‘Pay to stay’ trap will force working families out of council homes

An increase in rent prices has been a consistent issue over the years, with average rent prices rising significantly over time. Although these increases have caused problems for private tenants it seems that social tenants are also under similar pressures.

Now, thanks to the government’s ‘pay to stay’ policy, more than 70,000 social tenants face average rent rises of more than £1000 a year.

If you are a social tenant and your household’s combined income is above £40,000 in London (£31,000 in the rest of England), you will be considered a ‘high income tenant’. This means that you will pay 15p for every pound you earn above the high income threshold.

Councils have warned that nearly 1 in 10 social tenants in London and the south-east can expect rent rises, with those living in the capital facing an average monthly rent rise of £132.

Is this really a good idea? Families residing in social housing usually already have low incomes so a further rent increase will only put them at a disadvantage. Families will therefore face a lower quality of living in order to afford a rent increase. Shelter recently reported that some families already have to miss out daily meals so that they can pay their rent.

What will this policy mean for social housing tenants?

The Department for Communities and Local Government stated 90% of social housing tenants would be unaffected by the policy. A spokesperson stated “Pay to stay better reflects tenants’ ability to pay while those who genuinely need support continue to receive it. It means households earning £32,000 would see rents rise by just a couple of pounds a week.”

Sounds quite simple and straight forward? We don’t think so:

Former chancellor George Osborne stated last year that the policy is “ill-thought-out and unfair”.

The Local Government Association have advised that this will be a very lengthy and costly procedure. For example, the council will have to invest millions of pounds into new IT systems and staff to find out exactly how much income each household has. They will also need to consider the bills paid by each tenant. It could also lead to tenants appealing their decision so further monies would be spent on appeals and challenges.

Councillor Nick Forbes, senior vice-chair of the LGA stated that this could be an expensive distraction from what should be a joint ambition to build homes.

Considering the amount of families who are seeking accommodation, it would make more sense to spend money on building new homes not spend more money to potentially evict more people. If the tenants cannot afford the rent increase they will fall into arrears and potentially be evicted from their homes. This will only cause a further increase in homelessness.

So this policy is clearly lengthy and costly and is likely to have considerable negative results which ultimately will only involve more costs – for example housing homeless families, seeking possession of those who cannot afford the rent increases and dealing with considerable administration. Will these costs outweigh the gains made by introducing the policy in the first place? If not, what is the point?

By Sadhari Perera and Amirah Choudhury, Social Housing team.