Thursday, 02 October 2014

Pay to stay scheme to fund new affordable homes

The housing minister has pledged to put ‘every penny’ raised from increasing the rent of high-earners living in social housing into building more homes.

Grant Shapps told Parliament today that there were currently around 6,000 households in the UK with combined incomes of £100,000 or more.

Mr Shapps said: ‘That is something we intend to tackle with the pay to stay scheme.’

When asked if would consider ring fencing the money raised by the scheme, Mr Shapps said that it was unfair that people were using social housing to live in areas which many people could not afford.

‘We think that there are some tens of millions of pounds that will be available with pay to stay,’ he said

‘And with that money we will use every penny of it to provide more affordable homes for those who really need it.’

Previously Mr Shapps has said that around £56 million could be raised from charging market rents for high-earners living in social housing.

Readers' comments (11)

  • Sadly, the tories are bringing out new policies non stop
    to interfere with council tenants,and to create uncertainty
    and confusion over exactly whats happening.
    They are keeping the high rents ,and creating further
    levels of high market associated rents, as well as
    diminishing security of tenure for future tenants.

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  • F451

    6,000 households are going to be surcharged/taxed an extra £10,000,000 between them - are you sure about that Grant, or is this another of your pluck a figure out of the sky announcements?

    Is this based on your 8 Million Social Homes statement - or on the reality of what really exists?

    And what about right-to-buy, will you block these people from exercising their right to buy so that they do not continue to occupy these homes that others need?

    And will you extend this to RSL tenants like you announced but did not do with the Right-to-Buy.

    The Shapps pledges on thin air are adding up - and still not journalist dares ask him to account for his announcements (I really would love to know why this is!)

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  • Joe Halewood

    Shapps says 6000 of these high earners would pay £56m per year more.

    That works out at an additional £178.87pw each (Divide £56m by 6000) and that is interesting.

    We know average social rent figure is £76.16 but as I've discussed many times we dont have a gross market rent figure or GMR. Yet Shapps has determined that it is social rent of £76.16 + this £178.87 making £255.03 per week.

    Hence flowing from this we see that "Affordable Rent" at 80% of this figure is £204.03pw.

    We also know the average PRS in-payment HB figure is £110.57 and so each AR tenant will on average receive £93.46 more in HB. Multiply that by the intial 170,000 AR homes Shapps wants and thats an added £829m more for the HB bill per year.

    That £829m figure is the lowest added cost of AR as AR rents replace PRS claimants. If as Shapps now wishes for an additional 200,000 AR replacements for RTB2, which he does, then this means 370,000 at an average of £93.46 more in HB becomes a minimum added cost of £1.8 billion per year!

    You still looking again at Affordable Rent Mr Shapps as you and Jake Berry tweeted to say you were? Any idea when you going to get back on this?

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  • Rick Campbell

    Another great idea -- bung the rent up so it's cheaper to buy the property, give a bigger discount if buying it and lose yet another needed rented property forever!!

    Brilliant --- NOT!!!

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  • Shapps seems to miss the point that these so called 'high earners' will probably get a mortgage to buy a heavily discounted property. Then rather than increase the number of 'social' homes they will take these out of the sector.

    He talks about them being in areas where many cannot afford to live, therefore this sounds like by removing the social housing from these expensive areas he can keep the so called 'peasants' out of the nice parts.

    The people referred to, in many cases, have lived in these properties and have been involved in resident associations, community activities etc. They probably have taken pride in the homes and spent their own money in decorating and making them nice places in which to live. just because many have done what the Tories want and bettered themselves, they are now being penalised. Why would anyone want to risk losing their homes just because they have taken promotions, got a career or even inherited something?

    I despair over everything this minister comes up with. Even the TSA isn't yet 'toast'!

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  • Joe Halewood

    Apologies - my figures above are wrong as they UNDERESTIMATE the cost of the affordable rent bill.

