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Timetable for introduction of pay to stay 26/05/2016

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 lower. 


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 available).


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:

July 2016

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 appeals processes

Oct- Dec 2016

Councils write to tenants to request income data. Tenants declare income and provide supporting evidence

November 2016

Regulations in force

Dec 2016 - Mar 2017

Councils determine which tenants should pay higher rents. Calculate amounts and issue bills

April 2017

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 costs)


Details of a recent presentation given by DCLG to a number of local authorities can be found in the members' area.

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