We're preparing our response to The DCLG consultation paper on
the introduction of mandatory higher rents for so called "high
income" tenants.
We're asking our members for their views and comments to feed
into our response.
The government published a consultation paper
'Pay to Stay: Fairer Rents in Social Housing' on the
introduction of a mandatory 'pay to stay' scheme for tenants with
household incomes of over £30,000pa (£40,000 in London).
The government has now published their Impact Assessment of the proposals set
out in the Housing and Planning Bill including the proposal to
introduce a mandatory 'pay to stay' scheme. The Impact Assessment
estimates that:
- There are currently 350,000 council and housing association
tenants with household earnings above £30,000 who would be required
to pay a market or near market rent
- The number of tenants affected is expected to rise further by
April 2017 (the date of the planned introduction) because of rises
in the National Minimum Wage/National Living Wage and wage rises
generally. The caseload (number of tenants affected) by 2017/18 is
estimated to be:
- 200,000 council tenants; and
- 240,000 housing association tenants
- By 2020/21 the cost of administering a mandatory 'pay to stay'
scheme will be around £28million per year with a further £45million
in transitional costs; and
- Council and housing association tenants affected will be paying
an additional £1.05billion per year in rent:
- Council tenants will be paying an extra £510million in rent
which will be paid over to central government
- Housing association tenants will be paying an extra £540million
to their landlord which associations will be able to keep to
reinvest in new housing.
The government's consultation paper is seeking views on
whether some form of taper system should be introduced under which
the amount of rent paid will increase as tenants incomes increase
above the "high income threshold". The Impact Assessment is
modelled on tenants paying:
- 80% of the market rent of the property for those earning
between £30,000 to £40,000 (£40,000 to £50,000 in London); and
- 100% of the market rent of the property for those earning over
£40,000 (£50,000 in London)
The initial ARCH response to these proposals is
that:
- The government should rethink its plans to introduce a
mandatory 'pay to stay' scheme and continue to allow local
authorities to exercise local discretion as to whether such a
scheme is necessary within their local area.
- If the government do proceed with the introduction of a
mandatory 'pay to stay' scheme, then to avoid work disincentives
the income thresholds should be substantially increased and either:
- be raised to the level prescribed in the current discretionary
scheme (£60,000) as set out in the Guidance on Rents for Social
Housing (May 2014) in order to avoid penalising hard working low to
middle income earners; or
- Be set locally, with the threshold linked to the earnings
levels that would enable to access the local owner-occupied market
through incentives such as the Starter Homes Initiative and Help to
Buy Schemes etc.
- If the government refuse to consider a higher national
threshold or allowing local authorities to set local thresholds
then, as a minimum, the thresholds as proposed (£30,000/£40,000 in
London) should be index linked to rises in the National Minimum
Wage and National Living Wage from April 2016 onwards
- Furthermore, if the government do proceed with the proposal,
local authorities, like housing associations, should be allowed to
retain any additional income to re-invest locally in the housing
service.
However we're seeking the views of our members to help inform
both the ARCH response to the current DCLG consultation paper and
the formal ARCH representations on the Housing and Planning
Bill.
The ARCH Board will be considering its formal response to the
consultation paper at its meeting on 16 November 2015.
If you have any views and comments on the government's proposals
for introduction of a mandatory 'pay to stay' scheme please forward
your comments to ARCH Policy Adviser, Matthew Warburton, (Matthew.Warburton@arch-housing.org.uk)
by Wednesday 11 November 2015.
In any event, ARCH members are encouraged to submit their own
responses to the Consultation Paper and copy in Matthew
Warburton.