week I wrote about the
parts of CLG's consultation paper Rents for Social Housing from
2015-16 which propose changes to the levels of annual rent
increases from 2015. The paper also includes proposals intended to
take forward the Government's plans to allow councils to charge
higher rents to tenants on higher incomes - so-called "Pay to Stay"
As indicated back in July, the Government intends to implement Pay
to Stay in two stages. First it proposes to remove the regulatory
controls preventing landlords from charging market rents to
higher-income tenants - and the consultation paper includes
proposals intended to achieve this.
The second stage would involve legislation to require tenants on
high incomes to declare this to their landlord. There is still no
indication when the required legislation will be introduced.
Private registered providers are expected to adhere to rent
regulation requiring them to set formula rents, except where a
specific exemption is provided, such as for affordable rents.
Councils are legally required to set reasonable rents and have
regard to Government guidance, which currently contains no
exemption on this issue.
However, Government guidance is non-statutory and it could be
argued that there is no real obstacle to prevent a council adopting
a local policy to charge higher rents to high income tenants.
Amendment of the guidance, as CLG now propose, will simply put such
a policy's legality beyond doubt.
The government has previously suggested that landlords should
consider charging market, rather than social, rents to tenant
households with incomes above £60,000 a year. The consultation
paper offers an approach to defining "household" and "income" in
Only the income of the tenant and any partner residing in the
accommodation will be taken into account in determining household
income. This means that a tenant earning £35,000 with a partner
earning £26,000 would be expected to pay a higher rent, while a
household including three adults each earning £29,000 would not.
The proposed definition of income is total taxable income; capital
is proposed to be excluded, although views are invited on this
Some councils are opposed to Pay to Stay schemes in principle;
others regard them as unworkable until legislation requires
relevant tenants to declare their income. Some may wish to go ahead
despite the absence of clear powers to collect income information
But because, for councils, the CLG's proposed scheme is set out in
non-statutory guidance, councils are free to choose whether to go
ahead with a scheme at all, and, if they do, whether to follow the
details of the CLG scheme.
They are required to have regard to the Government's views on
these matters, but they are not bound to adopt them if they believe
a local policy would work better for them and their residents.
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