Co-operatives are submitting evidence to the House of Commons public bill committee on the Housing and Planning Bill 2015-16, arguing that a compulsory ‘pay to stay’ scheme would be highly detrimental to the future of housing co-ops.

Under current pay to stay legislation, social landlords can charge tenants with an income of over £60,000 market or near market rents, rather than social rents (typically half the market rent). The government intends to make these higher rents compulsory for social tenants earning over £40,000 in London and £30,000 elsewhere.

The Confederation of Co-operative Housing (CCH) says that in a survey of members, 75% of respondents were against pay to stay, while 17% supported it. 88% were concerned that it would change the relationship between co-ops and their members.

Concerns include members being expected to ‘pay’ twice through higher rents and through still being expected to make the significant voluntary contributions that co-ops rely on, and the potential conflicts between pay to stay and the co-operative ethos.

“The key current problem with pay to stay is that there is very limited available information from government about how it will be implemented,” said Nic Bliss, head of policy at CCH. “In the absence of information, a lot of rumours have circulated, and people in our sector are concerned about what the government may implement.”

Following the consultation, 12 housing co-operatives have submitted evidence to the bill committee, setting out the case that fully mutual housing co-operatives are different in form from other types of social housing and should be treated on their own merits.

Hatch Row, a 19-unit mutual housing co-op founded in Waterloo in 1983, believes “the introduction of the pay to stay and the right to buy will make such fundamental changes to the core structure of fully mutual co-ops as to render them inoperable and likely force their failure, making many hard-working families homeless”.

It added: “The introduction of pay to stay would force a majority of our active members and management team out of their homes onto the street. Without these active members the co-op would fail.”

It warned it would be a mistake to “plunder our success, driving away our community to repay a deficit”.

Mr Bliss said: “It is difficult to argue against the principle that those who earn more should contribute more in a home that was financed with government grant.”

He added: “CCH has proposed that pay to stay rents should be calculated according to a fair formula rather than being based on market rents or a proportion of market rents. We have also suggested that pay to stay should not be introduced in the co-op sector if the Government does not also provide the support it is providing to other social housing tenants to buy a home.”

Gareth Thomas MP, chair of the Co-operative Party, has also been working to persuade the government of the need for improvements to the bill. During the committee stage of the bill, Mr Thomas proposed that co-operative and community-led housing shouldn’t be disadvantaged from accessing good plots of land for creating housing co-operatives.

“Community-led housing or housing co-operatives not only have the advantage of providing housing for individuals and their families; they also encourage people who benefit from such building to take some responsibility for their community, for the rules under which it operates and for the conditions and the environment in which they live,” he said.

The government failed to support Mr Thomas’ amendment but the Co-operative Party says it will be bringing back the Co-operative Housing Tenure Bill this session.

What is Right to Buy?

Right to Buy gives secure tenants of councils and some housing associations the legal right to buy, at a large discount, the home they are living in.

What is Pay to Stay?

Pay to stay is a higher rate of rent that the government intends to make compulsory for social tenants earning over £40,000 in London and £30,000 elsewhere (income based on named tennant/s or the combined income of the highest earners living in the property).