Under-occupation - the 'bedroom tax'
If you have more bedrooms than you need for the size of your household, you may be under-occupying your home. This means that you're likely to be paying more to run your home than you need to, and if you're claiming housing benefit you'll receive a reduced amount towards your rental payment.
One of the biggest implications of under-occupation is the costs associated with living in a home which is larger than you actually need. This could be rent or mortgage payments, council tax, utility bills, as well as the extra work associated with maintaining and cleaning the property. Living in a smaller home could mean less work and more disposable income.
If you rely on housing benefit to pay for your housing costs, recent welfare benefit reforms mean that eligibility for housing benefit is assessed with reference to the number of people in a household and the number of bedrooms in a property. This is commonly known as the ‘bedroom tax’. This affects working-age affordable housing tenants. Those who live in private rented housing have similar rules under the local housing allowance regulations.
The rules allow one bedroom for:
- Every adult couple (married/civil partnered or co-habiting)
- Any other adult aged 16 or over
- Any two children of the same sex aged under 16
- Any two children of different sexes aged under 10
- Any other child (other than a foster child whose main home is elsewhere)
- A carer (or team of carers) who don't live with you but provide you or your partner with overnight care
Therefore, if you're a single person or a couple living in a two-bedroom home, you're 'under-occupying'. Similarly, if you're a single person (or a couple) with two children of the same sex under 16 years old in a three-bedroom house, you're 'under-occupying'.
The reduction in housing benefit for those in affordable housing is a fixed percentage of the eligible rent.
The government has said that this will be set at a 14% reduction in benefit for households with one extra bedroom, and a 25% reduction for two or more extra bedrooms.
In the private rented sector, the rent is capped for the size of property your household needs. If you choose to live in a larger house but are eligible for housing benefit, you may have to pay an additional amount to top up the rent.