England’s 3.9 million households living in social housing could be obliged by law to declare their incomes as part of the government’s ‘pay to stay’ plans, LGC has learned.
Announced in last week’s Budget, the ‘pay to stay’ policy means social housing tenants with household incomes over £30,000, or over £40,000 in London, would have to pay a market or near market level of rent. The measure would come into effect in April 2017.
A spokeswoman for the Department for Communities & Local Government told LGC the government intended to legislate to introduce the policy in the forthcoming Housing Bill.
She said: “It will apply to both new and existing tenants. Tenants will be required to declare their incomes. Further details on that will be in the Housing Bill.”
She added: “This repayment of subsidy will help to contribute towards government’s £12bn of welfare savings and, crucially, to reducing the deficit. We will be consulting shortly on the details of how the policy will be implemented.”
The Institute for Fiscal Studies estimates the policy would affect 10% of social housing tenants.
Councils fear collecting the data would be expensive and difficult, particularly for existing tenants and when tenants’ earnings change.
Paul Beardmore, housing director at Manchester City Council, said: “The biggest challenge with existing tenants is how we find out what household income is in a cost effective way.”
His authority gathered income data for the approximately 3,500 new social housing lettings made last year and found that about 150 people earned more than the £30,000 limit.
Nick Billingham, partner at solicitors Devonshires, said there was still a lot of detail missing and the Housing Bill, which is also set to introduce the extension of the right-to-buy to housing association tenants, was likely to be subject to considerable debate.
He said: “I think this will be ‘pay to go’: people will decide to exercise the right to buy.”
The Budget policy costing document estimated that ‘pay to stay’ would raise over £1bn from councils from 2017-18 to 2020-21 although it noted the figure was highly uncertain as tenants might move out of social housing or exercise their right-to-buy.
The ‘pay to stay’ concept was first introduced in April 2015 but the household income limit is currently £60,000 and councils and housing associations can choose whether to enforce it.
At the time the government said it might introduce legislation requiring tenants to declare their incomes in future but said all income raised would be available for investment in affordable housing.
However, the Budget document said while housing associations will keep the extra money to fund development, councils must hand it to the Treasury.