Thursday, 19 January 2017

High-income tenants exempt from rent cut

The 1% annual rent cut will not apply to households with household income of £60,000 or more, the government has said.

The exemption was made in secondary legislation to the Welfare Reform and Work Act, which forces housing associations and councils to reduce their rents by 1% every year for four years.

The Social Housing Rents (Exceptions and Miscellaneous Provisions) Regulations, published on Friday, state that the rent reduction will not apply to households meeting the income qualification criterion, which is £60,000.

Between 11,000 and 21,000 households living in social housing earn more than £60,000, according to government documents produced in 2013.

This figure is an estimate based on the English Housing Survey however, and the true figure is difficult to capture.

As it stands, social landlords have no mechanism for forcing tenants to disclose their income details. However, there could be some help in the future from HMRC under measures in the Housing and Planning Bill.

Housing built through private finance initiatives (PFI) will also be exempt from the social rent cut.

Inside Housing revealed the government was looking at this exemption in February.

Intermediate rent, temporary social housing, student accommodation and care homes are too exempt from the rent cut.

Supported housing will be exempt from the rent cut for one year, while the government carries out a review.

The Department for Work and Pensions has been approached for comment.

Full list of exemptions to 1% annual rent reduction

(a)accommodation where total household income meets the income qualification criterion [£60,000];

(b)in cases where sub-paragraph (a) does not apply, accommodation where total household income met the income qualification criterion in the previous relevant year;

(c)intermediate rent accommodation;

(d)specialised supported housing;

(e)PFI social housing;

(f)temporary social housing;

(g)student accommodation;

(h)accommodation where the rent registered under the Rent Act 1977 is lower than the social rent rate;

(i)in cases where sub-paragraph (h) does not apply, accommodation where the Rent Act 1977 rent criterion is met;

(j)care homes;

(k)relevant Housing Act 1996 accommodation;

(l)accommodation where the rent payable by the tenant was temporarily reduced or waived for any period during the previous relevant year.

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