Affordable homes facing demolition because of bedroom tax

Housing associations say change to benefit rules means tenants cannot afford to rent three-bed maisonettes.

Three-bedroom homes are being condemned to demolition by housing associations because the coalition's bedroom tax has made them too expensive for tenants to live in, the Observer can reveal.

Despite a national property shortage, providers of affordable homes are unable to find people who can meet the cost of living in a home with an extra bedroom and are, in some cases, planning demolitions. In Liverpool, one housing provider, Magenta Living, has admitted that "with changes to welfare benefits there is very little prospect of letting upper three-bedroom maisonettes in the current climate".

In a letter to Alison McGovern, the Labour MP for Wirral South, Magenta says one such block of flats will be "emptied with a view to subsequent demolition" because of the inability to let them out, sell them or keep up with the costs of keeping them unlived in.

Coast and Country Housing, a housing association in north-east England that has 10,190 homes, has also reported a huge increase in the number of empty homes and announced that demolitions are now feasible.

Wigan and Leigh Housing, which manages 22,576 homes on behalf of Wigan council in Greater Manchester, concurred that demolishing their unlettable larger properties may prove to be the most cost-effective step. The development will raise the temperature in a Commons debate on Tuesday in which Labour intends to vote in favour of the bedroom tax being immediately repealed.

A number of senior Liberal Democrats, including one cabinet minister, are also understood to have reservations about the policy.

Under the government's controversial reform, the amount of housing benefit single people or couples can receive is cut if they are deemed to have a spare bedroom in their council or housing association home. Two children under 16 of the same gender are expected to share a room and two children under 10 are expected to share, regardless of gender.

Ministers say they have made the changes in order to maximize the use of Britain's affordable housing stock. Figures published last week show that the year-on-year increase in the number of homes has hit its lowest ebb in a decade, with 124,720 more homes, a rate of increase 8% lower than the year before. The number of new homes built was 118,540, down from 128,160 the year before, a rate that does not keep up with population growth.

Research from the Joseph Rowntree Foundation suggests Britain is facing a property shortage of more than a million homes by 2022 unless the rate of house building is dramatically increased.

McGovern said the government's welfare policy was failing on its own criteria of success: "The rhetoric coming from the government was that the Bedroom was about cutting down the housing waiting list. But if that is the case why have we got empty homes in the Wirral? It simply hasn't worked."

Shadow work and pensions secretary Rachel Reeves said this week's Commons vote was an opportunity for the Liberal Democrats to show where they stand on the issue: "This incompetent and out of touch government seems oblivious to the perverse and costly consequences of this unjust and unworkable policy. Not only is it hitting 660,000 vulnerable households, including 440,000 disabled people; the costs to the taxpayer are mounting as people are pushed into more expensive private rented accommodation while existing social homes are left vacant."

A government spokesman said: "The removal of the spare room subsidy is a necessary reform that will return fairness to housing benefit. We've been clear that hardworking people should not be subsidising tenants living in properties that are too large for their requirements.

"Consent from the Homes and Communities Agency is required before any social housing provider can dispose of a site on which social housing stood and will ensure that public investment and the needs of tenants are protected."