Scottish AffairsWritten evidence submitted by Craig Stirrat Housing Services Director on behalf of Fife Housing Association (FHA)

Executive Summary

The Tenants of Fife Housing Association are experiencing a disproportionate impact of the bedroom tax due to the number of tenants (particularly single people and couples with no dependents) reliant on housing benefit and the higher numbers of under-occupied family houses.

Fife Housing Association has seen both rent arrears and void rent loss increase since 1 April 2013. Where under-occupied properties have been vacated, demand has virtually dried up for these large (mainly flatted) homes.

Currently 18% of FHA tenants are affected by the bedroom tax—prospects for an early move to a smaller house are affected by a number of factors—but the main one is the low availability and low turnover of one and two bedroom houses. For many tenants living in rural communities the alternative options to move, for instance, to the Private Rented sector are limited eg North east Fife area (St Andrews).

This low turnover has resulted in only a 2% reduction in number affected (as at 1 April 493 were affected) over the past six months. More time is needed to clear the “log-jam”.

Due to the insufficient options available to many households to downsize—FHA are calling on the UK Government to:

1.further investigate alternatives to encourage people to downsize, but which would not penalise them when they cannot;

2.to make further concessions on exemptions to be granted for those tenants who have applied to downsize to a smaller home but have to wait until a suitable home becomes available; and

3.ideally provide additional budget to the Scottish Government for the funding of smaller homes and homes designed for life (homes that can be adapted to take account of growing and shrinking household needs).

Who we are

1997—established as a General Needs housing provider.

Own—2,400 homes + provide Factoring Services for 89 homes.

£9.7 million—annual turnover.

66 staff, who also service our subsidiary—PACT.

Who are our Tenants?

30% of all FHA tenants are working (either FT or PT);

30% of all tenants on a weekly income of up to £170pw (net);

32% of all tenants are over 60 yrs. old;

37% of all households are single households;

and 52% of tenants have been tenants for 10 years or more;

As at 1 April 2013—57% FHA tenants on HB ( 39% full, 18% part).

Who We House

Fife Housing Association are partners in Fife Council’s (Combined ) Fife Housing Register (FHR)—we allocate our vacant homes from this register of housing applicants and tenants seeking a transfer—11,558 applicants (as at 31/08/13 ) seeking another home

52% of applicants on the FHR would only qualify for a 1 bedroom property under the DWP rules of entitlement (see table 5)—the rest would qualify for two and above bedrooms.

Only 31% of applicants/transferring tenants stated they were currently working full time or part-time (when part-time numbers are removed—because they are likely to be entitled to part HB this drops to 20%).

Table 1

FHA STOCK & ANNUAL TURNOVER 2012–13

Size—No Beds	FHA Stock— Number	FHA Stock type as % of total stock	FHA Turnover— Number	Turnover As % of stock size
bedsits	12	0.5%	0	0
1 bed	82	3.4%	15	18%
2 bed	1,125	45.8%	137	12%
3 bed	1,145	46.5%	52	4.5%
4 bed +	94	3.8%	3	3%
Total	2,458	100%	207	8.5%
Fife Council	30,100		2,500	8.3%

Table 2

WEEKLY FIFE RENTAL COMPARISONS

Size of Property	Fife HA £ Weekly (average = £70)	Weekly Rent reductions		Private £ Weekly (Kdy)	Fife Local Housing Allowance £
		14%	25%
1 Bed	51.00 (flat)			98.00 (flat)	80.77
2 Bed	63.00 (flat)	£9.00		115.00 (flat)*	103.85
3 Bed	73.00 (cott)	£10.00	£18.00	130.00 (cott)	117.92

*A 2 bed flat in St Andrews is higher at between £210 to £255 per week

Table3

PRIVATE RENTED SECTOR AVAILABILITY—FIFE1

Property Size/type	No. Available	Property Size/type	No. Available
1 Bedroomed cottage	5	2 Bedroomed cottage	57
1 Bedroomed flat	51	2 Bedroomed cottage	166
Total	56		223

Table 4

FIFE STOCK BY TENURE

Tenure	Number	% of total
Owner Occupied	119,189	70%
Council	30,100	18%
Registered Social Landlords(RSL)	9,292	5%
Private Rented Sector (PRS)	12,000	7%
Total	170,881	100%

