Thursday, 05 March 2015

High-earning tenants forced to declare income

High-earning social tenants are to be legally obliged to declare their income under plans to force households that earn more than £60,000 to pay market rent.

Plans set out by the Communities and Local Government department last week state the government will enshrine in law that the onus is on tenants who earn above the threshold to reveal their earnings ‘to ensure they are making a fairer contribution’.

The CLG’s response to a consultation on the ‘pay to stay’ plans confirms the government wants to press ahead with the controversial scheme, and that £60,000 will be the cut-off point. This was announced in this year’s Budget, but no further detail was released at the time.

Sixty-thousand pounds is the lowest of the three limits set out by the government in its consultation on pay to stay, which ran in June and July last year.

A summary of the consultation responses, which were published by the CLG last week, show one third of the 155 respondents ‘had some practical concerns’ and more than a third were opposed to the move.

In its response the department said: ‘We have carefully considered responses to this consultation, and we recognise that there are some specific issues to be addressed in implementing the policy, such as how income is to be defined.’ It said it will provide further details on the intended policy in a forthcoming consultation.

Social landlords will be expected to use the extra money made from the policy to fund new affordable housing.

Responses were received from a range of organisations including councils, arm’s-length management organisations, housing associations and tenants’ and residents’ organisations.

About a third of respondents thought the £60,000 threshold was appropriate, a smaller proportion thought £80,000 should be the minimum and the least number favoured a £100,000 threshold. A ‘significant number’ also felt the threshold should be a more nuanced, taking into account factors such as local affordability, average earnings and household and property size.

Readers' comments (80)

  • Melvin Bone

    Will this be called the Bob Crow law?

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  • Joe Halewood

    Note the wording carefully "...under plans to force HOUSEHOLDS that earn more than £60,000 to pay market rent."

    HOUSEHOLDS means everyones earnings not just a an individual tenant and includes mum, dad and son and daughter.

    Also note this is being dubbed the pay to stay issue yet every tenant has to pay to stay already. This is pay MORE to stay.

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  • Why £60k?

    Why not means test all social housing?

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  • Yes lets means test all social housing tenants. Social housing should be prioritised to those in need.

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  • Given social housing is a scarce resource, means testing every year should be compulsory.

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  • Across much of the UK social rents are around half a comparable private rent on like for like property. But taking just one example already cited on IH - eg Hammersmith & Fulham council - who have boasted that some of their rents are almost a 90% discount compared to local private rent - SRS tenants in that area may currently be paying only a tiny fraction of a commercial rent.

    For affected Inner London Tenants this could mean an increase of several hundred per cent. In practice I would guess H&F could see a rise from c.£650 per calendar month - to anything up to £4000 per calendar month for a 3 bed house.

    A single individual earning 60k gross, with 5% pension contributions will net around £3336 per calendar month - so any rent above say £2500 would be unaffordable.

    Whilst awaiting final wording as to how income is defined - could it also include unearned income?

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  • Christopher Dale

    Here's a novel idea - build sufficient social housing to make it a tenure available to everybody as per its original intent. No need to then means test. Still, building houses seems anathema to this sorry lot. They persist in thinking inflating house prices whilst building naff all will somehow cure our housing ills. Intellects of gnats.

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  • Colin Mcculloch

    Private rents too high and not enough social housing - solution: force people from social housing into paying private rent levels.

    Or we could just build a lot more social housing, as Iron Fist suggest!

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  • Social housing = people's homes, somewhere to build a life and become part of a community. It isn't, nor should it ever become, essentially transit housing for the poorest in society, with fewest choices about where they live. The comments on here demonstrate the extent of the attack on social housing and tenants' rights that this government is engaged in, and it is leading to increasingly nasty and vindictive comments from ill-informed "commentators". And yes, Melvin, it should be called the 'Bob Crow Law', because that is what it is all about.

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  • As a caveat to my earlier post - I am aware that in certain locations - eg Derby - SRS rents already equal PRS rents - hence in such locations high income SRS households will be unaffected - and will retain the advantage of secure tenure, compared to PRS.

    One can imagine the admin around this issue - if it ever sees the light of day - will be a nightmare. A household where income derives from multiple family members could see people drift in and out of employment - with main tenant then issuing revised household income data on potentially a weekly basis.

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