Pay to Stay – why did we ever do anything else?

John Moss, the Conservative candidate for the City & East London Assembly seat in May 2012, welcomes the recent housing announcements but calls for the right to buy for housing association tenants and more power to charge the rich higher rents

Grant Shapps had a good Conference. The announcement of the rejuvenation of Right to Buy was the pre-conference media splash and in the background of the week, he slipped out a couple of  golden nuggets which are finally getting traction, the idea of “Pay to Stay” and allowing councils and housing associations to deny people subsidised social homes if they already own another property.

It may seem bizarre that the current system of housing welfare actually allows the things which these two policies seek to correct. But it does. You can earn £145,000 a year (like Bob Crow, head of the RMT Union) or £66,500 a year, (like Frank Dobson MP) and still live in a council or housing association property on a social rent. It is also possible to secure a tenancy of a social home even if you own a property elsewhere. This is another example of the legacy of decades of policies driven by short-term political objectives, rather than sensible long-term policy goals.

So, what should those goals be? Do we want communities where people who need some help to meet the cost of their home, get that help if they only earn a small amount or lose their jobs? I think we do. Do we want communities where people with a variety of incomes live in the same streets, with no real distinction being drawn between them? I think we do. And do we want to stop people who earn high salaries from getting state benefits once their income rises to a level where they can meet their basic needs? I think we do.

Do we also want people who get on in life to have the opportunity to build up a stake in the place where they live, rather than feeling that getting on means getting out? And do we want to stop the abuse of the current system of subsidised rents which allows tenants to fraudulently sub-let their premises at a market rent, when they themselves only pay the subsidised rate? I think we want these all things and I think Grant Shapps is driving the reform agenda to achieve them. That he is doing it without the sort of furore which has accompanied Health reform and changes to Higher Education funding, is a credit to him.

He could go a little further and extend Right to Buy to all social tenants, including those living in housing association properties and he could write off the “grant” which sits on housing association balance sheets as debt, despite their being no corresponding “asset” listed in the Government’s books. This would create an income stream from RtB sales and free up borrowing power for housing associations to take advantage of the plots for new housing he is pushing councils and Government departments to sell off. All this means more homes will get built.

He could also allow social landlords to set rents at any level they like up to market rents, adjusting this relative to their tenants’ income. This would devolve power to them and allow them to manage their stock effectively. Following on from the reform of the Housing Revenue Account system in April, this might actually see Councils paying back to Government the historic debts of around £18 billion which they took out to build those homes in the first place, helping to reduce the Government’s borrowing requirement.

Finally, he could allow councils to search their existing tenant lists for those 60,000 people with other properties and immediately increase their rents to market rates. That would give social landlords an immediate boost of about £100m in rental income, enough to support about £1.6bn of additional borrowing to build those new homes.

So where do I think we will be in two years time when the impact of these reforms has worked through to people on the ground?

I think Bob Crow will have bought his house, with a discount, or he will be paying full market rent along with many of his neighbours and similar tenants on social estates across the country. This will start to break up the monotonous culture of dependency on social “estates” and lead to a much greater mix of people living in them.

I think Councils will be managing their housing stock more effectively and benefitting from higher rental income as illegal sub-lets are weeded out and tenants with second homes and high incomes pay full market rents or buy their homes.

And finally, I think housing associations and councils will be building tens of thousands of new homes, helping to lift the economy out of the doldrums and deliver much needed homes which, over time, people will buy, recycling the process all over again.