Table 5

BEDROOM ENTITLEMENT COMPARISON

Household Size	Bedroom Entitlement
	FHR	DWP
Single Person	Bedsit or 1	Bedsit or 1
Single pregnant woman	2	1
Couple	1 or 2	1
Family with one child	2	2
Family, two children of same sex under 13 years old	2	2
Family, two children of same sex one or more aged over 13 years	3	2
Family, two children not of same sex (irrespective of children’s age)	3	2
Family, three or more children	3 or 4	2 or 3

Table 6

SUMMARY WELFARE REFORM IMPACT ON FHA TENANTS

Reform	Impact on Tenants	Impact on Association	Mitigation by FHA
Benefit Cap	5 FHA tenants originally affected— loss in Housing Benefit of £673.83 per month. Reduction in tenants income	2 no longer affected by cap 3 currently now in high arrears	2 Discretionary Housing Payment applications submitted—both unsuccessful
Under Occupancy	435 FHA tenants affected (as at 1 April 57% of tenants stated they did not wish to move) Downsize Requirements: 321 (74%) have 1 extra bedroom 114 (26%) have 2+ extra bedrooms Of the 435 tenants affected by bedroom tax: 72%—are single people, 15% are couples with no dependants, 5% are families with dependants, 8% are single people with overnight access to dependants	18% of all FHA tenants affected Potential monthly rent loss for period 1.4.13 to 30.9.13—£121095.30 119 (27%) of affected tenants fell into arrears from 1.4.13 to 30.9.13 totaling—£18,255.42 105 (24%) of affected tenants fell further into arrears by an additional—£9691.26 Total additional arrears—£27946.68 (23%) of potential monthly rent loss. Additional recovery costs Additional transaction costs Rise in Voids— 100 voids for period 1.4.13–30.9.13. Inability to allocate 4 apt flatted accommodation Higher administration costs for voids Void rent loss increased from 0.7% to 1.26%	Collaboration with Fife Council & RSLs to help tenants via Fife Reform Group Encourage Mutual exchanges Promote Priority transfers Assisting tenants with DHP claims Help h/holds with income management—“Canny Budgeting” FACT course for applicants on housing list and new tenants Money advice surgeries
Universal Credit	1,320 tenants will no longer have their HB paid direct to their rent account Tenants will be fully responsible for paying their rent to FHA More responsibility on tenant to notify DWP of change in circumstances Online applications	UC: the £4.3m HB currently paid to FHA per annum—will be paid directly to working age tenants’ Increased collection costs—additional £17k	Collaboration with Fife Council & RSLs to help tenants via Fife Reform Group Working with Fife Council to promote Fife Credit Union—establish Jam-Jar accounts Working with Alliance members to take forward digital inclusion project and seek funding Pre tenancy course for applicants on housing list and new tenants On panel of Customer Representative Group with DWP in Fife

FHA Position Statement

The Board of Management and Senior Staff of Fife Housing Association (FHA) understands that the UK Government has to tackle the growing Welfare state budget and get people back to work.

However, as a responsible registered social landlord we have to remain opposed to the way in which the welfare reform policies—namely the under-occupation deductions from Housing Benefit payments—have been implemented.

We believe there has been insufficient consideration of the real impact on individuals and communities and (other than the additional allocation of Discretionary Housing Payments) any substantive planning and resource put in place to ease the transition (ie additional funding to build smaller homes or to reconfigure homes).

We would therefore call on the UK Government to:

1.further investigation into alternatives to encourage people to downsize, but which would not penalise them when they cannot;

2.to make further concessions on exemptions to be granted for those tenants who have applied to downsize to a smaller home but have to wait until a suitable home becomes available; and

3.ideally provide additional budget to the Scottish Government for the funding of smaller homes and homes designed for life (homes that can be adapted to take account of growing and shrinking household needs).

Evidence of Impact

Fife has one of the largest problems of shortage of smaller properties available in the social rented sector—particularly in our more rural communities.

