Plans to make pay-to-stay compulsory for local authorities have proved somewhat controversial and have been beset by delays through parliament as a result of the changing political landscape. However despite these delays, from April 2017 local authorities will be required to charge pay-to-stay rents to their tenants in higher income brackets. It will remain discretionary for housing associations.
Under the new legislation, tenants with household incomes of £40,000 and above in London, and £31,000 and above in the rest of England, will be required to pay higher rents for their accommodation if their rent is being subsidised below market rent levels.
Pay-to-stay: the concerns
A government consultation highlighted some key concerns for local authorities. Councils seem resigned to the fact they’ll have to adhere to the new legislation, but it will involve a significant culture change for both staff and tenants. The process of capturing and maintaining accurate data on tenants affected will be hard to manage with the resources they have, and they are unsure of how tenants will react to such a large change.
The administrative burden on local authorities to enforce these additional charges, via letters, handling appeals, handling enquiries, chasing missing payments and so on, alongside the potential set up and administrative costs of the associated software being implemented or updated, are significant concerns.
Furthermore, working tenants are traditionally those the local authority has had the least to do with, due to them having fewer reasons for contact and it is unknown how these tenants will respond to the new information requests and payment demands that will be coming into force. It’s also possible that they could be disincentivised to work and some could face substantial rent increases that they might not necessarily be able to afford, despite being in a higher income bracket. There are also concerns around occupancy fraud, which is already the biggest area of fraud in social housing.
So what should local authorities be doing now to make sure they are ready for the significant pay-to-stay changes?
It is vital for authorities to start collecting as much income and financial information as possible now. To be able to successfully deliver pay-to-stay, councils need to understand who is in their social households, who is currently receiving housing benefit or universal credit and who isn’t (as each of these will be exempt from pay-to-stay) and the relationships of their tenants and properties.
Managing this in conjunction with existing or scheduled contact with tenants will prove essential in ensuring this data is captured and ready for use. Because this capability is already present within local authorities’ housing management systems, it means organisations needn’t wait for the new legislation to come into force, and can be proactive in reducing the additional administrative burden it will create.
Understanding how to establish household income, and training staff in how to identify what income is and isn’t included in pay-to-stay cases, should also be a priority, so that when tenant enquiries start coming in, staff are equipped to deal with them.
Technology is key
Initial conversations with councils have identified one key area of focus; they can’t meet this legislation without suitable software to support it. Capita, alongside other IT providers, has been working with the DCLG to consult about what a pay-to-stay solution would need to include and should offer.
This consultation has identified necessary features for any successful solution and the desire of local authorities to automate as much as possible in order to reduce the administrative burden.
For the solution to be efficient, it will need to capture the very basics first, such as household income information, and whether or not benefits including universal credit and housing benefits are being claimed. Just because one person’s income drops in the household doesn’t necessarily mean the rent drops. Therefore, local authorities will need to capture income data for all household members.
From this basic information, the software will be able to identify the affected tenants and communicate information about the new legislation and the details requested. This would be through letters, emails or house visits.
A solution which supports numerous points of contact will increase the opportunities for tenants to provide household and income information, whether that’s via customer services staff, housing officers or online self-service portals. This online element is important because self-service will streamline much of the data collection. Digitising the process, including online forms to collect information, accepting supporting evidence such as digital payslips, and incorporating a declaration from tenants that the information is accurate, will encourage tenants to self-serve and reduce the need for staff to manually input data.
Using this income data, the software must accurately calculate and store a pay-to-stay element which can be included with existing rent collection and review processes. This will allow authorities to maintain control and audit information held without increasing their administrative burden.
All software solutions being developed for pay-to-stay need to be well designed and as effective as possible to reduce manual interventions and costs incurred by outcomes such as tenant appeals, letters being sent to households that are not applicable, and the administration of handling National Insurance or income verification.
Making pay-to-stay a success
It is clear that pay-to-stay represents a real overhaul of social housing rents, and it will have a significant impact on both tenants and local authorities. While it’s possible that the full impact will not be known until the new requirements are in force, local authorities cannot wait until then to start putting measures in place to be prepared.
Steps are already being made in housing units in authorities up and down the country and with the right software solutions in place to help them collect and analyse the data they need, these legislative changes could help generate revenue for the public purse while preserving discounted rents for those who need the most support.
Helen Rogers is head of housing products at Capita Software Services.