At entitledto we provide hundreds of help pages and information on benefits and entitlements. We've been getting asked about under-occupancy (aka the Bedroom Tax) and so this weeks blog explains the key factors about this reform and how it works.

Only working-age people are affected by the reform. What counts as working age?

If you or your partner were born before 5 October 1951 you will be classed as pension age when the changes occur in April 2013 and you won’t be affected. This is because the under occupation rules will only apply to tenants who are ‘working age’, which means tenants who do not qualify for Pension Credit.

The minimum age for Pension Credit (and other pension age benefits) is changing. For both men and women the minimum age increases in line with women’s state pension age. From 6th April 2012 the minimum age is 61 and reach roughly 61 and a half by April 2013.

If you are in a couple your eligibility for Pension Credit is currently determined by the age of the oldest person in the couple, even if the oldest person in the couple is male. However, please be aware that under Universal Credit, which is being introduced from October 2013, this rule will be reversed and the age of the youngest person will determine whether they qualify for Pension Credit.

I am a working age claimant with a joint tenant who is pension age. How will I be affected?

The reduction will be applied to the eligible rent before the Council apportions the share of the rent for benefit purposes. For example, Mr and Mrs Freestone are an elderly mother and adult son who share the tenancy of a 3 bed Council house. The rent for the property is £80.00 per week. According to the government's rules they need a 2 bed house, so their eligible rent will reduce to £68.80 because a 14% reduction will apply as Mr Freestone is over accommodated. The restriction does not apply to Mrs Freestone, so her Housing Benefit will be based on £40pw. Mr Freestone will, therefore, have his benefit based on a restricted rent of £24.80.

When will the changes come into effect?

The changes came into effect in April 2013 for all working age Housing Benefit claimants, including existing claimants. After October 2013 the new size criteria was absorbed into Universal Credit, with the element of the credit for housing costs incorporating any deduction for the additional bedroom(s).

How will the number of bedrooms I need be worked out?

Housing Benefit will calculate how many bedrooms you need as follows:

 

• One bedroom for each couple or named tenant if you are not a couple
• One bedroom for up to two dependent children under 10 regardless of gender
• One bedroom for up to two dependent children under 16 of the same gender
• One bedroom for any couple or single person aged 16 or over
• One bedroom for an overnight carer to provide care to a disabled tenant or their partner

The number of bedrooms a household can be increased in certain circumstances. The rules in this area are complicated and you may need to take advice on your individual situation.

Are there any exemptions?

Special rules affect the following groups:

• Disabled children
• Disabled adults who need overnight care
• Children in the armed forces
• Foster Carers

For more information see exemptions from the under occupation rules.

However, you are not affected by the under-occupation penalty (bedroom tax) if you have been receiving Housing Benefit continuously at the same address since before 1 January 1996. 

In order to qualify for this exemption, you must not have had a break in your claim or lived anywhere except at your current address in that time (except for any period where a fire, flood, explosion or natural catastrophe meant it was not possible to live in the property).  You may also qualify if you have lived at your current property since before 1 January 1996, even if you were not the tenant if you inherited your tenancy from a family member.

This rule was only made clear in January 2014, following a court ruling. Some people may have already been affected by the under-occupation penalty and had their Housing Benefit reduced since April 2013. If you have had money taken off your Housing Benefit because you have a spare room, you should contact your local council or housing officer.

The government have removed this exemption from March 2014. This means that anyone who was exempt from the under-occupation penalty because of this rule will have to pay extra towards their rent in the future.

What counts as a bedroom?

There is no centrally determined definition of what counts as a bedroom. However, in setting the rent for your home your landlord will normally have to define the number of bedrooms you have and this should be stated in your tenancy agreement.

How much will my Housing Benefit be reduced?

If you live in a property that is under occupied then the ‘eligible rent’ (the amount you pay minus any ineligible service charges) used to calculate your Housing Benefit will be reduced by a percentage:

• One bedroom too many: 14% reduction
• Two or more bedrooms too many: 25% reduction

If you currently receive Housing Benefit but get less than the maximum amount (for instance because you have some earnings) then you should work out the cash amount of the restriction by multiplying your eligible rent by the percentage reduction. The amount of Housing Benefit you receive will be reduced by the cash amount of the rent restriction if you claim after April 2013.