‘Pay to stay’ policy will not help fund new homes
In an environment where funding for affordable housing is constrained, we welcome additional flexibility for landlords to vary rents to generate additional revenue to be invested in building new homes.
We are however concerned about the practicalities of implementing the ‘Pay to Stay’ approach and believe the costs of administration may well exceed any revenue generated. We are also concerned about unintended consequences of suppressing aspiration, particularly in high cost areas if this were introduced at the lower of the income levels. Much depends on family composition and geography.
For new tenants, fixed term tenancies already offer a means to periodically review their circumstances and to provide a housing offer which meets their needs and aspirations as they progress through life. Rather than encouraging those tenants whose situation has improved to enter low cost ownership or utilise other housing options, the option of ‘pay to stay’ keeps them in valuable social housing and does not free up the property for use by someone in greater housing need.
A further unintended consequence of this policy may result if a lodger, an adult child or member of extended family is considered as part of a household. For example, if an adult child living at home has earnings that push the household over the agreed threshold, they may be asked to leave the household – or leave work.
A lack of new affordable housing is one of the key challenges for our sector and we are concerned that policies that pick around the edges of the issues may distract from the key problems. Whilst this proposal may encourage those who no longer need social housing to move on, we do not believe it is likely to result in sufficient funding to build new homes.
If one of the drivers of this policy is to raise rental income for re-investment in affordable homes, we believe that a higher return could be secured at minimal cost by simply allowing providers to set appropriate rents by a small amount.