The Department for Communities and Local Government and Housing Minster, Brandon Lewis MP have played another “blinder” and hammered home yet another nail in the coffin for the Private Rented Sector (PRS) in the form of “Pay to Stay”.
Housing Minister, Brandon Lewis, said:
“It’s not fair that other hard-working people are subsidising the lifestyles of higher-earners to the tune of £3,500 per year, when the money could be used to build more affordable homes.”
“’Pay to stay’ will ensure that those tenants on higher incomes who are living in social housing have a rent that reflects their ability to pay, while those who genuinely need support continue to receive it.”
Here is the link to The Department for Communities and Local Government press release:
https://www.gov.uk/government/news/fair-rents-will-ensure-higher-earning-tenants-pay-to-stay
So why is the “Pay to Stay” bad for Private Rented Sector?
Housing Associations can now charge full market rent to tenants who have a household income in excess of £30,000 per annum, the very same tenants the Private Rented Sector (PRS) is looking to attract, but which is more appealing to a tenant a private landlord or a Housing Association?
My guess would be a Housing Association is the more attractive option for a host of reasons but the most obvious being:
- Tenants will be able to buy their Housing Association property after just 3 years with a 35% discount if it’s house and a 50% discount on a flat
So for professional working tenants currently renting from a PRS landlord making the switch to a Housing Association landlord makes sound financial sense.
Next question where are all the low income and tenants in receipt of benefits going to be housed?
You can also read about other ways Government Attacks Private Rented Sector
Rooms in Cardiff 
Mark.
I doubt that PRS tenants will find it easy to get a Housing Association tenancy in the first instance. Yes they MAY get one in areas outside of London but inside London I think they will find it extremely difficult because everyone wants a council house/flat (a nice one, not a high rise!) and there just aren’t enough to go around. So in London it doesn’t matter what the PRS tenants want, they ain’t gonna get it (well, won’t get it easily).
Gareth,
Thank you for taking your time to read and reply to the post. I totally agree with you that council and housing association properties are in high demand but short supply, even more so in London. The reason I wrote the post was to highlight how ill thought Government legislation can have dire consequences and achieve the complete opposite outcome from what was intended.
Enabling Housing Associations to charge full market rent to tenants earning above £30K outside of London and £40K in London coupled with HA only being able to charge LHA rates to tenants now means HA are more likely to look at finances and profit rather than continue with their social mission to help those in society with the greatest need as they are no longer able to house those with greatest needs.