Briefing Note
DCLG Policy Seminar on Disposal of High Value Council Homes, ‘Pay to Stay’
Policy and Fixed Term Tenancies
Introduction
DCLG recently hosted two seminars for representatives of stock-owning local
authorities to discuss the implementation of various government housing policies.
The event concentrated on three main policy areas:
 Sale of high value council homes
 High Income council tenants (Pay to Stay)
 Flexible/Fixed term tenancies
A number of CWAG members attended the Birmingham event on Tuesday 22nd
September 2015 and the following briefing note has been compiled to summarise the
key issues discussed.
1. Sale of high value council homes
There are various drivers behind this policy, the main ones being:
 To ensure that councils “manage their stock more efficiently”.
 To generate receipts to fund the discounts payable to housing association
tenants when the Right to Buy is extended.
This will not be a local system. Receipts will be collected centrally and then flow out
again. The principles will be set out in the Housing Bill in October and operational
detail will then follow on through secondary legislation.
There are two options currently under consideration:
 Actual sale of high value homes or
 A formula approach.
DCLG were seeking views from those in attendance on whether the actual sale of
properties or a formula approach would be preferable to local authorities.
A formula approach would effectively be a levy on voids anticipated throughout the
year. An amount would be calculated and paid annually to government based upon a
formula that included property values, number of bedrooms, churn rate etc.
Those attending tended to support the formula approach as the council would have
the option to keep the property rather than sell. Councils would like flexibility to
decide whether or not to actually sell the property or pay the levy, depending on the
type of property, its location etc.
DCLG acknowledged that considerations for any attributable debt, as well as the
cost of valuing, marketing and selling properties, would need to be made.
Clarification will also be required on the relationship to general housing consents and
the timing of sales.
A proportion of receipts will be available for funding new provision / replacements.
There may also be discretion on what is built, for example, different tenures.
DCLG were keen to know the preferred route for refunding replacement properties
for those sold, suggesting three potential options:
 directly by local authority;
 via registered providers;
 or through a funded HCA programme.
The preference within those attending was for direct re-provision by councils but only
if the new properties were exempt from forced sale.
DCLG are considering exemptions from forced disposal for new build properties and
for supported housing and adapted properties. There are also likely to be
exemptions for certain properties in rural areas.
There is still no detail available on the thresholds that will determine the definition of
“high value”; however, it is unlikely that the regional figures produced prior to the
election will be used. DCLG favour a more local valuation, possibly based on local
authority boundaries.
DCLG also stated that there will be a cap on the number of properties that local
authorities will be required to sell, therefore high value local authority areas and low
value local authority areas will be required to dispose of a similar number of
properties.
2. Pay to Stay
Primary legislation will be required to implement high value & pay to stay. The
framework for this policy will be in the October Housing Bill with the detail about how
it will work following in secondary legislation. The planned implementation date for
this policy is April 2017.
DCLG could not yet say how they would define income or what a household was.
The discussion centred on the ability of councils to find out tenants’ earnings; what
support could be provided by HMRC; and what period near market rent would be
charged for, particularly where tenant’ earnings fluctuated.
DCLG were keen to hear views on how the policy could be implemented without
being a disincentive for work and how the government could receive the higher rent
payments without an additional administrative burden being placed upon local
authorities. There were no answers on this.
As yet there is no definition of ‘near market rent’, however it seems likely that
payments to government for ‘near market rent’ will be based upon the actual rent for
the property and not what the local authority has managed to collect. Exemptions are
still to be explored.
Councils highlighted concerns about the potential impact on wider service provision
created by the wage threshold and the potential perverse incentives for households
to reduce working hours in order to stay within the cap.
3. Fixed term tenancies
Full details will be in the Housing Bill and there will be no consultation on this policy.
Three reasons were given for this approach:
 Local Authorities were given the chance to introduce flexible tenancies in the
Localism Act and had not used them
 To make better use of stock
 To use as a platform into home ownership
Changes will be introduced for new tenants from 1 April 2017. Councils will be able
to choose any length of tenancy between 2 and 5 years.
The view from DCLG was that a tenant would not lose their tenancy as long as they
stayed in their home. It was unclear how existing tenants transferring between
properties would be treated. Concerns were raised that if a tenant were to lose a
lifetime tenancy by transferring, this would discourage downsizing.
Some concerns were also raised about the legal position of converting introductory
tenancies to fixed term tenancies due to the time limit within the current legislation.
DCLG is keen to hear how local authorities will manage the process of introducing
fixed term tenancies. There was no information about how these changes will be
monitored or regulated.