Thousands of council house tenants could be hit by a new ‘stealth tax’ which one resident says is designed to ‘keep the poor poorer’.
The Pay To Stay scheme, adopted as part of the Housing and Planning Act 2016, aims to bring social housing rent in line with market rent and will directly affect those earning more than £31,000 per household.
This is the equivalent of two people earning minimum wage, which is £7.20 an hour, and working 41.4 hours a week.
Once the central government scheme comes into force in April next year, those earning more than £31,000 will have to pay 15p tax on every £1 that they earn over that amount.
One Dacorum tenant believes the new law has been ‘buried’ amid the news of the EU referendum and is a tax on ‘the poorest in society’.
They said: “I have worked it out and my husband and I are going to be around £200 worse off each month. That is a lot of money to us and it means we are going to have to go without some things.
“Those in social housing are being subjected to a stealth tax.
“Local authorities are concerned that many tenants will try to buy the properties they live in as if they have to pay the higher amounts, they may as well try to buy.
“This will reduce the housing available to lower wage earners who social housing was intended for.
“Many of these tenants trying to buy will fail, more properties will be repossessed and the families will then become homeless.”
The extra cash raised by the scheme will bypass local government and instead go straight to London to help with reducing the country’s deficit.
It is not clear exactly how the scheme will be implementedbut Dacorum Borough Council says it is due to get firmer details later this month.
The Dacorum tenant, who has lived in their council property for more than 30 years, said: “Many people will be in an intolerable position. If they are lucky enough to be awarded a pay increase, any extra monies will again be subject to 15p in every £1.
“It’s in effect keeping the poor poorer. This cannot be fair? This has been brought in quietly and people need to be aware.”
Social housing rent is around 50 per cent of market rate, and affordable housing rent is around 80 per cent of what people pay on the open market.
Tenants do not legally have to declare their household income, but those who don’t will be forced to pay the equivalent of market rent on their property.
Lib Dem Ron Tindall, a Dacorum Borough Councillor serving the Adeyfield West ward, said: “While I recognise that on the surface this requirement may seem justified given the level of homelessness, it’s very hypocritical of the government to demand this when there is such a dearth of alternative housing.
“The government has got it all wrong. It’s daft. Nowadays, £31,000 is not enough to get a sufficient mortgage. It’s a dilemma.
“They’re not encouraging local councils to build new housing. It’s a terrible local situation caused by an ideological central government.”
“I’m old enough to remember when the government was less prescriptive. All Whitehall seems to do is issue dictats on what councils should do instead of asking the councils themselves.
“Local councils know what their constituents want, so the government should leave local authorities to get on with it.”