The bedroom tax loophole:
A guide for councils and housing associations
A step-by-step guide for identifying cases, challenging decisions and dealing with discretionary housing payments
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Some commentators predict up to 60,000 bedroom tax cases are exempt. Photograph: Matthew Lloyd/Getty Images
Last month the Department for Work and Pensions (DWP) conceded that a drafting error in the "maximum rent (social sector)", or bedroom tax, means that tenants getting housing benefit since 1 January 1996 are exempt from the tax due to the inadvertent widening of transitional protection put in place for private tenants in 1996.
Attention has now turned to identifying these cases.
Numbers
The DWP insists that only about 5,000 of the 520,000 bedroom tax cases are exempt.
Official statistics do not identify social tenants on housing benefit since 1996. If the DWP estimate relies on extrapolation from the small number of remaining pre-1996 private tenants, this ignores the high turnover in the private sector: the latest English Housing survey shows 20% of social tenants have rented their home for 20 years or more compared with 4% of private tenants. Councils I have spoken to report 2.5% to 7.5% of bedroom tax cases exempt (up to 40,000 nationally). Some commentators predict that up to 60,000 people could be exempt, based on social landlords' analysis of their stock.
Identifying cases
Few councils can identify exempt cases by electronically searching their records.
At best a crude list of "possibles" can be identified for the slow process of further investigation. Landlords and individuals who think they are exempt should contact their council. One lesser-known indicator of possible exemption is where housing benefit is paid in advance (because new claims since October 1996 are paid in arrears).
Councils are particularly reliant on tenants and landlords to identify cases where the 1996 exemption has been passed on by a previous tenant: If the original tenant died, a surviving partner or relative may be exempt; If a couple separated or one went to prison, the remaining partner may be exempt.
Challenging decisions
The housing benefit adjudication scheme is complex. The safest way for tenants to protect their position is to appeal to a Tribunal against last year's bedroom tax decision no more than 13 months after it was made. If the council agrees the exemption applies it will change the decision anyway. But if the council is not persuaded by the evidence it will have to submit the appeal to the tribunal, which decides cases on balance of probability: if the tenant's story sounds plausible and there is no documentary evidence to the contrary, the appeal will probably succeed. Appeals should be sent to the council in writing, signed by the tenant.
Discretionary housing payments
Some exempt tenants have received discretionary housing payments to cover the bedroom tax. These payments can be recovered if deemd to be awarded in error and opinion is divided over whether that applies here.
Even if discretionary housing payments can be recovered, councils have no power to claw them back from arrears of housing benefit. Recovery by other means might be too much of an administrative burden.
The council could take the overpayment into account when deciding whether to award a discretionary housing payment to the same tenant in the future: it is hard to argue against that if it releases funds for other cases. But some councils have underspent their DHP budgets and have no wish to recover overpayments.
From 3 March, the law will be changed to close this loophole. But tenants can still appeal on other grounds. The number of bedrooms specified in a tenancy agreement or asset register is only one of the factors used to identify a bedroom for housing benefit purposes. The way a room is used and furnished weighs heavily; other relevant factors include the size/shape of the room, its position in the dwelling, its past use and any special reasons why the tenant does not use the room as a bedroom.
Some of those appealing have successfully argued that the bedroom tax breached their human rights, although a tribunal's jurisdiction to provide a remedy in such cases is not straightforward. Things may become clearer when the court of appeal issues its reserved judgment on a human rights challenge to the bedroom tax, heard in January.
Meanwhile the clear message for tenants is: don't despair, some people may still escape the bedroom tax. An appeal costs nothing and the possible arguments are more promising than you might think.
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