Government’s ‘pay to stay’ policy will hit low- and middle-earners

House of Commons Library data released by Labour today shows that George Osborne’s plans to raise rents for “high-income social tenants” will actually hit thousands of low- and middle-income families, including people working as nurses, junior doctors, plumbers, bricklayers, car mechanics, call centre workers, postmen, firefighters, electricians, postmen and shop workers. Even people in the lowest 10 per cent of earners could be hit with rent rises.

For example:

  •  A two-earner household comprising two junior doctors, for whom the average salary is £22,870, would be affected by the rent rise both inside and outside London.

 

  • Two newly-qualified teachers would, on average, have a combined income of £44,500 - significantly more than the £30,000 threshold.
  • Two bricklayers, who on average earn £24,400, would be significantly above the threshold for being charged ‘market rates’.
  • Even households containing two retail assistants or call centre workers, for whom average salaries are just £16,300 and £17,000 per year respectively, would be hit by the rise outside of London.

 

  • A couple working full-time on George Osborne’s so-called ‘national living wage’, with a household income of £37,500, could also be affected.

The average rent hike could be as high as £2,900 outside London, and £8,800 in London. This figure is taken from the difference between average social and private rents, from the English Housing Survey: https://www.gov.uk/government/statistics/english-housing-survey-2014-to-2015-headline-report.

The ‘pay to stay’ policy was announced by the Chancellor in his summer budget last year. It will see socially-renting households with a combined income of more than £40,000 in London and £30,000 elsewhere forced to pay rents “at the market rate”. The legislative changes are included in the Housing and Planning Bill under Chapter 3, titled ‘Rents for high income social tenants’.

The House of Lords yesterday debated the Government’s ‘pay to stay’ policy, which Ministers predict will affect 290,000 households

Under the Localism Act 2012, councils already have the discretion to make tenants earning over £60,000 a year pay higher rents. This change would make it mandatory, and lower the earnings threshold.

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