Shapps facing legal barriers over market rent plans for high earners

Published by 24publishing for 24dash.com in Housing and also in Central Government, Local Government, Regulation

The Government will have to hurdle a series of legal barriers to allow social landlords to charge 'higher earning' social tenants more rent, including introducing primary legislation to allow them to access tenants' incomes.

The housing minister Grant Shapps has published the Government's 'Pay to Stay' proposals which could see new and existing council and housing association tenants pay market rents if they earn above £60,000.

The move - which aims to "end the unfairness of high-earning social tenants occupying homes for the most vulnerable" - would also need the Homes and Communities Agency (HCA) to amend its standard on rent to allow registered providers to operate the new freedoms.

This, says the Government, would be subject to statutory consultation.

For local authorities it is proposing to issue supplementary guidance – after the consultation - setting out a framework for councils to charge certain higher income social tenants a higher rent.

It wants to hear views on setting the household - defined as the single tenant or the two highest earners - income threshold at £60,000, £80,000 or £100,000.

But it doesn't want to create disincentives for extra work i.e. people reducing hours to fall below the threshold, so wants to find the "tipping point" to make the policy work.

It says in England there are between 1,000 and 6,000 households where the household reference person and partner have a combined income over £100,000 a year; and 12,000 to 34,000 earning £60,000 or more.

The Government says it will encourage landlords to increase rents to 80% of market rents adding that it may be "problematic to immediately introduce market rents in view of the charitable status and objectives of providers".

The consultation paper says: "We propose to look at these issues further and to encourage landlords to increase rents to 80% of market rents in the interim, with the aim of introducing full market rents for higher income tenants as soon as possible."

A further issue needing to be resolved is that of historic grant. The Government warns that where a provider converts a grant-funded social rent property to a higher rent, some or all of the grant might need to be recovered by the HCA or reinvested by the provider in new affordable housing supply.

Mr Shapps said: "A lazy consensus about the use of social housing has left landlords powerless to deal with this problem. So we want to call time on this blatant unfairness and these handouts to the very rich. Proposals I've announced today will give landlords the option to charge high-earning social tenants a fair level of rent - so if they want to continue using this precious national resource, they will pay for the privilege."

National Housing Federation (NHF) chief David Orr said given the extent of the housing crisis, it is "understandable" that the Government should allow landlords to increase rents so that high earners pay a fairer share for their homes.

He said: "However, it is important to note that only 1 per cent of social housing tenants have net annual incomes of over £36,400, with very few earning around £100,000. With 1.8 million families still on the housing waiting list, this change will still not be enough to ensure we are properly tackling the housing crisis."