Pay MORE to Stay is HERE TO STAY … with a vengeance !!

I have no doubt that Housing Associations will implement Pay MORE to Stay and chase the very significant excess income this policy actively incentivises them to pursue.

The differential between gross market rent (GMR) and HA social rent (SR) and affordable rent (AR) levels is significant right across the UK, so the additional rent that housing associations can charge – and all of this they keep – is a huge incentive that they will take up … at least for the 260,000 or so new HA tenancies each year

Note well I have emphasised NEW tenancies of which there are 261,000 NEW housing association tenancies each year in England.  These figures are official ones released last week in the Social Lettings 2015/16 released by the DCLG and all NEW HA tenancies now come with an affordability test hence the HA landlord knows the salary details of the household BEFORE any tenancy is allocated.

Critically there is no additional admin cost of the Pay MORE to Stay policy.

The amount of additional income Housing Associations can charge in rent per year is detailed in the table below – and the rent figures also come from the same official figures in the Social Lettings Survey for 2015/16

pms-regions

As the table shows the average additional rent a housing association in the regions can charge for a 3 bed property is up to £4,048 per year compared with a social rent (SR) level; or £2,274 per year if applying Pay More to Stay instead of an affordable rent (AR) level.

These are significant rent increases that housing associations can charge and HAs will not resist this opportunity especially as they already do tenant affordability tests now.  Charging up to £78 more on a now £104 per week 3 bed social rent is a considerable incentive, as is a £44 per week increase over and above the affordable rent model from £138 to £182 per week.

Based on what we have been told about the taper which is 15% means with the £31,000 threshold means a household income of £46,160 per year sees the affordable rent level of £138 per week increase to the £182 per week gross market rent.

The move from social rent of £104 per week up to £182 per week sees the household with an income of £57,986 per year being charged full market rent by a housing association.

Note well the Housing & Planning Act 2016 which reduced the threshold from £60,000 down to £31,000 in the regions that the HA tenant households with an income of £46,140 and £57,986 would have NO increase in rent under the existing pay MORE to stay policy.

Now the pay MORE to stay policy means that the above two scenarios enable housing associations in the regions to charge full market rent and £78 per week more whereas before with the £60,000 per year household threshold the rent would have remained unchanged.

If anyone believes housing associations are NOT going to seek this additional SEVENTY FIVE PER CENT RENT INCREASE then they are living in Cloud Cuckoo Land!

And when we start looking at the rent differentials in London the figures are way more in terms of actual rent charged.

pms-london

As you can see the potentially higher rents that housing associations can charge for a 3 bed property in London can see between £8,440 per year more up to £11,673 per year more.  That is a potential 255% rent increase on the current social rent level!!

If anyone believes housing associations are NOT going to seek this additional TWO HUNDRED AND FIFTY-FIVE PER CENT RENT INCREASE then they are living in Cloud Cuckoo Land!

What a surprise then that housing associations are saying the additional admin cost of claiming the higher rents in Pay MORE to Stay is too high!!!  (HAs are the ones who believe that anyone who believes them is living in Cloud Cuckoo Land!!)

261,000 NEW housing association tenancies per year and with between 75% and 255% more in rent … and housing associations are going to turn that down!!!

Here are the official figures on new lettings

new-lettings

As you can see 261,163 new lettings by housing associations each year … and all of them now with a huge incentive to claim between 75% and 255% more in rent!!

In summary, the housing association argument that it will cost too much to administer that could possibly hold, only holds for its EXISTING tenants on whom HAs do not necessarily have household income data … YET with tenant affordability tests now the norm there is NO extra administrative cost for NEW tenants!

This policy is far from being axed or dropped or rendered meaningless in any way shape or form.

The reality is the policy incentivises housing associations to allocate far MORE to those with higher household incomes and NOT as the hare-brained Housing Minister Gavin Barwell said it encourages more lower income households into social housing in his Ministerial Statement of yesterday!

______________________________________

GMR – Gross Market Rent

 

 

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9 thoughts on “Pay MORE to Stay is HERE TO STAY … with a vengeance !!

  1. Income related rents are a good idea for the social sector. A base rent of 90% of LHA would be a good starting point for all lettings (so HB takes the strain if help is needed) with 30% of net household income, if higher, charged if income justifies it.

    The excess rental that landlords would then make could be used to fund new building on the same basis, getting rid of the need for any capital support to the social sector.

    This would also mean people moving were faced with some certainty about the deal they would be offered even if they moved long distances, thus improving incentives to move to take work.

    1. Base rent of 90% of LHA would see existing HB bill increase immediately by £1.01 billion per year (3.21m SRS tenants @£6.04 more per week)

      What is this ‘capital support’ you speak of?!

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