The government has dropped plans to make higher income tenants ‘pay to stay’ in their homes, but will still press ahead with plans to introduce fixed term tenancies.
Since this summer’s change in government, we and others in the housing sector have been awaiting confirmation of when measures in the controversial Housing and Planning Act would be introduced – if at all.
Market rents for so-called higher income tenants and fixed term tenancies were supposed to take affect from April 2017. But with the necessary regulations unforthcoming, it looked like the new government was reconsidering the wisdom of these policies
Yesterday the housing minister confirmed that the government was reassessing its approach, but not as fundamentally as we’d hope.
‘Pay to stay’
The government has abandoned its much criticised plans to charge tenants on above average incomes higher rents, dubbed ‘pay to stay’. The proposal took a battering in the House of Lords, forcing the government to promise a series of concessions to significantly lessen the impact on households. But it still would have meant that many families on £31,000 per annum (£40,000 in London) would have seen their rent increase.
While such households do earn more than average, many were surprised to find themselves labelled “higher income” and hit with a penalty originally aimed at very high earners such as Bob Crow and Frank Dobson. Local authorities were also dismayed at the bureaucratic costs of inspecting the income of every social tenant in England.
Now the new government has wisely dropped this idea, and the housing minister has instead pledged to support “working class families struggling to get by”. The new prime minister has repeatedly promised more help for “just managing families”. Who exactly falls into this group is open to debate, but they are loosely households earning around £18,000 – £34,000 a year. Clearly there is a potential overlap with the pay to stay group; it would have been perverse for a government eager to show they are on the side of such families to hit them or their neighbours with a deliberate rent hike.
Fixed term tenancies
Considerably less welcome is the news that the new government does intend to impose shorter, fixed term tenancies on council tenants. Councils will be prohibited from offering secure tenancies and will instead have to review tenants’ circumstances every 5-10 years.
The government hopes this will avoid the need for pay to stay in the long-run. Tenants who see their salaries rise will lose their tenancy rather than be asked to pay more rent.
Tactically, this is a pragmatic move. One reason pay to stay was controversial was the sheer bureaucracy it imposed on councils. They are now freed from costly income assessments. It’s also much harder to impose a new policy on existing tenants – who form a vocal and visible group – than change the terms for new tenants or people who choose to move anyway.
But in its partial compromise the government still has a policy tool to enforce its overarching goal: restricting social housing to a residual safety net. Minsters hope that, over time, tenancies will be withdrawn from households as their incomes rise. Social housing will be established as the place you live when you’re poor, not a tenure you can expect to call your own.
In a time of diminishing stock this not an irrational approach, but neither is it a hopeful message for just managing families. With house prices increasingly out of step with salaries even average incomes families who cannot afford to buy will have no way of obtaining a secure roof over their head. They will find themselves either stuck in short-term, expensive private rented tenancies, or paying the lower rents of the social sector but with the constant threat of reassessment and potentially loss of their home. Neither will provide just managing families with the secure, affordable homes they need. Security will still become the preserve of those who can afford to ‘pay to stay’ on the increasingly inaccessible housing ladder.