Making a mint? Hunting the ‘fat cat’ social housing tenants
Published by Jon Land for 24dash.com in Housing and also in Featured
Making a mint? Hunting the 'fat cat' social housing tenants
‘Rich’ tenants have become one of the targets in the Coalition’s drive to increase ‘fairness’ across the social housing sector. But is the Government right to embark on such a crusade and, more importantly, do these ‘fat cat’ tenants really exist? Kate Murray investigates.
What do union boss Bob Crow, ex-cabinet minister Frank Dobson and a London headteacher have in common? According to some politicians, the answer is that they are all paying far too little rent for their social home.
Just as ministers argue that it’s not fair that families on benefit are able to live in homes in areas that working households couldn’t afford, so, they insist, it’s wrong to expect tax-payers to subsidise those who earn more than enough to afford their own home in the private sector.
Housing minister Grant Shapps claims a ‘pay to stay’ initiative, forcing the 6,000 tenants the Government estimates earn more than £100,000 a year to pay a market rent if they want to stay in their home, would bring in millions to build new homes.
Westminster Council, one of the most vocal backers of plans to charge high-earning tenants more, says that approach is right.
“It is fundamentally about fairness,” says Westminster’s cabinet member for housing Jonathan Glanz. “It is unfair that those who are earning significantly more than the average wage should be seeking subsidy.”
According to Mr Glanz, tenants should have the benefit of a subsidised home when they need it most.
“Many of us change homes throughout our lives as our circumstances change, whether it’s a promotion, a change of job or a change in family circumstances,’ he says.
“I don’t think many people are born and die in the same property. Social housing should facilitate and encourage that journey. People should have the benefit of subsidy while on lower pay and if they succeed - and clearly we hope they will - and find themselves on significantly higher than the average wage they should look at their choice again.”
But there is unease about the proposals on several fronts. Firstly, some find it difficult to square the messages on the issue of richer tenants with a drive to encourage more working tenants and tackle benefit dependency.
Westminster has announced it is redrawing its allocations criteria to favour working applicants.
Westminster’s Labour Group leader Paul Dimoldenberg says it’s ‘a complete mess’ that on the one hand the authority is giving priority for council housing to those in work but, at the same time it is targeting council tenants considered to earn ‘too much’.
“The real answer is to build more social rented homes for those families in housing need, instead of trying to shuffle a declining council housing stock amongst those the Conservatives deem to be ‘deserving’ of a home in Westminster,” he says.
Others also see a contradiction. “There’s this view now of social housing as a stop-gap measure, that it’s like the NHS and you use it when you need it. But it’s not like the NHS it’s your home,” says Phil Lyons, who is a tenant and chair of South Essex Homes. “They seem to be saying we want you to go out and earn a few quid - but not too much, don’t get ideas above your station. It’s so contradictory.”
Then there’s the very real issue of mixed income communities. For years now, housing providers have worked to create sustainable communities - and encouraging a mix of incomes has long been seen as a key element in achieving that.
So won’t introducing an income cut-off for a social rent discourage aspiration and further stigmatise social housing as an option of last resort?
As Mr Lyons puts it: “Older tenants remember the old properly mixed communities where you could be living on council estate, next door to a teacher or next door to a doctor. They would be earning considerably more than but that’s not a problem - that’s what people want. They don’t want to be segregated with all the poor people living in council housing over there.”
Backers of the scheme have insisted that - unlike suggestions when the idea was first floated - it’s not about evicting higher earners, but simply asking them to pay more if they want to stay. But even that has practical difficulties.
When he’s asked about whether his association houses anyone on a six-figure income, Bill Payne, chief executive of Metropolitan Housing Partnership, replies: “Do we house any chief executives or union leaders? I hope so - but I don’t make it my business to go and pry into what they earn.
“We have people who have been our tenants for 20 to 30 years - who would not aspire to them being better off? I suppose if the Inland Revenue was willing to share details we might get that sort of information, but I’m not sure that’s the kind of society people in this country want to live in.”
Nonetheless Mr Payne acknowledges that there is a debate to be had about whether rents should vary according to income. That is certainly the view of Peabody Trust chief executive Steve Howlett.
“We do know there are people in Peabody who started off poor, but because they had a solid base for their home, they have been able to use that as a springboard into a better-off life,” he says. “We obviously recognise that we want people to do that, but we do want some way of ensuring that those people pay a fair price for their accommodation.
“We wouldn’t want to see them forced out because they bring something to the community in which they live but paying a fair whack would be a fair way of using the money to provide more housing.”
But just how much money raising rents for the higher earners would bring in is unclear, given that accurate figures on household income are difficult to verify.
Westminster has used figures from its housing needs survey to suggest that some 2,200 social housing tenants in the borough have a household income of more than £50,000 and more than 220 receive more than £111,000.
Nationally, analysis by the Human City Institute of Tenant Services Authority data suggests that up to 10,000 social households across the country could be on an income of more than £52,000 (see box).
But, as HCI director Kevin Gulliver explains, an extended family living in the same house could easily top that figure. He believes it’s wrong to suggest there’s a real issue with fat cat tenants.
“They talk about people on high wages like Bob Crow and Frank Dobson but what they do is deliberately obfuscate the difference between household incomes and wages,” he says. “The two aren’t the same. You might have an extended family, which would mean you get a reasonably high household income but that doesn’t mean you would qualify for a mortgage.”
Even if richer tenants were encouraged to move or required to pay more, the number of new lettings created - or new homes built thanks to higher rental streams - would be marginal, Mr Gulliver adds. He estimates that assuming all of the 10,000 higher income tenants could be identified, the extra rental income would amount to £40 million a year, enough to build 500 new homes.
“When compared to ballooning council waiting lists, the extent of overcrowded housing, the 700,000 empty homes in England, persistent affordability issues in the home ownership and private rented sectors and increasing homelessness, the concentration of the social housing debate on a tiny number of marginally more affluent social tenants borders on the negligent,” he says.
“Massive investment in social housing is needed to tackle mounting housing problems and to kick-start the economy. Communities Secretary Eric Pickles, in his Right to Buy announcement during the Conservative Party conference, conceded that for every new home built two jobs are created. So such investment represents excellent value for money to the tax payer. Let's get the country building and working again.”
Rich pickings? Higher earners in social housing
- According to the Human City Institute analysis of TSA survey data, only 0.26% of social households have incomes of £52,000 or more. There are no figures for those with an income of more than £100,000.
- If the percentage with an income above £52,000 were extrapolated across all 3.9 million social tenancies (given that council tenants are marginally less affluent than the HA tenants covered by the TSA survey) just over 10,000 would have total net household incomes of more than £52,000. These households tend to be larger than the average and more likely to be living in the south-east.
- Just over 94% of social households have incomes below the average earnings figure of £26,000 per year and more than half have an income below half of that figure
- Only 2.2% of tenants in the TSA survey have savings of £16,000 or over and many of those are elderly people. Two-thirds of social tenants have no savings at all.
- Westminster’s housing needs survey suggests that the borough has 406 households in council homes with an income of more than £50,000 - and 2,237 in housing association homes. The same survey suggests there are no council tenant households with an income of more than £111,000 but 228 who rent from associations.
This feature originally appeared in the November edition of 24housing magazine.