Now that legislation is in place, DCLG officials have set out
the timetable for the introduction of the 'pay to stay' scheme for
council tenants with household incomes of over £31,000 (£40,000 in
London) under the Housing and Planning Act.
Full details of the scheme will be set out in Regulations which
DCLG officials are working on now. However, the aim is to introduce
the scheme from April 2017. This is a very short timescale and will
place enormous pressure on stock retained councils who will be
expected to have systems in place to collect household income
information from their tenants by December this year.
Under the scheme tenants with household incomes above the
governments income thresholds of £31,000pa (£40,000 in London) will
be required to pay higher rents from April 2017.
These thresholds will be up-rated annually by inflation
(Consumer Price Index) and tenants in receipt of Housing Benefit or
Universal Credit will be exempted from the policy. However, all
other tenants will be required to declare their total household
income to their local council to enable the council to calculate
how much additional rent they will be expected to pay.
The "taxable income" of the two highest household member incomes
will be counted and for this purpose household means tenants, joint
tenants, their spouses, partners and civil partners.
Any household with an income above the thresholds will be
charged an additional rent. The additional rent they will be
expected to pay will be 15% of any income over the threshold or the
full market rent for the property whichever is lower.
As an example a couple living in a council house outside London
with a current rent of £73.09, both working full time, one earning
£25,000pa and the other £15,000pa, will be expected to pay an
additional rent of £25.96pw on top of the normal rent for the
property. The total amount they will pay is expected to increase to
£99.05pw from April 2017 - unless the market rent for their home is
Councils will be required to charge a full market rent to any
tenant who fails to provide details of their household income.
Any additional monies collected by stock retained councils under
'pay to stay', over and above the normal rent for the property,
will be required to be paid over to Central Government to reduce
their overall budget deficit. Councils will be able to retain
reasonable costs for administering the scheme on behalf of the
government (details of how this is to be calculated are not yet
The DCLG has also confirmed that properties occupied by High
Income Tenants with earnings above the income thresholds will be
exempt from the mandatory 1% rent reductions. Tenants with incomes
above the thresholds can also expect to see their current basic
rent increased increased over the three years from April 2017 while
rents of their neighbours decrease annually by 1%pa.
The outline of government's timetable for introduction
of 'pay to stay' is:
DCLG publish draft Regulations
July - Sep 2016
Councils begin to consider and put processes in place to
calculate market rents, collect income data, apply tapers, manage
reviews of market rents, changes in tenant circumstances and set up
Oct- Dec 2016
Councils write to tenants to request income data. Tenants
declare income and provide supporting evidence
Regulations in force
Dec 2016 - Mar 2017
Councils determine which tenants should pay higher rents.
Calculate amounts and issue bills
Councils begin to collect additional higher rental payments,
calculate admin costs & set up arrangements to pay over monies
to central government on quarterly basis. (NB money transferred in
first year will be based on actual receipts less reasonable admin
Details of a recent presentation given by DCLG to a number of
local authorities can be found in
the members' area.