An endless summer is no good for social housing tenants worried about a rent rise

The introduction of Pay to Stay from April 2017 will see some higher income social tenants required to pay more rent. Local councils are responsible for managing Pay to Stay but there is considerable uncertainty still about whether they will have the necessary IT processes or staffing in place, or enough time to inform tenants and assess their incomes, before the change is comes into effect in April 2017.

We might have been basking in the unexpected sunshine of an Indian summer but a never-ending Whitehall summer silence poses significant problems for social housing tenants anxious to know how Pay to Stay will affect them. And for local councils charged with implementing a policy in just seven months’ time for which they are still awaiting the finer details.

It was always going to be a challenge, following the inclusion of Pay to Stay (targeted at ‘higher income social housing tenants’) in the Housing and Planning Act 2016 in February, for DCLG to get the all-important regulations out in time for tenants, councils and advice providers like us at Shelter to begin to understand how the new policy will work in practice. Time is ticking on and we are still waiting.

We originally expected draft regulations in July but are now heading into the autumn without any further clarity. Councils have already begun alerting tenants to the changes – and to the possibility that they will have to pay increased rents – but cannot say with any certainty exactly who will be affected or by how much.

DCLG anticipated that Councils would have the final regulations they need in November, to give them time to get income details and supporting evidence from tenants by the end of the year, before sending out new bills to tenants from January for payment from April. With no sign of even draft regulations, we are getting increasingly concerned that, not only will we not have an opportunity to comment on, or properly understand the regulations (vital as an organisation to whom thousands of people turn to for housing advice every year), but there will simply not be enough time to introduce the changes by April 2017.

Too much, too soon

If the Government is committed to making Pay to Stay work (a bold goal) then it must slow down and ensure that proper processes and safeguards are in place. Which is why we are calling for the policy to be delayed, if not scrapped altogether given the poor value for money it represents. And why we support calls to, at the very least, test the new policy through a pilot, to make sure it works, delaying the full-scale implementation across local councils until DCLG is confident that it does.

New analysis from Savills for the LGA adds to our understanding of the likely impact of Pay to Stay. Their projections suggest that:

  • 70,255 households will earn above the £31,000 income threshold outside London and £40,000 inside the capital.
  • 9.3 per cent of households living in council housing in the south east will see their rent increase along with 7.7 per cent in the east of England and 5.3 per cent in the north east.
  • Increased rents are expected to generate just £75 million annually, before making deductions for significant administrative costs. Originally the Government had forecast returns of £365 million in 2017/18.

70,000 households might seem like a lot, and each will see an increase in their rent, which some will find hard to afford, but this represents at most only 7 per cent of all households in social housing. In order to find those households, local councils must assess the income of every household that isn’t in receipt of housing benefit or universal credit – and charge full market rent to anyone who is does not, or cannot, submit their income details. It is little wonder that the policy looks increasingly unlikely to generate the financial returns that the Government has anticipated.

Even if you accept Pay to Stay as a point of principle, there are serious questions to be asked about whether the whole thing is worth it.

In an attempt to reduce council’s administrative burden, and reduce the number of social housing tenants subject to the policy early in their tenancies, we have been considering the merits of removing tenants who are new to social housing, from the requirement to submit and evidence their incomes. In our evidence to DCLG’s 2015 consultation on Pay to Stay, we proposed that social tenants shouldn’t have their income assessed until they have been tenants for, say, 5 years, given that they are likely to have lower incomes in order to qualify for social housing in the first place. This would both reduce the number of households that councils need to get information from – reducing the huge administrative burden they currently face, and allow new tenants to settle into their new lives, move into employment or extend their working hours without fear of penalty, clear debts and generally have a secure base from which to build their lives.

Shelter has long been concerned that Pay to Stay will become an impossible, and costly, administrative burden to councils, and create unnecessary anxiety for tenants, for very little return for central Government.

The new Government has promised to govern for ‘ordinary working people’. We urge them to rethink the timing, and the detail, of Pay to Stay.