'Pay to stay' set to affect thousands of families

Up to 60,000 working families could be forced to leave their council homes as a result of new government plans to end subsided rents for high earners from April 2017. This is according to new research by Savills UK, the estate agents, commissioned by the Local Government Association (LGA).

Under the new ‘pay to stay’ policy, households in social housing with a total income of more than £40,000 in London and over £30,000 elsewhere will pay rent at market or near market levels.

The government expects to save £245 million a year by 2019-20, ending a situation where higher-income social tenants benefit from taxpayer-funded subsidies of up to £3,500 per year.

The research by LGA found that 27,000 households in London and 215,000 households across England will be affected by the plans. However, the higher rents in the south and soaring house prices mean that many social housing tenants will be left unable to afford to pay rents at the market rate or take advantage of the right to buy and may have to leave their local areas to find affordable housing.

Critics of ‘pay to stay’ have said that enforcing near market rents for council tenants earning over £30,000 risks creating disincentives further. Families on the cusp of the £30,000 limit could find that securing a pay rise or working a few extra hours leaves them thousands of pounds worse off as a result of higher housing costs.

A threat to the future of social housing

Lord Kerslake, former head of the Civil Service, warned that the proposals were part of a package that could threaten the future of social housing. Lord Kerslake told The Observer: "When this was originally discussed in the coalition government, it was intended to deal with the very small number of high earners on over £60,000. The current proposals will affect a lot more households with earnings of half that.

"Pay to stay needs to be seen alongside the forced sale of council housing to fund right to buy for housing associations, the ending of permanent tenancies and the almost total end of funding for new social housing after 2018. Together, they threaten the future of social housing as we have known it."

Flexibility essential to protect social housing tenants

Peter Box, housing spokesman at the LGA, said: “A couple with three children earning £15,000 each a year cannot be defined as high income. Pay to stay needs to be voluntary for councils, as it will be for housing associations.

“This flexibility is essential to allow us to protect social housing tenants and avoid the unintended consequence of hard-working families being penalised, people being disincentivised to work and earn more and key workers, such as nurses, teachers or social workers, having to move out of their local area.”

‘Pay to stay better reflects tenants’ ability to pay’

A Department for Communities and Local Government spokesman said: "It's not fair that hard-working people are subsidising the lifestyles of those on higher than average incomes, to the tune of £3,500 per year.

"We have been clear that our intention is that social rents would increase gradually as tenants' incomes rise above this threshold. 'Pay to stay' better reflects tenants' ability to pay, while those who genuinely need support will continue to receive it."

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Source: The Guardian: ‘Pay to stay’ trap will force working families out of council homes