70,000 social housing tenants face £1,000 a year average rent rises under pay to stay

The Local Government Association (LGA) is urging new ministers to rethink the Pay to Stay policy which will require councils to charge some of their tenants higher rents from April 2017.

It comes as new analysis reveals today that more than 70,000 social housing tenants could face rent rise bills of an average £1,000 a year from next year under government plans to increase rents for those deemed to be earning high incomes.

The LGA is warning the policy would create a bureaucracy causing stress to families, further costs to councils, and financial returns to the Government far lower than it originally forecast. It is also warning administrative complexities now make implementation from April 2017 impossible.

Councils need to invest millions in new IT systems, hire new staff and write to more than a million social housing tenants to try and understand household income and approve individual tenant bills by January. This will be a difficult, lengthy and costly process for councils, and is likely to be unpopular with tenants and result in high levels of costly appeals and challenges.

Under Pay to Stay, High Income Social Tenants (HISTs) are defined as households with incomes of £40,000 and above in London and £31,000 and above in the rest of England - for example a working couple each earning above £15,500 outside of London would be defined as HIST – who will have to pay close to market rents from next year.

Tenants on housing benefit and universal credit will be exempt.

For eligible tenants above the high income thresholds rent increases will be tapered, as called for by the LGA. Every £1 they earn above will mean a 15p increase.

The Government will take additional rents taken from tenants minus a proportion that councils will retain to help administer the policy, an amount to be determined by the Government.