Many social housing tenants face either losing their homes or paying large penalties because under new government proposals they are considered to be ‘under-occupying’ their property

How many bedrooms is too many? Under current government plans in the welfare reform bill, a 'spare' bedroom will be an expensive luxury for a family in social housing. Photograph: Public domain

Imagine losing your home through no fault of your own. That is the stark reality facing more than half a million families in Britain, if government proposals to penalise social housing tenants for “under-occupying” their homes become law.

The government’s plans are part of the welfare reform bill, the report stage of which is taking place today in the House of Lords. Under these plans, 670,000 households – two-thirds containing a disabled family member – will be hit by an average £670 penalty every year because they are deemed to have a “spare” bedroom.

Anyone deemed to be under-occupying by one bedroom stands to lose up to 15% of their housing benefit, and those considered to have two or more – even if they are in use – will lose up to 25% of their benefit.

If that happens, millions of social housing tenants will be forced to make an agonising decision: stay put and live in hardship, or move home and attempt to find a cheaper place to live, away from family, support networks and their children’s school. With so few smaller homes available, many will not even have that choice.

For some, the argument couldn’t be simpler. These spare rooms, to quote the welfare minister, Lord Freud, are a “luxury the country can’t afford”, an unforgivable excess in a time of austerity and cuts.

Is it really a luxury to have a room for your foster child to sleep in, who for benefit purposes does not count as part of the household? Is it extravagant for your two teenage daughters to have their own rooms for privacy and study? Or a separated parent who has a room to share the care of their child – is that an unnecessary indulgence?

What the government describes as “luxury” is just the reality of British family life. Penalising poorer families is unfair and unjust – which is what is going to happen in April 2013 if these under-occupation proposals become law.

The statistics speak for themselves. Riverside Housing Association has calculated that nearly half of its households (almost 16,000 out of 35,000) comprise a single person, but only one in five of its homes (about 7,000) have one bedroom.

Tenants aren’t needlessly under-occupying larger homes because they want the extra space. They are doing so because there is a major national shortage of affordable homes, and in particular one- and two-bedroom properties.

Today, peers will have the opportunity to vote for an amendment to the welfare reform bill that will redefine under-occupation. It applies existingCommunities and Local Government guidance in place of the welfare minister’s restrictive proposals. This definition, endorsed by the housing minister, Grant Shapps, states that a household is under-occupying only where more than one bedroom is deemed to be “spare”.

The National Housing Federation has been working with housing associations, social tenants and nearly 50 disability, housing and health organisations to press the government to change course. And today we’re calling on peers to back Lord Best’s amendment to provide more flexibility, to better reflect the reality of family life.

To millions of social housing tenants it could be the difference between a stable family environment and the nightmare of losing their home.

• David Orr is chief executive of the National Housing Federation.

The Guardian