What is the “bedroom tax” all about and how might this effect private landlords?

Next month will see the introduction of a campaign by the government to cut housing benefit through what has been dubbed the “bedroom tax”. Social housing tenants will see their benefits cut according to the number of spare bedrooms they have, 14% for those with one spare room and 25% for two or more. In addition there is to be a change as to how rents are to be paid to landlords; those receiving benefit will now receive a Universal Benefit and going forward tenants will be responsible for paying landlords directly. The impact of these changes will be much more wide spread than simply the impact on tenants living in affected properties. The reforms are likely to cause a great deal of instability in the rental market as a whole as there is likely to be a shortage of smaller properties in the social housing sector available for people to downsize, therefore forcing tenants to rent from private landlords.  With this higher demand, rents are also likely to rise more than we have already seen as a result of the slowdown in bank lending. This will impact social housing and private tenants alike. If you are a private landlord you may see an increase in the number of your tenants receiving benefit, including those with disabilities. You might therefore need to consider keeping up to date with legislation around what is required of you to accommodate tenants with disabilities and consider any alterations which may be required to your properties. Another point for private landlords whose properties start to attract those on benefits is that there is a discrepancy as to how many people can occupy properties with a box room. A room that is less than 70sqft goes against the The Space Standard requirements set by the Housing Act 1985, that says that a room under this size cannot be classed as a bedroom for any person over the age of 10. Therefore a three bedroom property that could be suitable for a family with two children would be in breach of housing requirements.  Landlords then may run the risk of having tenants and then suddenly when a child who occupies a box room turns 10 the tenants will need to move. The changes to the way that landlords will be paid will mean that both social and private landlords will run the risk of coming up against rent arrears and late payments issues. As tenants become responsible for paying their rent directly and many have their benefit cut, landlords are likely to come across situations where tenants are slow to pay or are unable to make payments at all. Landlords will then need to consider their debt collection methods and/or consider possession proceedings and ensure that they pay close attention to their own terms and conditions within their rental agreements so they can be sure that they properly protected. If you are a private landlord and you are concerned that the bedroom tax may affect you, Setfords residential property and landlord and tenant team can help. We also have dedicated dispute resolution lawyers who are skilled at dealing with debt recovery and possession proceedings. Contact us on 0845 450 6135 or by filling out form here to discuss your requirements in more detail.