Councils to miss out on extra cash from higher rent proposal

Social housing tenants with combined incomes of over £30,000 (or £40,000 in London) will be required to pay rent above market levels, but local authorities will not be able to retain any of the extra cash.

Under government proposals put forward today (9 October) by housing minister Brandon Lewis, social rents will increase if tenants’ incomes are above the designated threshold –ensuring that higher-income tenants no longer “benefit from taxpayer-funded subsidies of up to £3,500 per year”.

But the extra money collected under this reformed ‘pay to stay’ policy will go directly to Whitehall to “contribute to deficit reduction” related to welfare savings.

Councils will be allowed to recover “reasonable administrative costs” only.

But housing associations will be able to absorb this extra income to reinvest in new housing.

The government also expects that local authorities already have systems in place that could be changed in order to operate the new policy – which will carry with it extra staff time costs.

Lewis said: “It’s not fair that other hard-working people are subsidising the lifestyles of higher-earners to the tune of £3,500 per year, when the money could be used to build more affordable homes.

“’Pay to stay’ will ensure that those tenants on higher incomes who are living in social housing have a rent that reflects their ability to pay, while those who genuinely need support continue to serve it.”

The policy will operate “in broadly the same way” as the existing pay to stay scheme in terms of how household incomes are calculated and how they are taxed.

Whitehall is currently consulting on the proposal until 20 November, and the scheme is expected to be in place from April 2017.

The policy is the latest in a series of housing reforms put forward by central government. On Wednesday (7 October), prime minister David Cameron announced he would scrap existing planning rules that require property developers to build affordable homes for rent, in an effort to increase the amount of homes for first-time buyers.

And at the end of September, the National Housing Federation (NHF) secured a deal with communities secretary Greg Clark MP to extend Right to Buy to housing association tenants, which Cameron perceived as a “breakthrough policy”.

The proposal also comes on the same day as Lewis’s local planning panel, created in September, invited views from local government and developers to consider the issues raised during its first meeting.


There are no comments. Why not be the first?

Add your comment


public sector executive tv

more videos >

latest news

View all News


Peter Kyle MP: It’s time to say thank you this Public Service Day

21/06/2019Peter Kyle MP: It’s time to say thank you this Public Service Day

Taking time to say thank you is one of the hidden pillars of a society. Bei... more >
How community-led initiatives can help save the housing shortage

19/06/2019How community-led initiatives can help save the housing shortage

Tom Chance, director at the National Community Land Trust Network, argues t... more >

editor's comment

25/10/2017Take a moment to celebrate

Devolution, restructuring and widespread service reform: from a journalist’s perspective, it’s never been a more exciting time to report on the public sector. That’s why I could not be more thrilled to be taking over the reins at PSE at this key juncture. There could not be a feature that more perfectly encapsulates this feeling of imminent change than the article James Palmer, mayor of Cambridgeshire and Peterborough, has penned for us on p28. In it, he highlights... read more >

last word

Prevention: Investing for the future

Prevention: Investing for the future

Rob Whiteman, CEO at the Chartered Institute of Public Finance (CIPFA), discusses the benefits of long-term preventative investment. Rising demand, reducing resource – this has been the r more > more last word articles >


Artificial intelligence: the devil is in the data

17/12/2018Artificial intelligence: the devil is in the data

It’s no secret that the public sector and its service providers need ... more >

the raven's daily blog

Cleaner, greener, safer media: Increased ROI, decreased carbon

23/06/2020Cleaner, greener, safer media: Increased ROI, decreased carbon

Evolution is crucial in any business and Public Sector Executive is no different. Long before Covid-19 even became a thought in the back of our minds, the team at PS... more >
read more blog posts from 'the raven' >

public sector events

events calendar


August 2020

mon tue wed thu fri sat sun
27 28 29 30 31 1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30
31 1 2 3 4 5 6

featured articles

View all News