Government ditches plans to introduce 'pay to stay' regime in social housing

The Government has axed plans to introduce the so-called ‘pay to stay’ regime under which higher income social tenants would have had to pay rents close to market rates to stay in their homes.

Gavin Barwell, Minister for Housing and Planning and Minister for London, tweeted yesterday: “We've listened to views of tenants, councils + others & won't be proceeding with plans to charge higher income council tenants higher rents.

“Still want to ensure social housing is occupied by those who need it most but also must support working class families struggling to get by.”

In a written ministerial statement, Barwell said local authorities and housing associations would still have local discretion.

"The Government remains committed to delivering its objective of ensuring social housing is occupied by those who need it most. But we need to do so in a way that supports those ordinary working class families who can struggle to get by, and in a way which delivers real savings to the taxpayer. The policy as previously envisaged did not meet those aims," the minister said.

"This is why we are introducing the mandatory use of fixed term tenancies for new tenants in local authority housing. This will better enable councils to give priority to people with the greatest housing need. Councils will review tenancies at the end of each fixed term to ensure that tenants still need a socially rented home. The Government’s guidance to councils will make clear that they should take into account a household’s financial circumstances when looking at this, and that, except in exceptional circumstances, tenancies should be targeted on those on lower incomes."

Barwell added that the Government would consider whether other options existed to ensure that high income tenants in social housing made a greater contribution to costs.

In August the Local Government Association warned that councils could expect costly challenges and appeals with more than 70,000 tenants facing £1,000 a year average rent rises. The increased rents were likely to cause hostility among those affected, it added.

Research by property firm Savills for the LGA suggested that there were 70,255 households set to be affected. The regime would have applied to those households in council housing where annual earnings exceeded £31,000 outside London and £40,000 in the capital.

The LGA also said that administering the system would be so complicated that implementation as planned from April 2017 would have been impossible.