Wednesday, 01 April 2015

Housing bodies dismiss ‘pay to stay’

Housing groups have poured cold water on government plans to charge higher earning social tenants more rent.

In responses to a Communities and Local Government department consultation on ‘pay to stay’, housing organisations suggest the plans are unworkable and call for a wider debate on rent setting across the affordable housing sector.

The CLG published its consultation in June, and responses were due by yesterday. It suggested social tenants earning more than a specified income should be forced to pay more rent.

The consultation asked whether the level should be set at £60,000, £80,000 or £100,000, and said rents would be increased to either 80 per cent of market rent in the short term, and full market rent if the necessary legislation was introduced.

The Chartered Institute of Housing questioned whether the policy should be pursued at all. Its consultation response says it would create ‘devastating costs for social housing providers’ and put them in a ‘precarious position ethically and in relation to their charitable status’.

The National Housing Federation also questioned the fundamental concept behind the policy. ‘We are concerned that any benefit derived from charging higher rents would not compensate for the cost and burden of implementing and administering this change,’ it states.

Campbell Robb, chief executive of Shelter, said: ‘At face value the principle of high earners paying more for social housing makes a lot of sense. However in reality it would need a hugely complex and bureaucratic system that international experience suggests would cost more to administer than it would save.’

Both the NHF and CIH suggested a more wide-ranging debate about rent setting in the sector would be needed if the government wanted to pursue the ‘pay to stay’ policy.

The Council of Mortgage Lenders also raised the issue of flexible rents, and the impact this could have on lender confidence in the sector.

Its response states: ‘We believe flexible rent needs to be fully explored in the sector to ensure that, if taken forward, it is developed in a way which is workable both for landlords and tenants, and sufficiently safeguards lender and investor interests in the sector.’

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