Table 7

SIZE OF DWELLING (NUMBER OF ROOMS)—SOURCE: SCOTTISH HOUSE CONDITION SURVEY 2009–11

	Number of rooms
	1–3		4–5		6+
	Dwellings
	000s	Row %	000s	Row %	000s	Row %
Aberdeen City	19	19	64	62	20	20
Aberdeenshire	13	12	52	50	39	38
Angus	7	14	26	51	18	35
Argyll and Bute	6	15	22	53	13	32
Clackmannanshire	3	15	13	56	7	29
Dumfries and Galloway	5	7	40	58	24	34
Dundee City	13	19	43	62	14	20
East Ayrshire	4	8	36	66	14	26
East Dunbartonshire	5	11	22	51	16	38
East Lothian	5	12	26	62	11	26
East Renfrewshire	4	10	16	44	16	46
City of Edinburgh	44	20	125	57	52	23
Eilean Siar	1	6	6	48	5	45
Falkirk	9	13	44	64	15	22
Fife	17	11	98	61	46	28
Glasgow City	45	16	197	70	40	14
Highland	13	13	59	58	30	30
Inverclyde	6	17	24	65	7	18
Midlothian	3	7	24	67	9	26
Moray	4	10	23	59	12	31
North Ayrshire	9	14	36	57	17	28
North Lanarkshire	16	11	96	66	34	23
Orkney Islands	2	16	5	50	3	34
Perth and Kinross	7	11	38	59	19	30
Renfrewshire	15	20	42	53	22	28
Scottish Borders	7	14	26	50	19	36
Shetland Islands	1	9	6	57	3	33
South Ayrshire	8	15	29	55	15	30
South Lanarkshire	14	10	89	65	34	25
Stirling	4	12	21	56	12	32
West Dunbartonshire	8	19	28	67	6	15
West Lothian	8	11	46	63	19	26
Scotland	325	14	1,418	60	614	26

Currently there is a structural mismatch of supply to demand (particularly in the former Fife Mining villages, where FHA has many properties) which the bedroom tax has exacerbated. Many large family flats which have been let to smaller households on benefits in the past are becoming virtually un-lettable because these households cannot afford the 14 or 25% charge.

Since 1 April 2013 FHA void rent loss has increased from 0.7% to 1.26% because properties are now harder to let. (ironically if a single person household moves from a two bed FHA flat and moves into a one bed flat in the PRS—it adds an additional £140 per month to the Housing benefit costs for that individual—whilst FHA loses rental income caused by an un-necessary property vacation).

Since 1 April 2013 FHA net rent arrears have increased from 3.0% to 3.7%

The Fife Housing Partnership’s Housing Need and Demand Assessment (2011) indicate that 68% of the 561 new affordable housing requirements (per annum over 10 yrs) are for one and two bedroom homes and 32% for three bedrooms and above. A total of 5,610 homes has been estimated to be required by 2021.

Fife Council has set a 5 yr. target of 2,700 new affordable homes (an average of 540 per yr. against a 10 yr. target). Fife Council have set a target to achieve 22% specific needs housing on new developments (provided through amenity & wheelchair units).

In May 2013 the Scottish Government announced that it is on target to complete the 6,000 affordable homes needed every year across Scotland to deliver the overall aim of 30,000 over the life of the Scottish Parliament (by 2016), at least 20,000 of which should be for social rent.

Delivery of these homes, of these sizes, will be most effective in meeting affordable housing needs and help tackle the bedroom tax issues. Fife Council and Housing Associations however need time to achieve this goal. It is anticipated that one consequence is that more low income households will be forced into higher cost private rented accommodation.

In line with national trends (as revealed in the recent Scottish Federation of Housing Associations (June 2012) survey), many of the FHA households affected by the bedroom tax require a one bedroom property in order to avoid a reduction in housing benefit.

Yet little more than 7% (15—see table 1) of all available FHA lets in a year are one bedroom homes. Turnover of Housing Association homes of any size is relatively low with less than one in ten properties becoming available to let each year.

For most affected tenants they have no alternative but to wait until a smaller house is offered to them. In the meantime they are incurring additional cost of up to £72 per month through no fault of their own.

There are many households in social rented housing (including tenants of Fife Housing Association) in Fife willing to downsize from two or three bedroom properties but there is a definite lack of one and two bedroom properties available.

Since 2002, there has been a 6% reduction in the number of social rented homes in Fife. The reducing size of the social housing sector has meant a corresponding reduction in the amount of housing that becomes available each year through turnover.

It could be argued that the Private Rented Sector (PRS) in Fife is one solution to the under-occupation and bedroom tax issues, as this sector has grown by 3% over the last 10 years—a higher growth rate than other housing tenures in Fife.

But one has to question the value for money implications of encouraging social tenants dependent on housing benefit moving into the PRS when rents are on average almost 25% higher than in the voluntary social rented sector. Ironically, these higher rents may also act as a deterrent to those householders who are actively seeking full time employment.