    The first part is correct and the added cost of the first 170,000 AR units is an additional £829m. This is the lowest ADDITIONAL cost using Shapps own figures and assuming all new AR tenants are now private tenants.

    The second part was incorrect and a significant UNDERESTIMATE as my first figures used the differenatial for the PRS of £93.43 pw (£204.03 less £110.57) for the 200,000 AR replacements in RTB2. The correct figure is (£205.03 less the £76.16 figure) or £128.87 pw

    Hence the additional cost is 200,000 x £128.87 for this part or £1.344bn which when you add the £829m from the first bit comes to £2.17bn per year ADDED COST of affordable housing to the HB bill

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  • Jono

    Joe Figures - some questionable assumptions on your part.

    1) Will providers set the AR rents only at 80%? They are allowed to set up to 80%, meaning they can set it below 80% given certain circumstances. It would be interesting if IH would survey housing providers and get some input as to what percentage will be charged in what areas - I expect some surprises.
    2) Will all AR be allocated only to welfare dependent households, or will there be a mix, with a significant proportion available to the low income employed? Your number of 200,000 is highly erroneous and misleading as it is highly unlikely all tenants of AR will be claiming full HB.
    3) Your figures are skewed by London - which is representative of only 18% of HB claimants, leaving 82% living elsewhere in the UK. Therefore your average figures are not representative of the reality in the majority of locations in the UK.
    4) Rents in London are on average 50% higher than national rent levels. Therefore the impact on the HB bill will be greatest here, and it will be very sensitive to the allocations policy opted for, which again your simplistic figures have not considered.
    5) AR is likely to be inclusive of variable service charges. This affects your comparison of the cost of social rented against AR, by understating the costs of social rents.

    The reality is the measures taken by the Government is likely to result in HB levels being restrained compared to what would happen otherwise. The increased rental income going to providers of AR will be used to increase the supply of social rented housing, and again will help to ease pressures on HB.

    Joe - you complain about the HB bill but you still decline to state on the record whether you think the bill is worth paying, or whether you would prefer it phased out and scrapped. Apart from suggesting the Government has got its sums wrong - what is your point?

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  • Rick Campbell

    Government policy is being based on suspect information -- shock, horror!!!

    A poster makes an honest mistake and can be dropped on like a ton of bricks!!

    It is a strange world we live in.

    Speaking of strange worlds ... I'm meeting 25 or so colleagues from here 'up north' (as part of a lobbying group) at the House of Commons -- we're from 15 'transferred' housing associations based roughly within 50 miles of Manchester Airport ... we're lobbying against some aspects of the Welfare Reform Bill.

    Some colleagues are presenting a petition at 10 Dowing Street,

    Every little helps?

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  • Has anyone yet brought up the point of how RSLs / LAs are going to get the data of income for the (up to) 2 named persons in the household. If noone is claiming benefit, how is this to be monitored - will hosuing bodies have to get copies of HMRC returns. What of 'self-employed' operating under companies drawing a minimum in wage and maximum in dividends. Never mind the malicios neighbour.

    What will happen with the first data protection breach when some innocent housing officer with salary details on gets a laptop, or even an Iphone stolen.

    A complete can of worms. Why not just charge Bob Crow and Frank Dobson, which is all GS really wants to do?

    How much will the administration of the levy cost? if the housing provider is not developing what will be the transfer mechanism?

    Today's highly vamped policy - tomorrow's chip wrappings.

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  • Has there ever been so inept a government?

    How is it possible for Shapps to believe that all tenants with high incomes should be charged more, whilst at the same time pressing for all tenants to be offered bigger discounts to allow them to buy their own homes?

    Does he not see that the most likely beneficiaries of his discounted sale policy will be those with the largest incomes and they might, just might be the very people who are most able to take advantage of it?

    Does it not follow, therefore, that far from generating more income that could be reinvested to build new homes, the effect will be to see more homes sold into the private sector? Shapps has thus come up with a means of losing an income stream before it exists and reducing the number of affordable homes available for those in greatest need?

    Genius.

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