Pay to stay?

Pay to Stay?

In High Income Social Tenants: Pay to Stay, the government proposes a dramatic increase in rent payable by some social housing tenants. Andrew Arden QC and Justin Bates respond.

Introduction

According to the government, there are between 1,000 and 6,000 households in social rented housing in England where the combined family income exceeds £100,000 per year and between 12,000 and 34,000 households earning more than £60,000 per year. The government believes that there is ‘no case for very high earners’ to benefit from subsidised housing and proposes to develop a national strategy to allow landlords to charge a higher rent to these households. (80% of the market rent until primary legislation allows full market rents).

Beginning of the wedge

It is obvious that this will not be a one-shot policy. If someone earning over, say, £100,000 per year has to pay market rent (let’s assume double what someone on income support pays, though it could easily be more, e.g. in central London), then there will be no reason why someone earning £60,000 should not have to pay one and a half times, and someone on £40,000 an uplift of 25%, and so on. It is a return to the means-tested rents which were not uncommon before the war and even after.

 

Unsustainable communities

The proposals will undermine attempts to create sustainable communities as in Fair and flexible: statutory guidance on social housing allocations for local authorities in England, DCLG, December 2009. The policy is destined to produce sink estates where only those with no or low-paying work will live. This cannot be a good thing, whether for the residents of those estates or more generally and will inevitably lead to an increase in anti-social behaviour (as to which, see our last post, here).

Perverse incentives

The implications for existing tenants are clear. There will be real pressure not to look for better paid work, if the effect would be to cause rent to increase dramatically. Households will face difficult and unpalatable decisions about what sort of work to look for and accept. There may also be equality issues that will arise, e.g. an incentive for women to stay home and care for the children, rather than go out to work and increase household income.

The wider implications

Imagine how far this principle could extend. If it is right that the better off pay more for their housing, why should they not also pay more for their education? Why should the NHS provide free health care to the wealthy? Perhaps the fire brigade should charge a fee before assisting higher-rate tax payer who finds his/her house on fire? These propositions are absurd on their face. So why is housing treated any differently?

Conclusion

This is a misconceived policy ostensibly aimed at a small number of families and households, which will have far reaching potential consequences. It is a nakedly ideological drive to recast social housing as a welfare benefit only for the poorest and it should be opposed.

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3 Comments

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3 responses to “Pay to stay?

  1. Yes I fully agree it id ideological nonsense and the thin end of the wedge.

    As for the level of increases this would have, Shapps said that in London the Affordable Rent tenancies were 65% of market rent and 80% in the provinces. These AR tenancies at 65% of market rate were a 100% increase on the normal social rent which means to take a social ent to market rent is an increase of 150%. In the provinces social to AR is a 30% increase so social to market rent is a 38% increase.

    One obvious point – all tenants now pay to stay ….else they are evicted for arrears. So this policy is really Pay MORE to Stay -somehow doesnt have t same ring to it though!

    • Justin

      Joe,
      Thanks for this. Have you got a link to where the Housing Minister says this? It wasn’t (from memory) in the last Direction to the Regulation Committee of the HCA, so it is presumably a general hope/expectation?

      On your wider point, yes, of course payment of rent is a condition of a tenancy, but the condition is linked to the landlord/tenant relationship. This won’t be, or, at least, not properly. The scale and extent of the condition will depend on (and vary according to) your personal circumstances. I find that quite troubling.

  2. Justin,
    If you mean the figures Shapps said the 65% and 80% figures in the consultation response document on RTB2. I’ll dig it out as have the reference somewhere. Curiously he also said it in that 95% of cases AR level was less than 80% that resumably means 5% of AR rents were above 80%!! – I referenced it in one of my blogs so will add it here.

    It is in Housing Strategy and as I said:
    “What he said on page 24 of the Housing Strategy was :-

    “The new homes created under the Affordable Homes Programme will be offered at a range of different rents up to 80 per cent of market levels, according to local circumstances. Affordable rents in London are on average 65 per cent of local market rents, and 95 per cent of Affordable Rent properties in London will be made available at rents lower than 80 per cent of market level”

    He went on to say provincial rents were at or near 80% and Ill source this

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