Pay to Stay Consultation: Fairer Rent in the Social Housing Sector?

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The Department for Communities and Local Government has launched a consultation on the topic of Pay to Stay: Fairer Rents in the Social Housing Sector. It is the Government intention to introduce a policy from April 2017 in England to enable housing association to charge rent according to the means of tenants on the basis that not all social housing tenants should benefit automatically from subsidised rents.

According to the Government decision social housing tenants with a household income of £40,000 and above in London, and £30,000 and above in the rest of England will be required to pay an increased level of rent if their rent is currently being subsidised.

There is already a “Pay to Stay” policy in force, which local authorities and housing associations can operate voluntarily. The Government has indicated that the modified policy would operate by applying broadly similar criteria:

  • household means tenant or joint tenants and any spouse, civil partner or partner. Where several people live in the same property, the highest two incomes will be considered;
  • income means taxable income in the preceding financial year; and
  • where a HIST tenancy comes to an end or a property becomes vacant, the Government expects such a property to be re-let at lower rent so either social rent or Affordable Rent to a household in housing need.

Money raised through this policy by local authorities is to be returned to the exchequer to contribute towards deficit reduction, whereas housing association will be able to use the income to reinvest in social housing.

The consultation focuses on the following issues:

  • How the scheme can support incentives to work and in particular how income thresholds should operate. One example is whether the starting threshold should be set in relation to eligibility for Housing Benefit; and
  • Evidence of administrative costs – this is particularly important for housing associations as they are required to administer the policy, while local authorities can recover reasonable costs before returning additional income generated.

The policy is to be implemented through primary legislation, which seems to indicate that housing associations will no longer have an option whether to charge more. While the policy may be well intentioned it does raise a number of issues for housing associations.

Firstly, this may be viewed as a tokenistic gesture as the Government on the one hand has restricted social rent, which creates problems for social housing associations. Through such a policy, this may be an attempt to address possible shortfalls, although it is not clear that this will yield positive results. This is because it is not clear exactly what housing association can in fact charge i.e. whether it will be an increase or market.

Similarly, administering such a scheme could be a permanent costly exercise. This is because household income can fluctuate so a housing association would need to have systems in place to allow for adjustments depending on the fluctuations that tenants face.

Also a housing association currently does not have access to data about a tenant’s income like a local authority would have. Collection of this data may be difficult as a housing association may have to rely on voluntary declarations of tenants, as well as altering conditions of tenancies to enable this to take place. The knock on effect of collecting more data means that housing associations are required to process much more information about their tenants and in particular sensitive information relating to financial affairs, increasing their responsibility in terms of complying with the Data Protection Act.

If a housing association has tenants who qualify for the “Pay to Stay” policy, this may also have governance implications. This is because it may interfere with its objects of providing housing for certain categories of tenants, in which case a housing association may need to set up a separate commercial arm to house such tenants. While this may be an opportunity that a housing association can consider, it would also need to look at the impact this would have on its status as a Registered Provider. From a tenant’s perspective, this would not be particularly beneficial as its landlord could potentially be one that is not regulated by the Homes and Communities Agency and the related protection that this provides such as the Consumer Standard.

The Consultation is open until the 20th of November 2015 and further details can be accessed here. Our team will be responding to the consultation and providing updates on the outcome.

Forbes Solicitors assist a number of housing associations with a range of matters from regulatory matters and tenancy management to anti-social behaviour and development. If you would like advice on any related matter or would like to share your views about how this change affects your organisations as part of the consultation process, please contact Daniel Milnes.

Nat Avdiu

About Nat Avdiu

Nat Avdiu is a Paralegal in the Contracts and Projects team at Forbes Solicitors. Nat provides updates for clients on a range of issues including: governance, data protection and freedom of information, procurement and charity law.
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6 responses to Pay to Stay Consultation: Fairer Rent in the Social Housing Sector?

  1. steve says:

    Who will represent tenants when their rent doubles? 17 years making this house a home only to be told to pay up or get out. It’s a fair rent not a subsidised rent. Can they really double my rent? Legally? Myself and my daughter are the highest earners.. do I throw her out to keep household income 30k ? Maybe that’s the answer! More homelessness.

