Rent arrears up since spare room subsidy abolished, report suggests

Rent arrears owed to housing associations and local authorities rose in the three months after the spare room subsidy was abolished, according to a study.

The Scottish Housing Regulator (SHR), has published research on the early impact of the measure, which has been dubbed the bedroom tax by critics.

It said arrears increased by £789,000 in the period to the end of June 2013.

It comes against a background of rising arrears in the past two years.

SHR said the report, based on feedback from almost 85% of social landlords, gave the fullest available picture of the early effects of welfare reform on Scottish landlords' rent arrears.

Iain Muirhead, the regulator's director of strategy and communications, said: "We want to get more information and see a fuller picture before we would draw any firm conclusions on what is happening and why.

"Our research establishes a baseline and we will repeat it each quarter and report the findings."

But the Early Impacts of Welfare Reform report revealed that the level of arrears had reduced during the period between March and June in each of the previous two years.

Biggest challenges

In 2011 it fell by £3.5m and by £2.8m in 2012.

The report said the total amount owed in rent at 30 June 2013 was £63,125,355, although this included amounts carried over from previous years.

It said most landlords were facing the same problems in dealing with the effects of welfare reform.

They identified increased workload and income reduction as their two biggest challenges.

Support, advice and information to tenants featured prominently in the actions landlords were taking to address the early impact.

David Ogilvie, policy manager for the Scottish Federation of Housing Associations, said the report provided concrete evidence of a worrying trend.

"This heralds tough times ahead for Scottish social landlords - be they housing associations, co-operatives or local authorities - as they face the twin challenges of increasing service delivery costs and reducing income.

"Both of these challenges arise directly from welfare reform."

The benefit changes form part of a revamped system.

Under the new housing rules, 14% will be deducted from housing benefit for one "spare" bedroom and a quarter for two or more.

The government says the changes should ensure that people are in suitably sized accommodation and release larger accommodation for people who need it.