Bedroom tax

The bedroom tax is a United Kingdom welfare policy whereby tenants living in public housing (also called council or social housing) with rooms deemed "spare" experience a reduction in Housing Benefit, resulting in them being obliged to fund this reduction from their incomes, move home, or face rent arrears and potential eviction by their landlord (be that the local authority or a housing association). The policy was introduced as part of the Welfare Reform Act 2012 passed during the Premiership of David Cameron. Bedroom tax is the most commonly used term for the policy, especially by critics of the changes who argue that they amount to a tax because of the lack of social housing (or in some areas, any rented accommodation) for affected tenants to downsize to (and the refusal to accept the risk of taking in lodgers). The bedroom tax is also referred to as the under-occupancy penalty, under occupation penalty, under-occupancy charge, under-occupation charge or size criteria.

In 2016 it was announced that the penalty would be extended to pensioners. Caroline Abrahams of Age UK said: "Imposing the cap on older tenants will not only cause them anxiety and distress, it is also pointless given the lack of affordable housing options available to them". It has not been applied to pensioners.

Supporters of the changes have referred to the unreformed system as a "spare room subsidy" whereby tax-payers are said to have been subsidising social-housing tenants living in houses larger than they needed. The stated intention of the under-occupancy penalty policy was to reduce these costs and to ease housing shortages and overcrowding.

A similar policy was enacted by the preceding New Labour government during the decade beforehand in private-sector housing, as the Local Housing Allowance, without attracting controversy.