Bedrooms could be converted to avoid tax burden

The idea being debated by councillors would see hundreds of spare bedrooms changed into studies, living rooms or other spaces.

If passed, the scheme could save social housing tenants, who are unable to downsize and face losing an average £14 a week in benefits for the property charge, more than £600,000 each year in housing benefits. The architects of the plan say it will also save the council in legal bills chasing rent from cash-strapped tenants.

Details of the proposal came days after Leeds campaign group Hands off Our Homes warned it could cost Leeds City Council £76m to evict tenants who cannot afford a spare bedroom.

However, opposition councillors fear the renovation idea could hit the taxpayer in the pocket as they pay for the work.

The proposed plan would see the most unpopular or under-occupied homes targeted – 398 three-bedroom low rise flats would be turned into two bedroom flats; 341 five-bedroom houses with a downstairs bedroom into four bedrooms; and 126 two bedroom multi-storey flats into one beds.

Coun Peter Gruen, executive board member with responsibility for neighbourhoods, said: “We want to make sure people can live comfortably in our city without the worry of not being able to pay their rent.

“Under the new welfare changes, tenants under-occupying a house by one or more bedrooms will have their housing benefit reduced, therefore making it more difficult to pay the rent each month.

“If the council is able to re-designate all 865 properties we are currently looking at, it will mean the households affected will not have to find additional funds and will not find themselves in hardship.”

A spokeswoman did not reveal how much rent the council would lose by reducing the capacity of its properties.

Coun Barry Anderson, shadow environmental spokesman, said renovating housing so tenants do not pay a spare room subsidy could end up penalising council tax payers.

Ministers insist cutting benefits for social tenants with spare rooms is making the system fairer and could save £500m a year. But the under-occupancy penalty, dubbed the “spare-room subsidy” by the Government, is unfair, campaigners say, because there are so few alternative properties for people to move into.