The DWP threatens local authorities with penalties

Some landlords – most recently, Welwyn Hatfield DC – have been redesignating rooms in order to reduce tenants’ liability to the bedroom tax.  This has attracted an aggressive response from the DWP , directed at local authorities rather than social landlords.  Lord Freud has rewritten to Chief Executives to warn them that

“Blanket redesignations without a clear and justifiable reason and without reductions in rent, are inappropriate and do not fall within the spirit of the policy. … Where it is found that a local authority has redesignated properties without reasonable grounds and without reducing rents, my department would consider either restricting or not paying their housing benefit subsidy.”

The first problem for the DWP is, of course, that there is a clear and justifiable reason for redesignation.  There is a statutory definition of room size, and box rooms, alcoves and walk-in cupboards don’t meet it.

The second part of this, referring to reductions in rent, is rather more complex.  Traditionally, rents in the social housing sector have reflected historic costs rather more than the amenities they offered.   Rent setting in England has been since 2002 subject to a process of ‘convergence’, intended to rationalise the morass of  different levels of rents charged for otherwise similar properties.  (In Scotland and Wales the issues have been considered, and there has been some ad hoc adaptation, but there has not been the same uniform process.)  Target rents in England have been set on the following principles:

•   30% of a property’s rent should be based on relative property values compared to the national average
•   70% of a property’s rent should be based on relative local earnings compared to the national average
•   a bedroom factor should be applied so that, other things being equal, smaller properties have lower rents

Initially the English policy was supposed to bring rents into conformity with a common standard by 2012.  The rent rises demanded were unmanageably high, the deadline has slipped back, and it is now scheduled to be done by 2015/16 unless the Bedroom Tax upsets it further.

Do make allowances if I get this next bit wrong; I don’t work in England, but  I trust that my English readers will set me right.  From what I can decipher, while the government would have liked bedroom size to be a determinant of rents, it hasn’t quite happened, and it is not always obvious what proportion of rent is attributable to the number of bedrooms.  In places, it seems that the main effect of the DWP demanding a deduction of the proportion of rent attributable to bedrooms will be to limit the scale of increase in rents that the DCLG has been requiring social landlords to make.  It looks, then, like a case of government pulling in two directions at once; it’s also a mark of a wider failure to understand that Housing Benefit is not just a benefit, but an instrument of housing policy.