Landlord to cushion bedroom tax blow

Aster Group, which owns 27,000 properties, is considering taking the financial hit to protect tenants who would otherwise lose out under the government’s under-occupation penalty.

From 1 April social housing tenants with one or more spare rooms will have £14 deducted from their weekly housing benefit on average.

Although other landlords, including Viridian Housing and Thurrock Council, have announced they will offer cash incentives to tenants who move to smaller properties, Aster is understood to be the first to link it to the amount tenants actually stand to lose.

Jo Savage, group services director at Aster, said the move is unlikely to cost the organisation much money as the cost of providing the incentive is likely to be cancelled out by the increase in arrears and the extra costs of rent collection if tenants are hit by the tax. Aster estimates affected tenants will lose around £1.3 million per year through the tax.

Ms Savage said: ‘We need to be a lot more commercial in our approach to this.’

She added: ‘I guarantee the cost of chasing arrears will be more than the cost of the downsizing incentive.’

Aster is considering offering the equivalent amount to three years’ worth of bedroom tax.

For example, a household on benefits paying £100 a week in rent facing a 14 per cent benefit cut over three years, would lose £2,184 (see box: how Aster’s plan would work). Aster would look to pay this as a lump sum if the tenant downsizes.

Ms Savage stressed the proposal has yet to go before the group’s board and a detailed business plan has still to be drawn up.

Aster, which operates across central southern and south west England, estimates it has 1,557 households affected by the bedroom tax. Of these 1,211 under-occupy by one room, 327 have two spare rooms, while 19 have more than two spare rooms.

Sam Lister, policy and practice officer at the Chartered Institute of Housing, said the plan could work, but cautioned that some tenants may not take up the incentive if they want to stay in exactly the same area.

The Department for Work and Pensions estimates 660,000 households will lose an average of £14 a week under the bedroom tax. The policy will save £500 million a year by 2014/15, according to the government.