Beating the Bedroom Tax:

Supporting Tenants to find a

Lodger

CIH London Office

June 19th 2013

Who are we? • Founded 1999 as IntoLondon – the online flatsharing marketplace for

London

• SpareRoom.co.uk launched as a nationwide service in 2004

• Biggest flatshare site and fifth biggest property site in the UK

• 3 million customers – tenants, lodgers, landlords and letting agents

• Award winning customer service

The Authority on Lodgers

• Over a decade’s active work on behalf of lodgers and live-in-landlords

• We provide advice and information on lodger and live-in-landlord rights

and responsibilities

• We brought lodgers back into the mainstream

• We’ve lobbied government on behalf of live-in-landlords with our

Raise the Roof campaign

• Our evidence to the Inquiry into the Private Rented Sector has been

accepted by the Communities and Local Government Committee

• We provide expert comment on the subject of lodgers and

live-in-landlords for national and local media

• No other property service covers this sector so comprehensively.

The Impact of Welfare Reform

on Social Housing

• An estimated 660,000 working age social tenants will be affected by the Bedroom Tax

(Social Size Criteria) from April 2013, across the UK.

• Benefit Cap expected to hit 67,000 households in 2013/14, falling disproportionately

on those living in more expensive areas.

• Direct Payments paid monthly in arrears to become the norm in a bid to help social

tenants get used to managing their own finances.

• Existing claimants will be transferred onto Universal Credit from Oct 2013 if their

circumstances have changed, and from Apr 2014 if they haven’t.

• Slower and costlier cash collection

• More arrears and bad debt (as demonstrated by test projects)

• Higher costs for chasing arrears

• More evictions

• Greater need to support tenants through all these changes and the associated effects on their finances.

• Lower profitability,

• Less able to meet new housing supply objectives.

Welfare Reform:

Effects on Social Landlords

Options for Social Tenants

affected by Welfare Reform

1. Downsize to a smaller property by mutual exchange.

2. Move to the private rented sector

3. Make up the shortfall from other income or savings, or by asking family members to contribute more.

4. Apply for discretionary payments

5. Take in a lodger

Taking in a Lodger Pros Cons

Extra income to help cover squeezed finances, and not liable for Under-occupancy charge

Extra earnings will affect benefits

Lodgers are ‘excluded occupiers’ so can be given ‘reasonable notice’ to leave at any time

Having to share living areas with strangers. Not suitable for vulnerable tenants.

Can choose who you’d like to live with, and set house rules

Could create a House in Multiple Occupation or overcrowding if taking in multiple lodgers

Earn up to earn up to £4,250 a year tax free under the Rent a Room Scheme

If living alone, lose entitlement to single person discount on Council Tax.

Other benefits include: making friends, pets fed, plants watered, house occupied whilst away, and even learning a new language

Will affect home contents insurance policies.

How income from lodgers

affects benefits • Currently income from lodgers is taken into account for means-tested benefits

such as Income Support.

• First £20 per week is ignored.

• If meals are included, 50% of anything above this level is also ignored.

• If no meals are provided, the rest will be treated as income, and will affect other

benefits.

• The lodger will count as occupying a room under the size criteria rules, so bedroom

tax won’t be applied.

• If renting to a relative, they will be treated as a non-dependent, which means that

income not counted as rent, but evidence of their income will be taken into account,

and a deduction applied to the lead tenant’s benefits.

• Under Universal Credit, income from lodgers will be disregarded, but bedroom tax

applied.

Why support tenants

to find a lodger?

• Helps make better use of under-occupied homes

• Helps keep residents in their homes, and increase affordability

• Helps meet the needs of increasing numbers of single people looking for a home

• Helps to reduce arrears

• Help give them the widest choice of suitable lodgers, in a safe, and supportive environment

Case Study • Owns & manages over 20,000 homes in Kent, Sussex, Essex, Hertfordshire

and South London.

• Identified 1,000 tenants affected by Bedroom Tax and Benefit Cap

• Visiting tenants to discuss their options

• Offering lodger scheme as one option, provided by SpareRoom

“Downsizing is not a realistic option for most residents, as there is

simply nowhere for them to move to. We see taking in a lodger as a

realistic option, which helps tenants stay in their homes.

Working with SpareRoom helps us to ensure that tenants get the

necessary support, and the chance to find the right lodger for their

circumstances, which is very important.”

Peggy Nicholson –

Economic Well-being

Coordinator, Moat

Lodger Support

Package • Until-let premium advertising

• One-to-One telephone and online support

• Step by Step guide to advertising for a lodger

• Lodger pack including • Lodger Agreement

• Deposit Receipt Form

• Notice to Quit Form

• 2x Inventory Sheets

Advice for tenants considering

taking in a lodger • Don’t rush the decision

• Check with your landlord, home insurance provider and benefits agency

• Get the room ready – it needs to be furnished

• Find out how much you can charge

• Take good photos of your room

• Consider your safety when meeting prospective tenants

• Meet them more than once & make sure they can pay the rent

• Establish ground rules

• Get it in writing – use a lodger agreement to cover yourself

• Tell council if single occupancy rate discount for council tax no longer applies

What if things turn sour?

• Talk things through in a calm manner

• Tenant can give reasonable notice to their lodger – get it in writing

• If lodger outstays their notice – tenant can change locks and

refuse to let them in. No need for a court order.

• Tenant should call the police and get witnesses if the lodger reacts

badly to eviction. This is very, very rare!

• Don’t use force – remain passive and refuse access to the house.

Any questions?

sam.cowen@spareroom.co.uk

@spareroomuk

Download our Lodger Guide at www.spareroom.co.uk/lodger