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DCLG issue response to Pay to Stay consultation 18/03/2016

The DCLG has published their response to an earlier consultation on the introduction of a mandatory 'pay to stay' scheme for council tenants.


The government has decided that social housing tenants with household incomes of £30,000 or more (£40,000 in London) will require an increased level of rent for their accommodation.


The scheme was originally proposed to be mandatory for both council tenants and housing association tenants, however it will now only apply on a mandatory basis to council tenants. Under the proposals contained in the Housing and Planning Bill, it has subsequently been announced that housing associations will have discretion as to whether to introduce the scheme for their tenants.


The government received a total of 509 responses to the consultation including a response from ARCH.


In their response to the consultation the government has now said:


  • They will apply "tapers" to incomes above the minimum income thresholds of £30,000 (£40,000), however, they have not given any firm indication of what those tapers might be other than they will be designed so that households at the lower end of the income, above the proposed minimum thresholds, will see their rent rise "by only a few pounds per week".


  • Households in receipt of housing benefit will be exempt from the policy and the government will consider links to Universal Credit as it is rolled out. 


  • Before paying over any additional rental income collected from tenants, councils will be allowed to retain "a reasonable amount for administrative costs" from any additional rental income. This is to cover costs relating to updating IT systems, additional staffing costs, collection of income data and creating new rental agreements. The government has not said what level of costs may be retained stating this will be subject to further discussion with the sector about what a reasonable level would be.


View the government's consultation response "Pay to Stay: Fairer Rents in Social Housing"


ARCH CEO John Bibby comments:


"The response from the government on these issues clearly underscores their intention to press ahead with the introduction of a mandatory 'pay to stay' scheme. It is particularly disappointing that the government has failed to listen to calls from ARCH for the minimum income thresholds to be raised and unless they are the most dual earning households in receipt of the new National Living Wage will soon find themselves having to pay more rent.


The exemption of tenants in receipt of housing benefit will reduce the administrative burden on councils and the acceptance of the need for some form of taper to reduce the impact on hardworking tenants is to be welcomed. However, this will only add to the complexity of administering the scheme as tenants incomes change. The introduction of Universal Credit (UC) may yet complicate matters as tenants transfer onto UC. 


The failure to provide any details of the proposed tapers is equally disappointing - the government has had long enough to think about this and at this stage they ought to be more open and transparent in their response to enable councils, and more importantly their tenants, to understand how this will affect them."

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