Does the #bedroomtax apply to private rent? How do rules differ between social rent and private? I'll try to explain, read on...

The 'bedroom tax' is not a 'tax', but a reduction to housing benefit entitlement for people living in social rented housing (renting off the council or a housing association). If you live in social housing but don't claim housing benefit it won't affect you. It also won't affect you if you're over pension age (although be warned rules are bit complex if you're part of a couple where one person is over pension age and the other person isn't).

The government has been saying that in introducing the 'bedroom tax' it is bringing social rented housing into line with the housing benefit rules in the private rented sector. This is only half true - the rules will be similar, but the differences are important.

In the private rented sector the amount of housing benefit you get is set by 'local housing allowance' (LHA) rules. LHA sets a limit on the amount of benefit you get according the number of bedrooms you're judged to need and typical rents in the local area. The number of bedrooms you need is calculated according the the age and gender of people in the household. Let's say you need 2 bedrooms - and let's say the LHA limit for a 2 bed in your area is £100 a week. You can then choose where you want to live - if your rent is more than £100 you'll have to make up the difference yourself. You might even find a three bed flat for £100 a week (the third bedroom will probably be small and the flat a bit of a dump, but it could happen). Or you might find a flat advertised for £110 a week but sweet-talk the landlord into letting you have it for £100. Let's face it in practice you probably won't have much choice or much luck finding landlords willing to drop the rent - but this is the theory.

So how does the 'bedroom tax' compare? One thing is pretty much the same: the criteria used to determine how many bedrooms you need - it's the same consideration of the age and gender of the people in the household. What's different is what happens next. Whereas LHA is a cap on the maximum amount of benefit you can claim, the 'bedroom tax' is a deduction from your benefit entitlement based on the number of 'extra' bedrooms you have over the number they think you're entitled to. If you have 1 bedroom more than your entitlement the deduction is 14% of your total rent. If you have 2 or more bedrooms 'extra' then the deduction is 25% of your rent. If your housing benefit only covers part of your rent (eg because you're working in a low paid job) the deduction will still be the same - it's a % of the rent, not a % of your benefit.

This has some important impacts. For one, it means that even if councils and housing associations dropped the rent, it'd have very little impact - if they dropped a £100 a week rent by 14% to £86, the 'bedroom tax' deduction would only drop £2 from £14 to £12 (ie from 14% of £100 to 14% of £86). Also because the deduction is based on a simple calculation of the number of bedrooms the house has, it makes no difference whether the bedroom is small or large, new and lovely or damp and dingy, you'll still lose the same amount of benefit just by virtue of it being a bedroom.

The rigid way the 'bedroom tax' is applied against the number of bedrooms in a home means there is very little scope for tenants and landlords to do things differently to avoid being in a situation where your housing benefit doesn't cover your rent. Moving somewhere cheaper doesn't work, you have to move somewhere with fewer bedrooms and in practice the small homes with 1-2 beds are scarce.

The fact that the 'bedroom tax' is a percent of your rent not a percent of the benefit you receive means that for part-time/low paid workers it's difficult to work your way out of the deduction - if you're only getting £20 housing benefit a week on a rent of £100 and you have one 'spare' bedroom, you'll lose the full £14 just the same.

In practice tenants on housing benefit renting in the private sector have a tough time of it, especially because the LHA caps have been dropped recently and are going to keep getting tighter, and in because the choice they have in theory is often 'Hobson's choice' in the real world. But at least the theory behind LHA isn't too bad. In contrast the theory behind the 'bedroom tax' is a bit of a mess to begin with, even before it's put into practice.

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