  2. Louise says:

    I have a great idea to get round this (not that I want to but it makes perfect financial sense).

    We earn 68,500 a year, sounds great doesn’t it even if my husband works night shift?! But then going from earning pennies and both have student finance to pay back as mature students, its what everyone aspires to isn’t it? We do not claim Tax Credits ect and pay 150 a week rent and live in a 4 bed.

    Now our rent will go up to 400 a week. With 100 food a week, utilities, commuting costs, we will be left with 90 a week to clothe 6 people let alone school trips, xmas, birthdays, household goods needing replaced, car maintenance, ect ect. Holidays no more!

    We have discovered that IF we were NOW paying 400 a week rent we would get 198 a week towards rent, leaving 288 a week, sounds not too bad for us both working. BUT the same time this policy comes out, so does Universal Credit and the 2 child cap. If we were claiming towards the rent now, we would keep our entitlement to 4 children and get the extra 198 a week, but we do not claim now, cant and do not need to. So when our rent goes up, we will lose 198 a week towards the rent all because we currently aspire to work hard. We could downsize to a cramped 2 bed, but no housing association or private landlord would accept us being over crowded.

    The solution, I give up work, my husband takes a minimum wage job earning 20,000 a year. We keep our entitlement and more money from the State flows to us, our rent does not go up it goes down by 1% and if we ever become redundant or have ill health no worries the state will recognise our 4 children rather than 2.

    The result, the State will lose 33,330 a YEAR in lost Tax and NI contributions and benefit entitlement. Thats also 33,330 that we would spend in the economy else where as well. We will even be 60 a week better of after paying a little rent, food, utilities!

    Now how the hell does that work? Better of earning 20,000 than 68,500?? After numerous emails to MPs of course we are disregarded as `high earners` and protection is only for the `poor` and disabled. Who will pay for them now, who will pay for us if we go ahead with our plan?

    Dont believe me? Go to http://www.entitledto.co.uk. Play with the figures based on what we pay and earn today compared to April 2017. Look at the 2 child cap. When the final calculation on benefit entitlement comes up, scroll down to Universal Credit entitlement and see how much better off we will be if we were on 20,000 a year with 4 kids, as remember, when UC comes out you can only put in 2 children if we stay at our current pay rate.

    Works pay? Nope.

  3. Mr Alan PIlcher says:

    We are hard working council tennants in the south-east. Paying the market rent here will be about 700 pounds per month extra.We are also now in our fifties so no amount of discounts, share schemes or rights to buy are going to be able to keep us in our family home unless we work wee into our seventies.Basically we have our backs to the wall clutching onto a life tenure that wont be worth the paper its written on! So having been regular rent payers we are now being forced, yes forced out to accommodate (probably) non rent payers.Our last option is of couse, similar to the last comment and for one of us to give up work.Either way the government will lose our rent or our tax.

  4. Jayne says:

    So this government say it is a party for the working people, what a joke. If this bill passes then I am left with the option of throwing my husband out so my rent is reduced and I claim some housing benefit, I give up work so we have only one income coming in so our rent stays the same or how about we both give up work and claim full housing benefit.

    Having worked hard and having university fees I have progressed in a good job. I ask for nothing off the state and our taxes pay the rent of others who can’t or are too lazy to work.

    This is not an incentive to work, to progress in life and to remain off of benefits. I am appalled that this is being allowed to happen and despite sending numerous emails to my local MP and surprise suprise have not received a reply I am disgusted by this party and they way they are treating hard working families who aspire to do better. The very thing they claim to support what a joke

  5. Pamela says:

    There is still no guidance or clarity as regards this ‘pay to stay’. As far as I’m aware your income will be calculated on your previous years income. I really don’t know what is going to happen if you have a drop in income; will you still be expected to pay the full increased amount?
    If you earn just over £30,000 and you live in Essex, you can expect your rent to double! I don’t know how we are going to manage. Our local Conservative MP. thinks this is fair!!! I need say no more.

  6. gary anderson says:

    What do you expect from torys .they always revert to fleecing hard working familys .they said to get elected we want to put more money in the hard working familys pockets .yet 2 years down the line there taking it all in rent .what a bunch of liars and crooks osbourn is to the working family what hitler was to the jews .very very cruel

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