According to recent Fife Council research,2 by and large, tenants find it relatively easy to find accommodation in the PRS, although there are variations between areas. While 65% of all tenants said they had found it easy or relatively easy to find a let, this fell to 50% in the St Andrews area. Affordability was the main problem experienced by those that had struggled to find accommodation.

This example clearly demonstrates that in particular areas of Fife—in this instance the North East of Fife—the one size fits all policy of applying bedroom tax is not appropriate.

With its relatively self-contained market and high proportion of households living in the PRS, the St Andrews market is markedly different to other areas of Fife. Rents are high, as are the number of Houses in Multiple Occupation; the market is dominated by and designed to cater for students—making it very difficult for social rented tenants to access in order to downsize.

According to the research, “The level and type of intervention required to ‘tempt’ a significant number of landlords out of the student market would be considerable and potentially highly distorting to the market.”

The significance of this level of impact on Fife Housing Association tenants is highlighted by the research undertaken by the Scottish Federation of Housing Associations3 which reveal that on average, 9% of Scottish Housing Association tenants were under-occupying their properties.

With welfare budget and public sector cuts all coming at once, the staff at Fife Housing Association are already seeing people cutting back on the essentials of food and heating but there is only so much they can do.

The result for a significant number of social rent tenants will be misery—cold rooms, longer queues at food banks (see attached statistics from the Dunfermline Food Bank), broken families, and missed rent payments and yet more people facing homelessness—devastating for those directly affected, but bad for the resilience of the Social Rented Sector.

DHP

Fife Council has received 2922 applications for DHP since 1st April 2013. 2,252 of these applications have been successful.

The amount spent totals £787.,400.80 from the initial pot of £1,045.000 which had been topped up by Fife Council from the original award of £435,000 from DWP. It is anticipated that all of the fund will be used.

There has been 195 applications made by tenants of Fife Housing Association with help from their housing officer of which 80 have been successful which gives additional assistance of £3852.50 per month to our tenants.

Housing Officers continue to help tenants complete applications on a daily basis.

DHP applications were initially awarded for a six month period with all applications needing to be reassessed from 26 September 2013, however the Local Authority Executive Committee gave consent for all existing awards to be automatically extended to the end of the financial year. This is for cases where no change in income has taken place since the last award was assessed.

Where an award for DHP is successful Fife Council will continue to fund 75% of the difference for underoccupancy cases.

The Scottish Government has just committed £20 million of new funding to assist councils top up their “Discretionary Housing Payment” budgets to offset some of the worst effects of the Housing Benefit sanctions.

APPENDIX 1

SUPPLEMENTARY INFORMATION

The Bedroom Tax & Homelessness Issues in Fife

In Fife there were 39, 359 social rented sector homes in 2011–12 of which there are only one in five which have one bedroom.

Right to Buy resulted in the loss of 6,883 affordable homes between 2001–02 and 2011–12.

In the last year 416 social sector properties have been lost through sale or demolition.

There were 534 households living in temporary accommodation in September 2012, including 330 children.

There were 2,713 households assessed as homeless in 2011–12—70% of which required a one Bedroomed house but most had to be offered a larger home than the DWP social housing size criteria dictates.

University and social landlord collaborative research has found the Department of Work and Pensions may have significantly over-estimated the savings from the bedroom tax.

The University of York worked with Riverside, Wigan and Leigh Housing, Affinity Sutton and Gentoo to apply figures based on the experience of the housing associations tenants to a model used by the DWP to estimate the savings reported to parliament in impact assessments in 2011 and 2012.

DWP estimated that the introduction of bedroom tax would reduce the housing benefit bill by £930 million over the next two years, with further tests showing annual savings within a range of £10 million either side of its main estimate. However, the new research suggests that using the DWP’s own model, the actual savings may be little more than 60% of the projected figure.

Data based on the first five months of the four landlords implementing the tax, suggests that the DWP has under-estimated the proportion of tenants under-occupying by one bedroom who will downsize, and of those, the proportion who will be displaced into the private rented sector.

Written by Professor Rebecca Tunstall, director of the centre for housing policy at the University of York, the report shows major weaknesses in the DWP’s model, which only takes into consideration the impact of a limited number of possible options for those moving and does not consider the full impact of long chains of moves which could be triggered.

October 2013