Saturday, 25 October 2014

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.’

Readers' comments (24)

  • Chris

    As was said at the time when Shapps blurted out the idea - it is crass, unworkable, unjustified, and may not even be legal.

    Obviously then it will be implemented shortly!

    Social housing, to be successful, requires a mix of tenants that reflect across the diversity of the community, including economic diversity. As the volume and economic diversity of social housing has been deliberately reduced under successive government policy to favour the private sector the very symptoms the demonisers use to justify their actions have been caused.

    Perhaps now the real relationship between the State, its Police and the Media has been exposed via Hillsborough (and remember how it was the Sun that spread the police and government propaganda to break the miners' strike, and it was Mackenzie in particular who lampooned how print unions were able to prevent the Sun running blatant propaganda and lies before the government 'freed' the nation of such worker tyranny - and it the same unholy trinity that has continued to operate all the way through to the current uncovered illegal and immoral actions for which, of course, no Minister will ever be held to account for)

    Well done, at last, to voices of the sector for not capitulating with the evil direction of government for once (although I'm sure the CIH will be right up there with a torch!)

    Now can we get on with the sensible idea of addressing the housing shortage, addressing the scandalous number of empty homes, addressing the issue of housing affordability, and addressing the democratic deficit of government.

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  • Melvin Bone

    As long as Bob Crow pays some more rent I'm sure the government would be happy.

    They can make it legal Chris...

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  • Chris, I've been reading your comments on a variety of issues for some time. You never fail to entertain and inform me, and to deliver a range of well-aimed kicks up the bottoms of deserving targets. Example? I give you Shapps. These people are asking for it. Bravo Sir! Keep up the good work - a grateful readership salutes you ;)

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  • Pseudo-social Pontifications by Chris apart - social housing is a scarce resource, and no reason why rents should not be linked to income - why should public subsidy be given to those who can and should get private-market homes.

    In fact income of tenants should be monitored regularly and tenants made to declare their income annually. In fact people of high incomes should be taken out of social housing completely.

    Regards social mixing - there is very little of that in reality and although social engineers would like to create their utopia reality is that British society is very individualistic and living in close proximity does not necessarily mean social mixing. People meet socially across distance where there is commonality of income, cultural, and educational, levels, - 'birds of a feather flock together.'

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  • 'You cannot help (people) permanently by doing for them what they can and should do for themselves'. Rule #1 - support yourself AS MUCH AS YOU CAN - and your dependents. They aren't anybody else's responsibility. Don't expect an unnecessary subsidy on something which others who earn less cannot access. You don't expect to pay less for your weekly shopping, just because you once qualified for a Council house, do you?

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  • Rick Campbell

    Venk's comments demonstrate a mindset that may well have come from the demonisers (no change there then) of social housing and social housing tenants.

    Those comments help towards their being a balance of comments on these threads no matter from which extreme viewpoint they come.

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  • Joe Halewood

    Melvin - the Bob Crow argument has always been very thin and thanks to recent government research we can dismiss the nonsense of 'pay to stay' altogether.

    I posted yesterday that the high level of PRS rents is a much bigger deterrent to worklessness than welfare benefits and the 'traditional' welfare dependency trap or culture arguments. For example:

    - for the average family to live in private renting in London sees a need for them to earn more than 4 times average earnings!!
    - a family on average earnings cannot afford to rent privately in 97% of areas of England

    The 'choice' whether to come off benefits and take up employment or in simple terms is it worth my while financially to work depends far more on the rent cost than the benefits foregone.

    The post gives plenty of detail and fact (http://wp.me/p1vuvL-h3)

    If you then introduce 'pay MORE to stay' (to give it its correct title) you then make employment even less appealing to those already in employment. If as the detail shows 97% of PRS rent levels are unaffordable on the average wage then currently employed people having to pay PRS rent levels in social housing would have one obvious choice and that is to give up work as work would clearly not pay.

    Venk - look at the figures not the superficial political spin or Utopian social theory / mumbo jumbo or whatever you care to call mixed communities. You will see such a plan of paying MORE to stay would result in more unemployment and more public purse cost. And of course you should also remember PRS gets more subsidy than social housing as the £1.2bn total 'subsidy' per year that goes into social housing is less than the £2.4bn EXTRA we pay in HB alone to the PRS for the same number of properties.

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  • Iron Fist

    Venk - Social housing is a scarce resource because it has been deliberately made so by your masters starting with Right To Buy.

    This has contributed to rising rents due to restricted supply in the private sector; and spiralling house prices rendering owner occupation an impossibility for many. If housebuilding had remained at sensible levels this debate wouldn't even be being held. To deliberately ration supply and then penalise people who live in social housing for improving their circumstances is perverse.

    Do you think that the resources used on monitoring tenants incomes would be a wise use of landlords time and money? They're paid to manage homes and provide services to tenants; not act as Big Brother in the totalitarian distopia you seem in favour of.

    I'm an owner occupier myself but I don't feel in the least bothered by the fact that somebody may be living in a social rented home whilst earning a high wage. I'd sooner get worked up about real injustices such as bailing out bankers, MPs claiming ridiculous expenses and the fact that so many companies and wealthy individuals avoid paying taxes.

    These are the real issues that make a mockery of the rest of us, not the distorted media peddling images of rich people living in social housing, smoking Cuban cigars and wiping their backsides with £50 notes.

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  • Housing Troll

    @Venk if you can think of a way to administer this scheme without overwhelming expense and/or gross invasion of privacy, we are all ears. Go ahead, go for it, lets see what you can come up with, enlighten us with your wisdom.

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  • Joe Halewood

    Venk - you say "In fact income of tenants should be monitored regularly and tenants made to declare their income annually"

    In fact the government are going to do this weekly for every employee as part if the Universal Credit IT system. All 1.3m UK employers must submit wages data weekly to the UC IT system so that any changes in wages can be met with a change in UC benefit.

    It was revealed today in the Telegraph that of the 1.3m employers nationally a whopping 1400 have signed up for this - 0.11% and so 99.89% of UK employers have NOT signed up for this! In other words UC cant operate as intended unless the other 99.89% of UK employers submit wages data weekly on its employees.

    This gives an idea of the huge admin burden, red tape and cost that employers will face as part of UC. That is just one of the elements of pay MORE to stay as for this to work means that up-to-date wage information on every single social tenant is needed.

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