Pay to Stay Could Lead To 'Subsidy Giveaway'

The Government’s consultation on plans to charge higher earning social tenants more rent has now ended.  The plan is so blunt and affects such a relatively small number of people – 51,000 if the Government chooses to set the threshold at £60,000 – that it has been described by some as ‘taking a sledgehammer to a nut’.  Leaving aside the obvious fragmentation and uncertainty of three separate rent regimes operating in the social mix, the policy is bound to speed up Right to Buy (RTB) and, in turn, channel subsidy to the better off.  If made mandatory, the policy would push higher earners into a choice of stay and pay more or exercise the RTB. There are a number of issues with this. 1. Why, if they are deemed to be able to pay near market rents, should tenants then be handed up to a £75,000 discount on the property? 2. It will inevitably speed up RTB sales and further deplete the social stock, as the replacements will be Affordable Rents.  However the Government is constantly referring to social housing as a scarce resource and how subsidy needs to be channelled to those most in need.  But, it works out cheaper for the Government to continue subsidising higher earners in social rented homes than taking the ‘subsidy hit’ by selling off the homes at whopping great big discounts.  Read more on 24dash.