‘Bedroom tax’ sparks multi-million pound rent risk

By Kaye Wiggins

Nearly £4 million of rent paid by council tenants could be used to cover the cost of a huge rise in debt problems that is expected to be triggered by the government’s benefits cap and “bedroom tax”.

The money from tenants’ rent payments, which would normally be spent on repairs and maintenance to their properties or on keeping future rent costs down, will instead be put away in a council fund.

It has been earmarked to plug a hole in Lambeth council’s budget that will come about if, as predicted, the government’s cuts to benefit payments cause tenants to fall into arrears.

The move has been introduced alongside a 4% rise in rents for social housing tenants.

The council claims it has been forced to raise rents and set some of the extra money aside because it is not legally allowed to let its housing budget go into debt. It predicts a drop of up to £2.5m in the amount of rent it collects, as a result of the welfare reforms.

Lindon Turvey, a Brixton resident and former leaseholders’ council chair, told the Bugle that tenants had raised concerns about the move during meetings with the council earlier this year.

“People generally weren’t happy about having to pay more rent because if rents were higher, it was likely to make more people default, so it’s a circular thing,” he said.

“There were also questions about how much money the council needs to put away as a contingency. Tenants accepted the rationale that it was sensible to put some money away, but they weren’t happy that repairs that need to be done keep not getting done.”

“There is a direct cause-and-effect link between the welfare reforms and the loss of money for those repairs, because the repairs money comes from the same budget [that the £4m contingency money is being taken from].”

He said the council had also told tenants that the welfare reforms were part of the reason for the 4% rent rise – because it would have to put the extra money away to cover the cost of the expected arrears.

A Lambeth council spokesman said it was sensible to plan for a future loss of income, although he accepted that the rent rise and reduced repairs budget would have an impact on tenants.