A PERFECT storm has arrived with the combination of changes to both housing benefit and council tax payments in April.
The so called 'bedroom tax' penalises social housing tenants considered to be under-occupying the property by cutting housing benefit payments if they are deemed to have one or more spare bedrooms. In addition, changes to council tax benefits will affect owner-occupiers and private tenants as well as council and housing association tenants.
As a result of government policy, residents will no longer receive benefit to cover the full amount of council tax and in Exeter they will be required to contribute 20 per cent themselves. For example, a tenant of working age in a three bedroom property with a son and daughter under the age of 10 will be deemed to be under occupying by a bedroom and will lose 14 per cent of their housing benefit and 20 per cent of their council tax support and will need to find an additional £73.45 per month (£16.95 per week) from their benefits.
Reducing the meagre incomes of some of our tenants with a reduction in housing benefit and at the same time asking them to begin paying some of their council tax is a double blow which will inevitably increase the level of debt. We are very concerned for our tenants.
Cornerstone has contacted those tenants who are now considered to have spare bedrooms and will be affected by the housing benefit changes and found that 20 per cent of them are contemplating moving to a smaller home but this may be easier said than done due to the lack of such vacancies.
Within families, children of the same sex are now expected to share bedrooms until they are 16 and even opposite sex siblings must share until they are 10-years-old or risk losing housing benefit for having spare bedrooms. Some tenants unable to make up the shortfall in rent will be forced into an unsettling move, including a possible change of schools for the children, perhaps only for a few years until their children reach the right age for separate bedrooms and they need to move house again. Until now, Cornerstone's policy on housing families has been to provide them with a house that gives them the space they need for the future. We are now having to work with them to find them smaller alternative housing, which is in very short supply.
We want to support our tenants through these changes and try to help them plan for the future by thinking about their reduced incomes before they find themselves in debt or rent arrears. We are asking any tenant with concerns to contact our housing team who will be happy to discuss it with them.
Key to Cornerstone's ability to continue to build affordable housing is our capacity to borrow money based on our strong, secure rental income. Changes to housing benefit and the expected increase in rent arrears may mean our rental income becomes less secure resulting in less favourable lending rates from investors.
Our aim is to continue to increase our stock within our development area of Exeter and the surrounding districts and to provide affordable housing to local people within Devon but the future is far from certain.
