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The bedroom tax is a United Kingdom welfare policy whereby tenants living in public housing (also called council or social housing) with rooms deemed "spare" experience a reduction in Housing Benefit, resulting in them being obliged to fund this reduction from their incomes, move home, or face rent arrears and potential eviction by their landlord (be that the local authority or a housing association). The policy was introduced as part of the Welfare Reform Act 2012 passed during the Premiership of David Cameron. Bedroom tax is the most commonly used term for the policy, especially by critics of the changes who argue that they amount to a tax because of the lack of social housing (or in some areas, any rented accommodation) for affected tenants to downsize to (and the refusal to accept the risk of taking in lodgers). The bedroom tax is also referred to as the under-occupancy penalty, under occupation penalty, under-occupancy charge, under-occupation charge or size criteria.
In 2016 it was announced that the penalty would be extended to pensioners. Caroline Abrahams of Age UK said: "Imposing the cap on older tenants will not only cause them anxiety and distress, it is also pointless given the lack of affordable housing options available to them". Poorest pensioners to lose hundreds of pounds a year in 'new bedroom tax' BBC Poorest pensioners to lose hundreds of pounds a year in 'new bedroom tax' BBC - "And Caroline Abrahams, charity director of Age UK, said: 'Imposing the cap on older tenants will not only cause them anxiety and distress, it is also pointless given the lack of affordable housing options available to them. ... It will create hardship without any significant financial gains for the Government.'" It has not been applied to pensioners.
Supporters of the changes have referred to the unreformed system as a "spare room subsidy"
A similar policy was enacted by the preceding New Labour government during the decade beforehand in private-sector housing, as the Local Housing Allowance, without attracting controversy. The 2012 legislation essentially represented an equalisation of treatment of benefit claimants, regardless of whether they live in private tenancies or social housing. The reforms formed one part of the 2010–2015 Coalition Government's wide-ranging welfare-reform agenda – sometimes known as the United Kingdom government austerity programme – which included the introduction of Universal Credit, the introduction of a welfare cap to limit the total size of the welfare bill, reform of the Council Tax and the introduction of Personal Independence Payments to reform of disability benefits.
Critics argue that the policy has had a disproportionate impact on disabled people and other vulnerable groups, as well as increasing poverty and homelessness. Supporters of the policy argue that it is a fair way to manage social housing and encourage efficient use of housing resources.
The rules for calculating allowed bedrooms are the same as for Local Housing Allowance introduced by the Labour government in 2008 for benefit claimants in private sector tenancies, except for the rules involving disability or the armed forces.
One bedroom is allowed for each of the following:
There is a further category of exempt accommodation defined as "accommodation provided by a housing association, a registered charity or voluntary association where that body, or a person acting on its behalf, also provides the claimant with care or support" ( supported housing), "or supervision" ( sheltered housing). The UK Supreme Court ruled in 2019 that failing to provide a bedroom for the partner of a severely disabled tenant was a breach of that partner's human rights to a home. A room is needed in that tenancy for the disabled partner's medical equipment. UK government loses supreme court fight over bedroom tax The Guardian
If a "spare" bedroom is created following a death then a council tenant's housing benefit will not be reduced until a year after the death.
The Welfare Supplementary Payments (Amendment) Bill provides protection to around 37,000 households in Northern Ireland.
In 2012, speaking in the House of Lords, Lord Freud stated:
In their 2017 general election manifesto, the Liberal Democrats declared their intention to end the bedroom tax.
The under-occupancy penalty has been criticised for potentially costing more than it saves by forcing individuals into the private rented sector, where rents are higher, thereby increasing the cost to the taxpayer. The National Housing Federation has estimated that the housing benefit bill could increase by £143 million if affected tenants were to downsize by moving into smaller privately rented accommodation. However the Government argues that freeing up social housing would also reduce the cost of housing people in expensive temporary accommodation; since those people would be more likely to find themselves in overcrowded accommodation as compared to those affected by the penalty, the combined impact should be to reduce net costs, and reduce net overcrowding.
In January 2015, it was announced that the Supreme Court of the United Kingdom would rule in March 2016 on whether the "bedroom tax" was illegal on the basis that it unfairly discriminated against disabled adults.
In May 2015, a father successfully challenged the penalty at a tribunal. The father had separated from his partner but was able to argue that his "spare" room was occupied by his son who stayed with him three nights a week. However, it was believed that the Government would challenge the ruling.
In February 2016, a decision by the Upper Tribunal involving Stevenage Borough Council considered the question of what constituted a room for the purposes of the regulations. Judge Lloyd-Davies decided that a room "should be capable of accommodating a single adult bed, a bedside table and somewhere to store clothes, as well as providing space for dressing and undressing". This implies a minimum size of 65.81 square feet for a rectangular room.
On 13 November 2019, according to the The Guardian, the Supreme Court ruled that "applying a 14% housing benefit reduction to a man, referred sic only as RR, was a breach of his right to home under the Human Rights Act. RR’s partner is severely disabled so 'it is accepted' that the couple need an extra bedroom for her medical equipment, Lady Hale said".
In 2019, the European Court of Human Rights ruled the bedroom tax discriminatory and incompatible with Article 14 in conjunction with Article 1 Protocol 1 of the European Convention on Human Rights.
The Centre for Housing Policy at the University of York concluded that the under-occupation policy has saved money, but that the potential savings forecast by the Department for Work and Pensions have been overestimated. The use of Discretionary Housing Payment has partly reduced the savings predicted for the penalty.
In July 2014, a report was published by the DWP that said only one in twenty claimants affected by the change had downsized their property. A study published four months earlier had similar results.
The report also showed that there has been great demand for downsizing properties but there has been nowhere near sufficient supply of suitable sized housing.
In response to this report, the Liberal Democrats signalled a change in their support for the policy, with both Nick Clegg and Danny Alexander stating that they would like to see changes to the way it is implemented.
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