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England Real Estate News: George Osborne’s ‘Pay to Rent’ Policy to Price Out Families from Council Homes

The new policy by George Osborne to limit the council housing to the poorest, by imposing families in the council housing earning £40,000 in London and £30,000 outside, to pay market rent, could force thousands of families out of their homes.

                According to the report of the Guardian, the new 'Pay to Rent' policy may result to almost 60,000 households in England to be priced out of their council properties from April 2017.

                In a BBC report, the LGA's figures, compiled by Savills estate agents, found that almost 215,000 housing tenants will be greatly affected by the new policy, and most of the 27,000 affected households in London are said to have difficulties in affording the rent or buying in the same area.

                 "Many social housing tenants across the country will be unable to afford market rents or take up the offer to buy their council home under this policy," said Councilor Peter Box, housing spokesman at the LGA.

                "A couple with three children, earning £15,000 each a year, cannot be defined as high income. Pay to stay needs to be voluntary for councils - as it will be for housing associations," Councilor Box added. "This flexibility is essential to allow us to protect social housing tenants and avoid the unintended consequence of hard-working families being penalized, people being dis-incentivised to work and earn more, and key workers, such as nurses, teachers or social workers, having to move out of their local area."

                Those who are opposing the new policy said that imposing families earning £30,000 a year will encompass greatly disheartened hard workers who are tipping over £30,000.

                 "Enforcing near-market rents for council tenants earning over £30,000 risks creating strong dis-incentives to earn more. Families on the cusp of the £30,000 cliff edge could find that securing a pay rise or working a few extra hours, leaves them thousands of pounds worse off, as a result of far higher housing costs," said Laura Gardiner, senior economic analyst at the foundation. "Introducing a taper could mitigate the worst effects, but it is questionable how it could be administered."


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