Change language
Actions
Displays
Remove from selection
Add to selection
Abstract

Thousands of tenants could shun job promotions, reduce working hours, split up from partners or fiddle incomes to prevent their rent from increasing four-fold, Islington’s housing chief has warned.

Councillor James Murray said that a new Pay to Stay policy announced by the Chancellor in the budget on Wednesday – forcing social tenant households earning more than £40,000 a year to pay sky-high market rent or near that amount to keep their homes – could see residents take “perverse” steps to prevent their rent from rocketing overnight.

According to estate agent Foxtons, the average rental of a two-bedroom property in the borough is £561 a week, or £2,244 per month. The average council rent of a two-bed home is around £140.

And the market rent of three- or four-bedroom homes in Islington would leave somebody earning £40,000 with no disposable income to pay bills, Cllr Murray warned.

Branding the policy as “ridiculous”, he said: “The government talks about encouraging work, but because market rents are so out of control this presents a huge disincentive to earn more money. If you are a tenant earning £38,000, you get penalised when you get a promotion at work, for example. It offers all sorts of perverse incentives.

“But what’s even worse is that the money will not go to fund new housing in the area but to fund Tory election give-aways such as raising the inheritance threshold to £1million.”

Controversially, whereas housing associations will be able to keep the increase in rental income, any additional money local authorities receive will go straight to the Treasury. The policy, expected to raise £250million for the Exchequer, is due to come into effect in 2017.

Chancellor George Osborne has said: “It’s time to act on the higher earners who use taxpayer-funded subsidies to live in council and housing association homes when they could afford the market rent that others on their salaries pay.”

But Cllr Murray hit back, saying: “Council rents are not subsidised. They cover the cost of management, maintenance and investment in housing stock. The only subsidy here is tenants paying for election give-aways.

“It’s classic Tory frontbench tactics. They repeat a lie over and over again and hope it will stick.

“It shows that the government is using every tactic to undermine social housing, whether through right to buy, which is a subsidy, and now effectively penalising tenants who get a job that pays more.”

Jan Tucker, housing association tenant and chairwoman of the Palmer Estate tenants’ association in Archway, said: “This policy is just ridiculous. You could have four people living in a house and £40,000 is not a lot of money. You are not allowing them to save up to buy a house and move on.

“In some areas rents are high and in others not so high. But we have social housing in Chelsea. Market rents there are mega. People are not going to be able to afford it. Are they going to pay housing benefit to make up the difference?”

The Treasury has not announced how exactly the policy would work.