Peabody recently responded to the Government’s consultation on its pay to stay proposals. The idea is that tenants who earn a high income should be made to pay a market rent, and would no longer be entitled to a subsidised social rent. We fully support the principle behind these proposals. With so many on the waiting list who can’t access affordable housing, we think it’s right that better off tenants who can afford a higher rent are asked to contribute more. In our 21st Century Peabody report, we highlighted the need for a rent model that moves away from a low rent option for life, to a system that offers more choice and is more closely related to what people are able to pay.
But like a lot of good ideas that sound simple in principle, the devil really is in the detail. The pay to stay scheme as it has been presented would raise enormous challenges for social landlords to implement - and for now there are many more questions than answers. How much does someone have to earn to be considered a ‘high earner’? How will landlords identify these tenants? What happens when people’s circumstances change and their income fluctuates suddenly?
The Government has suggested new legislation would be needed to oblige tenants to disclose their income to landlords. But this is a fairly radical change in our relationship with our tenants so needs to be considered very carefully. Also it’s not at all clear how the pay to stay proposals join up with the Government’s right to buy policy, under which high earners can still benefit from very generous subsidies.
No doubt all the administrative challenges could be overcome. But given the relatively low estimates of tenants earning salaries above £60,000, the additional income generated from higher rents for landlords to invest in new affordable homes, is likely to be small. And if ‘pay to stay’ does ever become a reality, at Peabody we’d certainly want the scheme to be voluntary so we could decide for ourselves whether the benefits would outweigh the costs. I’d also be interested to see some research on the attitudes of high earners to allow the full impact of these proposals to be better assessed.
Read our response here