Observer: "I'm a working single parent with a tiny boxroom and now I'm faced with the choice between food, heat or paying the bedroom tax. People have looked after their homes, improved them ? why should they be turfed out?"

Under the scheme, which is introduced tomorrow, people in social housing with one spare bedroom will have their housing benefit cut by 14%, while those with two or more unoccupied rooms will see it slashed by 25%.

Ministers say the tax, which David Cameron calls the "spare room subsidy", will encourage people to move to smaller properties and save around £480m a year from the spiralling housing benefit bill. But critics such as the National Housing Federation (NHF) argue that as well as causing social disruption, the move risks increasing costs to taxpayers because a shortage of smaller social housing properties may force many people to downsize into the more expensive private rented sector.

The federation's warnings came as charities said the combination of benefit cuts and tax rises coming in from this week will amount to a £2.3bn hit on family finances.

Labour said analysis of official figures showed average families would be £891 worse off in the new tax year as the changes ? including those to tax credits and housing benefits ? begin to bite.

Research by the NHF says that while there are currently 180,000 households that are "underoccupying two-bedroom homes", there are far fewer smaller properties in the social housing sector available to move into. Last year only 85,000 one-bedroom homes became available. The federation has calculated that if all those available places were taken up by people moving as a result of the "bedroom tax", the remaining 95,000 households would be faced with the choice of staying put and taking a cut in income, or renting a home in the private sector.

If all 95,000 moved into the private sector, it says the cost of housing benefit would increase by £143m, and by millions more if others among the remaining 480,000 affected chose to rent privately.

As well as the move on spare bedrooms, council tax benefit will be replaced from this week by a new system that will be run by English local authorities but on 10% less funding. Pensioners will be protected under the changes but, as a result, it is feared there will be a bigger burden on poor working-age adults. Restrictions on the uprating of a number of welfare payments will also hit millions of households, homelessness charity Crisis has warned.

Chief executive Leslie Morphy said: "Our poorest households face a bleak April as they struggle to budget for all these cuts coming at once. People are already cutting back on the essentials of food and heating but there is only so much they can do.

"The result will be misery ? cold rooms, longer queues at food banks, broken families, missed rent payments and yet more people facing homelessness ? devastating for those directly affected, but bad for us all."

A Department for Work and Pensions spokesman said: "Our welfare reforms will improve the lives of some of the poorest families in our communities, with universal credit simplifying the complex myriad of benefits and making three million people better off. And by next year, we will have taken two million of the lowest earners out of paying tax altogether."

Crisis argues that homelessness is set to rise dramatically. This winter has already seen a rise of 31% in the numbers of rough sleepers across the country and a 20% rise in people seeking help with homelessness from their local authority in the past two years, according to Crisis.

ChartiesCharities are also concerned that the government-funded network of homelessness advisers in England is to be scrapped. The team of regional advisers and rough sleeper and youth specialists which have provided councils with expert guidance on meeting statutory homelessness duties since 2007 will be disbanded just as the bedroom tax comes in. Also being scrapped are the crisis loans and community care grants which provided a lifeline for people in financial crisis who needed essentials when moving to a new home.

Shadow chancellor Ed Balls said: "This is the week when the whole country will see whose side David Cameron and George Osborne are really on and who is paying the price for their economic failure."

OP posts:
CecilyP · 02/04/2013 13:44

^skinnywitch ..... And indeed many council tenants have 3, or even 4 children to a room while they wait for something better.

the system doesn't work does it?^

It does work, but by something better, I do not mean just anything big enough but somewhere big enough where they would actually like to live. Obviously displays an excessive sense of entitlement, but if they just wanted somewhere bigger and nothing else, at least in my town, they could be rehoused quite quickly.

williaminajetfighter · 02/04/2013 13:46

yes, faster what particularly irks me about this one - "moving, like many people do for work = damaging DCs lives" - is that I had to move across the country for work twice with children and I did so because I HAD to.

No discussion about 'loss of community' or 'impact on transience' for me. But others need to be so deeply and firmly imbedded in their communities, close to their support networks and bang close to where they were brought up, possibly next door to mum, that they can't move anywhere.

