The Fresh Start Agreement of November 2015, negotiated by local politicians, the UK and Irish governments, clearly stated: ‘It has been agreed that the social sector size criteria – the so called bedroom tax – will not apply, as agreed by the Executive.’ Significant funding was set aside to fully mitigate the policy’s impact until March 2020.
If the collapse of the NI Executive results in a failure to deliver this mitigation, the introduction of the Bedroom Tax will have a severe impact on many hard-pressed social housing tenants. With around 7,500 housing association tenants affected by the bedroom tax, this is a real concern for housing associations.
Addressing this legislative issue must be a political priority, for Stormont and Westminster. NIFHA calls on the Northern Ireland political parties and the Secretary of State to facilitate emergency procedures to enable these supplementary payments to be made.
Without supplementary payments, there will be an average cost of £14.50 per week for households impacted by the Bedroom Tax. If these payments are not received and tenants are unable to cover this additional sum on top of their housing benefit, sizeable debts will accrue across the housing association sector.
NIFHA calculates that, if supplementary payments are not made and rent is unable to be collected, there would be a loss to housing associations in rental income of approximately:
- £109,000 per week*
- £473,000 per month
- £1.4m per quarter
- £5.7m per year
Rental income is critically important in sustaining core activities such as developing new homes and maintaining existing stock. Given the scale of these potential reductions in income it would be difficult for housing associations to exercise forbearance. This is further complicated by the lack of certainty around how long it may take to establish a new Executive and Assembly able to legislate for supplementary payments.
NIFHA’s Chief Executive Cameron Watt said:
“NIFHA will continue to work with the Department for Communities to support any emergency procedures to enable the Bedroom Tax to be fully mitigated. Housing associations will continue to work with tenants to support them through the welfare changes. However, social landlords and tenants must not be penalised as a result of our current political problems. Our political parties and the UK government must prioritise working together to avoid the great harm that would result from the Bedroom Tax being introduced without mitigation.”
* This figure reflects the reduction of housing benefit as a result of under occupation by housing association tenants as of 30th November 2016.