The UK Government's Welfare Reform Bill will introduce a bedroom tax which will reduce the amount of housing benefit support that can be given to tenants in the social rented sector by introducing new criteria for working-age housing benefit claimants who have extra bedrooms.

People who are judged to be "under occupying" their home by one bedroom will have their housing benefit cut by 14 per cent. Where tenants are under occupying by two or more bedrooms the deductions will be 25 per cent.

The House of Lords proposed a number of changes to the Bill but they were dismissed when the proposals came back to the House of Commons. One concession to the original Bill was that people in supported or sheltered accommodation would not be adversely affected.

Currently the only exemptions in the legislation are;

• Where a person requires a spare room for an unpaid carer to provide overnight care (defined as in receipt of High or Middle rate of Disability Living Allowance care)
• The recently bereaved (protection for 52 weeks)

There will be some limited Discretionary Housing Payment (DHP) available to some tenants to help assist with reductions in housing benefit but this is short term funding - normally for a maximum of 6 months. The priorities for DHP payments will be:

• Disabled people whose houses have had significant physical adaptions
• Foster carers who are in between children to be cared for

Everyone else will be on a first come first served basis from a limited pot.

The bedroom tax will come into force from April 2013 and tenants will be responsible for notifying their landlords about their circumstances. Government Ministers have suggested that tenants who will be affected by the reforms consider taking a number of actions in order to account for the reduced income. Some suggestions include:

• Taking in a lodger
• Moving to alternative accommodation e.g. a one bedroom property (although there is already a shortage of one bedroom properties in the country)

Housing associations will need to realign their housing and homelessness policies to meet the challenges that the reforms will introduce. Homelessness prevention policies must meet the difficulties the tenants will experience if their housing benefit payments are reduced while social landlords will have to plan ahead for an increased demand for one bedroom properties.

If you would like to discuss the upcoming Welfare Reforms in greater detail please contact one of our experienced team.