And I guess my children are f*ed as well!

IneedAsockamnesty · 02/04/2013 13:47

I work across 5 LA's the cheapest 3 bed house in any of them is currently £99.84 pw.

williaminajetfighter · 02/04/2013 13:53

Sock - a bit of splitting hairs. A 3 bed house at £400 per month is still not even close to market rates. Just did a check and in Manchester for £400 you get.... a house share. A room in a house. Not a house.

Honestly!

CecilyP · 02/04/2013 13:55

Also just to flag up that most private LLs don't make a huge profit. An average 5% profit (5% above the cost of covering the mortgage for a property) doesn't amount to much for taking the risk of buying, letting and managing a property. I'm not a huge advocate of mass slumlords, but there is no massive take from renting. The profits that most made over the years have to do with increase in housing prices NOT rental income.

How do you kinow what most private landlords make? I would imagine if you bought recently, especially in the south-east your profit would be quite small, but if you are renting at current prices, properties you bought decades ago for decades ago prices, I can't see it being hugely profitable.

FasterStronger · 02/04/2013 13:57

a three bed house for less than £100 pw.

and that's though of as too expensive?

where is it?

IneedAsockamnesty · 02/04/2013 13:57

Its not splitting hairs to say what they cost when people are saying they cost much less than they do.

Rents are also not worked out PCM they are weekly

williaminajetfighter · 02/04/2013 14:01

Cecily of course there will be people who turn more of a profit but, in general, people buy rental properties because of the income they will generate through an increase in house prices NOT the massive amounts they return from rent. Head to some sites for landlords or read about it in the papers...

And sock guess what? £99 per week works out to £400-£450 per month. In the real world most rents are worked out monthly. What's the difference exactly?

IneedAsockamnesty · 02/04/2013 14:01

Who said it was expensive I only pointed out that it is the cheapest LA rent in all 5 areas I work when another poster claimed they cost £70

aufaniae · 02/04/2013 14:02

Faster and William your posts betray you total lack of understanding of the issues.

Yes, relocating thousands of families because of this and the benefits cap will result in the breaking up of communities and have negative effects on children. Camden council for example is planning to relocate nearly 3,000 people including 900 school age DCs out of the south east.

DP and I moved for our careers. It was a positive decision for us and we had a choice in where we moved to. That is not the sane thing at all as being moved against your will to somewhere you have noblinks with. With the benefits cap, people are being moved away from areas with jobs (eg London) to areas where the rent is cheap, often as no one wants to live there because there are no jobs.

Also this is happening on such a large scale that yes, it will break up communities. Can't see what's so hard to understand about that.

Also the bedroom tax will lead to many DCs being made homeless. It is well documented that DCs living in unstable accommodation suffer more from significantly worse health - physical and mental - struggle more at school and have worse prospects than those in stable accommodation.

faster, that you discrive this as hysterical makes my stomach turn. You really have no idea.

CecilyP · 02/04/2013 14:02

Williamina, I think you are talking about people wanting to become private landlords now; not people who have been doing it for years.

IneedAsockamnesty · 02/04/2013 14:04

The poster was implying its £400 PCM its not.

Also that is the cheapest and they rise every year.

FasterStronger · 02/04/2013 14:04

Cecily - you are counting the same profits every year. you can only count them once.

if I invest £50 in property in 2000
by 2012 its worth say £200
now if I make 5% 2012-2013, that's £10 for that year. the £150 I made previously is not this years profits.

FasterStronger · 02/04/2013 14:08

aufaniae DP and I moved for our careers. It was a positive decision for us

good for you. not everyone can make a positive choice to move for work. some people just move for work.

900 school age children move all the time.
people leave their communities all the time.

often to move to other countries. there they may not even speak the language.

williaminajetfighter · 02/04/2013 14:11

aufan - sorry but not everyone moves OF THEIR WILL to take up new, better jobs. If people's jobs come to an end, contracts end or they become redundant (and this is happening a lot) they HAVE TO move to where the jobs are. Even if its a shitty area. It's not all aspirational moves up the ladder.

