The UK government’s ‘pay to stay’ policy will discourage people living in social housing from increasing their earnings or finding work, housing professionals fear.

Pay to stay, which was announced in the summer budget, will see social housing tenants in England with a household income of £30,000 or more (£40,000 in London) paying higher rents.

In a survey of Chartered Institute of Housing (CIH) members, 77 per cent of people who responded said the policy was very likely or likely to discourage tenants from increasing their earnings. In addition:

CIH member Susan, a housing advice and homelessness manager who lives in South Cambridgeshire, will be hit by the policy. The 52-year-old, who earns £37,000 a year, said: “I have lived in South Cambridgeshire since 1978. I have lived in my house and brought up my children there for almost 25 years and during that time gone back into education to get better employment. I have never claimed one penny towards my rent from housing benefit in all that time.

“My income now puts me in the bracket to be hit by pay to stay. However, I live in an area where the rents are extremely high – in my village a house like mine will command £1,100 or more per month.

“I don’t want to move as my work, my children and my parents are in this area. People say why don’t you go part-time to avoid pay to stay but I would still have to lose several hundred pounds a month, so either way my years of hard work to provide for my family have definitely not paid off. Any chance of saving towards a better pension will disappear and I face the prospect of struggling financially to have any kind of life beyond bills for the duration of my working life.”

Susan added that house prices in her area mean that she wouldn’t be able to afford a mortgage even if she took advantage of the right to buy.

Almost all of the CIH members who responded to the survey (97.8 per cent) said the policy was very likely or likely to increase administration costs for landlords – potentially cancelling out the extra income it will generate for housing associations. Local authorities have been told that they will have to give any extra income to the Treasury, which CIH has argued is unfair.

Overall 62 per cent of CIH members who responded to the survey said they disagreed with the policy.

CIH chief executve Terrie Alafat said: “Like us, our members clearly have grave concerns about pay to stay. There is the risk that it will discourage tenants from finding work or increasing their earnings, and also that it will push people into housing benefit entitlement.

“Ultimately, you simply cannot class a household with an income of £30,000 as ‘high income’. A single person with no children might seem relatively well off, but what about a couple who both earn £15,000 and have three children?”

Terrie Alafat said the definition will become even more blurred with the introduction of the national living wage. Based on the current level of £7.20 per hour, a household with two earners working a 40-hour week on the living wage will earn £29,952 a year, so they would just escape the current threshold. She added: “It must be contradictory for a household to be on the statutory minimum wage and also less than £50 away from being classified as a high earner for housing policy purposes.”

@CIHhousing