Further to the update in our
last bulletin, on the first two days of debate on the Housing
and Planning Bill in Report Stage at the House of Lords, the
government has offered a number of amendments to soften the impact
of 'pay to stay' and the phasing out of lifetime tenancies.
The debate continued on 18 and 20 April with Peers further
discussing the government's proposals for 'pay to stay' and phasing
out of lifetime tenancies.
Peers voted against the government to make significant
amendments to the scheme provisions in Part 4 of the Bill making
the introduction of a 'pay to stay' scheme discretionary for local
authorities in the same way as for housing associations.
Peers also agreed amendments to increase the "high earnings"
thresholds from £30,000 to £40,000 (£40,000 to £50,000 in London)
and to limit any rent increase for households above the thresholds
to no more than 10%.
Ministers made it clear that they would resist the amendment to
make the scheme discretionary for local authorities or permit local
authorities to retain any increased rental income rather than
surrender it to the Exchequer. However, the Minister made it clear
that the introduction of the mandatory Pay to Stay Policy for local
authorities"is an important contribution to the government's
manifesto commitment to reduce the deficit".
Ministers did however offer up further details of how 'pay to
stay' would operate including changes to the "higher earnings"
threshold outside London and the tapers to be applied to those with
incomes above the thresholds, full details of which Ministers said
would be specified in Regulations:
- The proposed higher earnings threshold of £30,000pa outside of
London will be increased to £31,000pa
- Income will be defined as "taxable income" which would exclude
child benefit, disability living allowance and tax credits.
- A taper of 20% will be introduced which means that for every
pound above the household income threshold, the tenant will be
required to pay an additional 20p on their rent.
- The Regulations giving effect to these proposals will be
subject to the "affirmative resolution process" which requires
debate in both the House of Commons and House of Lords
The Minister gave an example of how the proposed 20% taper would
impact on the rent payable by households with income above the
- A household outside London with a household income of £32,000
will be required to pay just less than £4.00pw additional
- A household outside London with a household income of £40,000
will be required to pay around £35.00pw additional rent
Ministers also made it clear that in calculating the household
income, "household" will be defined as "the Tenant, any joint
tenants and their spouses, partners or civil partners" and within a
household, only the incomes of the two highest earners will count.
This means that the incomes of non-dependent children will not be
counted unless they are named on the tenancy agreement and only
then if they are one of the two highest earners in the
The Minister also announced that in the first year of operation,
the government will not apply a formula approach to the amount
required to be paid by councils; and councils will be required to
pay the actual amount of money raised through 'pay to stay' to the
The Minister also hinted that 'pay to stay' may not be
introduced where the administrative costs would not be covered by
the amounts of additional rent raised from the scheme.
The Bill requires local authorities to grant new tenancies on
fixed-term tenancies of between two and five years. However, under
pressure from a number of amendments by Peers to the provisions
relating to the phasing out of lifetime tenancies, Ministers agreed
to bring forward government amendments to the Bill at the Third
Reading which would provide local authorities with discretion to
grant tenancies of up to ten years in certain circumstances.
Details are unclear but this may potentially include the
granting of longer fixed-term tenancies to cover the period where a
child is in full-time education; and in certain circumstances where
the tenant is disabled or of pensionable age.
ARCH Policy Adviser, Matthew Warburton, has produced a detailed
briefing paper on the debates in days 3 and 4 of the
Report Stage for ARCH members. This is available in
the members' area under 'Bulletin news'.
The House of Lords scheduled a final session for debate on the
Report Stage on 25 April. The Third Reading of the Bill was
scheduled for 27 April 2016.
We will provide ARCH members with a
briefing summarising the outcome of the Report Stage and
the amendments made to the Bill by the Lords prior to the Bill
returning to the Commons.