What I get tired of is that the notion of 'community' is something that is only allowed for certain groups --- seen as an absolute right and requirement for the poorer or disenfranchised or even the working classes... but everyone else... well who cares about our 'community needs' because, heck, we're not part of the system. We're just freefloating people moving from job to job, quietly paying our taxes and trying to get by. It's bollocks. And that is why people start to feel disenfranchised....

Didn't mean to go off on a tangent but the rhetoric on here can get pretty tedious and one-sided.

CecilyP · 02/04/2013 14:17

No I am not. No, I am thinking you bought a house for £30,000 in 1983.

You made £1,500 per year in 1983 = 5% return

This percentage increases year on year until:

You make £14,000 per year in 2013 = 47% return

For simplicity, I have excluded maintenance and admin costs.

I have not included the fact that the house is now worth £250,000.

However someone now buys the house for £250,000.

He charges £14,000 per year rent = 5.6% return.

FasterStronger · 02/04/2013 14:22

Cecily

(1) the house is not worth 30k in 2013. you are counting the profits twice.
(2) LL 2 will be paying the bank for his 200k mortgage. you are excluding the cost of capital.

if your accounted properly you would see a much smaller profit. no accountant in the land would agree with your method. it is just plain wrong.

FasterStronger · 02/04/2013 14:23

no wonder you are angry and think money grows on trees.

MeDented · 02/04/2013 14:23

aufaniae - faster did not say the situation you describe is hysterical, she said people complaining that having to work to earn the same as they receive on benefits means they are working for free and people complaining that they have to move out of the area will damage their kids is hysterical. And I agree, it is entitled claptrap. All of us have to live within our means and sometimes that means moving to an area you might not want to live in and that's true regardless of wether you are privately owned, rented, or housing benefit.

PeneloPeePitstop · 02/04/2013 14:26

Once again, the protected, vulnerable groups. Why do you think they get protected status in the first place?

For fun?

You honestly think they're getting more than you? Perhaps they would be if they didn't have to overcome massive hurdles to even get to a level playing field with you.

StormyBrid · 02/04/2013 14:26

williamina - I care about your "community needs". I care about the fact that people like you can't find work in your communities and so have to move away from your homes and support networks. I'm very much in favour of solutions to the current economic fiasco being geared towards allowing you to live well, in a house of suitable size, and putting down roots and feeling part of your community.

But when you say 'I moved, I lost my job, no one cares about my needs', why does that mean everyone else has to go through the same? Would other people going through the same make anything better for you? Would it not be better - for everyone and for you personally - to try and work out why people are being made redundant and forced to move great distances to find work that barely keeps a roof over their heads, and do something about that instead?

FasterStronger · 02/04/2013 14:32

why people are being made redundant and forced to move great distances to find work that barely keeps a roof over their heads, and do something about that instead?

the answer is globalisation, which no country is every going to control. so that is not the answer.

there is no easy answer. only hard ones.

Darkesteyes · 02/04/2013 14:44

Going back a few pages now i just wanted to say that insomnia is a very serious condition. Sleep deprivation can drive you insane and you will do ANYTHING .......ANYTHING so you can get some sleep.

Why do you think the Gestapo used sleep deprivation as an interrogation tool in World War 2!

CecilyP · 02/04/2013 14:46

^(1) the house is not worth 30k in 2013. you are counting the profits twice.
(2) LL 2 will be paying the bank for his 200k mortgage. you are excluding the cost of capital.^

No I am not counting profits twice. I thought my table above made that perfectly clear. Obviously the house is no longer worth £30,000 but that is still all LL1 paid for it. All I have done is shown what the percentage return is for 2013 for both landlords. If LL1 holds onto the property his return will be about 47% or if he sells it to LL2, LL2's return will only be 5.6%. Obviously both scenarios can't happen at the same time - I just showed them as 2 contrasting possibilities

Yes, I know I am excluding all the associated costs of being a landlord.

Arisbottle · 02/04/2013 14:57

We have had to move for work , it was stressful even with paid help and a relatively high income .

If the government can shield others from that stress why shouldn't they?

I do not understand this mentality of " this has caused me stress and anxiety so I want everyone else to feel the same "