The government has recently announced a number of delays to high-profile projects such as Hinkley Point C, the roll-out of universal credit and the model for the future funding of supported housing. In this context, many people in the housing sector are wondering when the planned pay-to-stay initiative will be implemented. At the time of writing (August 2016), there has been no change from the proposed April 2017 start date. The government estimates that the scheme will generate significant revenue for the exchequer so, although it’s not inconceivable that the implementation date could be delayed, it is very unlikely that the pay-to-stay scheme will be abandoned altogether.
I would therefore like to suggest that housing IT providers and housing providers’ IT directors should begin to actively plan and think about implementing the pay-to-stay scheme during the 2017/18 rent year. I had a workshop in July this year to look at the systems enhancements that would be needed to implement this new scheme and they are fairly major. We will need to hold earnings data at an individual person level and not just at a tenancy level. Because the definition of a household being used by the DCLG is the tenant and joint tenants plus their partners, this means that we will need to hold this earnings information for not just those people formally named on the tenancy agreement, but also for any other adults living in the household.
Each year, housing providers will be required to write to any tenants not receiving housing benefit asking them to provide details of who lives in the property along with their NI number, date of birth and taxable earnings.
Some housing professionals say that tenants simply won’t provide the information needed. But if they don’t do so, they will be expected to pay the full market rent from the point the scheme becomes active. This means that in addition to gathering earnings data, housing providers will also need to agree a method for determining the market rent of all of their properties. I have been looking on the Rightmove website for ex-council properties for rent and have discovered that in Solihull, the market rent can be 55-85 per cent higher than the social rent that tenants are currently paying. This would mean that in some parts of Solihull, if tenants don’t provide the information as requested, they could see their rent increase by as much as £100 per week.
Housing providers who want to avoid unnecessary hardship and stress for their tenants need to begin actively planning now how they will capture the necessary data and how they will ensure that vulnerable tenants are supported.
After the rent increase letter goes out, the tenant will have 28 days to appeal. They can appeal on one of three grounds. If they believe their landlord has made a mistake in calculating their household income, they can write to them with evidence of their correct income. If the tenant believes the landlord has incorrectly applied the taper, they can appeal on those ground too. Or if they believe that the market rent the landlord has calculated for their property is too high, they can appeal against this.
However, if their earnings are just above a £31,000 threshold, it’s unlikely that this will make much difference to the rent they pay. Tenants also need to be aware that if they appeal the market rent, their rent can go up as well as down as a result of the appeal and that if they ask for an impartial assessment to be made by the Property Chamber then they may be charged an administrative cost for the appeal.
Section 83 of the Housing and Planning Act states: “HMRC may disclose information for the purpose of enabling a registered provider of social housing to determine whether it is obliged by rent regulations to charge a tenant a specific level of rent and what that level is”.
The DCLG and HMRC are now working with local authorities to understand how the data-sharing powers of HMRC could be used to support income collection and verification.
At this point, there is also a big question mark over whether the major IT systems providers will have made the necessary changes to their systems in time for the implementation of the scheme. I therefore have the following three pieces of advice for senior housing and IT managers.
Begin planning now – You will probably need to contact around 30-40 per cent of your tenants (i.e. those who don’t receive housing benefit). If people don’t respond with the required information, they could see dramatic rent increases and suffer unnecessary hardship, so begin planning now how you’re going to contact those tenants.
Develop temporary solutions – Assume that your systems providers won’t have developed fully-working solutions to help you manage this scheme in time for you to begin recording the information. So you’re going to have to think about using Access databases or spreadsheets!
Keep it as simple as possible – In time, systems and interfaces will be developed to validate the earnings information that tenants provide. Best-practice methods for determining the market rent of properties are also likely to evolve over time. However in the short term, the best advice is to try not to ‘over-think’ things, such as using proportionate common sense approaches to determine your market rents.
Chris Deery is head of ICT at Solihull Community Housing.