Higher-earning tenants in social housing, will pay a fair level of rent to continue living there, under consultation proposals published today (9 October 2015) by Housing Minister Brandon Lewis.
Households in social housing with a total income of more than £40,000 in London and over £30,000 elsewhere, will pay a rent at market or near market levels.
This will put an end to the situation where higher-income social tenants benefit from taxpayer-funded subsidies of up to £3,500 per year.
Instead, social rents would increase as tenants’ incomes rise above this threshold – meaning those in real need continue to pay a subsidised rent, while continuing to ensure that work always pays.
Housing Minister, Brandon Lewis, said:
It’s not fair that other hard-working people are subsidising the lifestyles of higher-earners to the tune of £3,500 per year, when the money could be used to build more affordable homes.
’Pay to stay’ will ensure that those tenants on higher incomes who are living in social housing have a rent that reflects their ability to pay, while those who genuinely need support continue to receive it.
The money saved by councils by removing this subsidy will help contribute to the government’s £12 billion of welfare savings, and housing associations will be able to retain the additional income raised to help support their role in providing new housing.
There are currently more than more than 40,000 social rented tenants with household incomes in excess of £50,000 per year; and a further 300,000 with incomes over £30,000.
See the ‘pay to stay’ consultation.
The scheme will come into effect in April 2017.
Social landlords will be required to administer the policy. The proposal is that local authorities will be allowed to recover any reasonable administrative costs before they are required to return additional income from increased rents to the exchequer. As housing associations will be retaining the income they receive from higher rent payments to invest in new housing, they will be expected to absorb the administrative costs.