Council house tenants who earn up to £40,000 could be liable to pay the market value rent of their home.
The so called “pay-to-stay” Housing and Planning Bill before parliament will tackle what the government is calling a “subsidised below market rent level” for council tenants throughout the UK. The changes which were outlined as part of last year’s budget could affect up to 27,000 lower-income families in London who will be forced to move out of areas where private rents are far higher than the rates they currently pay.
In Kensington and Chelsea, which is currently the most expensive borough in which to rent a property in England, the average monthly rental price is £2,235. Up to 25% of the households in the borough rent their properties from the council or housing association which is also much higher than average in London.
However, according to the borough’s own housing policy document, many of its properties are not fit for purpose as many of their “existing households are overcrowded” while others “are too big” for the families inhabiting them.”
With only 500 properties available in Kensington and Chelsea for new tenants last year, “the number of people in Kensington and Chelsea who need to be rehoused is much larger than the number of properties available to the Council for letting each year”. Any income generated by the rent increase will be returned to housing associations with an expectation that the additional funds will be reinvested in new housing which is urgently required.
London mayoral candidates, Zac Goldsmith and Sadiq Khan, have both criticised the pay-to-stay proposal and agreed that rents should be capped at a third of household income. For a household earning the current proposed lower limit of £40,000, this would make rent in Chelsea £1,125 a month cheaper than the current market value.
Brandon Lewis, the Minister for State housing and planning, has already sought to “water down” the policy. While indicating that this has always been the Government’s aim, he said: “it is absolutely right that we come up with a deal that is also fair for taxpayers.”
Before adding that the scheme may be introduced gradually so as to avoid a backlash similar to the one created last year by the ‘Bedroom tax’.
Moreover, this policy comes just weeks after the popular launch of London specific help to buy scheme which 15,000 people have already joined. The squeeze on social housing is a clear product of the Government’s preference for homeownership and development schemes. In the midst of what many call a “housing crisis” record numbers of housing association flats are being sold to subsidise mortgage deposits for first-time buyers.