Agenda item

(Director of Communities) To consider the attached report and appendix.

The Select Committee received a report from the Assistant Director (Housing Operations) regarding the District Council’s proposed response to the Department of Communities and Local Government (DCLG) Consultation on Pay to Stay: Fairer Rents in Social Housing.

In June 2013, the DCLG issued a consultation paper entitled “High Income Social Tenants Pay to Stay.” At that time, the Government set out its intention that local authorities should be given the flexibility to charge those with high income proposed at that time, as more than (£60,000 per year) a higher level of rent to stay in their own homes. The proposal at that time was based on the higher rent being set at 80% of market rents. The Housing Scrutiny Panel, which preceded this Select Committee, supported the proposal at that time but had concerns particularly around administration costs, the creation of “ghettos” which would inhibit mixed communities and felt that different thresholds should be applied to different parts of the country.

At its meeting in July 2014, the Panel considered the matter again. This time, the Government did not expect local authorities to adhere to its Social Rent Policy for properties let to households with an income of £60,000 per year, instead they could choose to charge up to full market rent. The Panel agreed at that time that as there were no powers to compel tenants to tell their landlords how much they earned, a further report should be submitted when such powers were in place.

In October 2015, the Government issued a further Consultation Paper – Pay to Stay: Fairer Rents in Social Housing. Particular attention was drawn to the two questions on which views were invited by the DCLG, these were:

Question 1: How income thresholds should operate beyond the minimum threshold set at budget, for example through the use of a simple taper/multiple thresholds that increases the amount of rent as income increases and whether the starting threshold should be set in relation to eligibility for Housing Benefit?

Members felt that the introduction of a simple taper could be a sensible approach on the basis that a tenant’s taxable income increased the level of rent increase. However, this change would make the administrative arrangements difficult.

The Select Committee were advised that the Assistant Director (Benefits) had informed officers that there would be difficulties in setting a general threshold due to many variables, bearing in mind that each housing benefit claim was decided based on individual circumstances including rent, household composition and income. Varying rent levels throughout the year would cause increased administrative difficulties with the calculation of benefits.

The Housing Portfolio Holder was concerned that the consultation document, stated that the two highest incomes within a household would be included and therefore did not say as in previous guidance that it would be based on the incomes of those named on the tenancy agreement 9including spouses and civil partners). Officers confirmed that they would query this point with the DCLG in the Council’s response.

Question 2: Based on the current system and powers that local authorities had, what was your estimate of the administrative costs and what were the factors that drive these costs?

Officers considered that to administer the scheme an additional 2 (FTE) members of staff would be required to deal with matters such as tenants changing incomes and rent levels, backdating increased payments and refunds, altering a tenant’s rent in accordance with their tenancy conditions and undertaking regular reviews.

Alongside this, it would be necessary to undertake data matching exercises with the Department of Work and Pensions (DWP). It was further considered that an additional 1 (FTE) Fraud Officer would be needed as the scheme would clearly be open to fraud. The overall administrative costs were estimated to be around £75,000 per annum.

The Housing Portfolio Holder advised that the legislative power to require tenants to declare their income would be needed to make these proposals workable.

The Assistant Director (Housing Operations) advised that due to changes in income and benefit, officers would need to review cases several times a year.

A letter to the DCLG would be drafted and signed by the Select Committee Chairman.

RECOMMENDED:

That the Epping Forest District Council response to the DCLG Consultation regarding the Mandatory “Pay to Stay” Scheme be returned with a covering letter from the Housing Select Committee Chairman advising of the following:

(1)           That the introduction of a simple taper would be a sensible approach but will lead to a significant administrative burden, particularly with the calculation of benefits and it should be considered if the taper ought to be income or time related or perhaps both;

(2)           That the Government be asked to clarify if taxable income will be based on the two highest earners in each household or those named on the tenancy agreement;

(3)           That the Council has assessed the administrative costs of the scheme at around £75,000 per annum;

(4)           That legislative power to require tenants to declare their incomes will be required to make these proposals workable;

(5)           That it will be difficult to set a threshold in relation to housing benefit due to there being too many variables; and

(6)           That the Select Committee ask officers to include further general commentary in the consultation response.